Excuse Based on Later Event

Question 1

Is the other party’s breach an excuse for non-performance?

Answer 1

Art. 2: perfect tender rule, free reign

Common law: injured party can recover damages for any breach; only material breach provides excuse

Question 2

What is anticipatory repudiation?

Answer 2

Contract repudiated before performance due
Performer can stop and sue for damages
Can be retracted if not relied upon

Question 3

What is a failure to give adequate assurance?

Answer 3

Party with reasonable grounds for being insecure about other party’s performance may request in writing adequate assurance that other party will perform in accordance with contract

If not provided, same as anticipatory repudiation
Cannot rewrite contract or demand particular type of assurance

Question 4

What is rescission?

Answer 4

Agreement to cancel the contract, enforceable only if both parties have some performance remaining (otherwise no consideration)

Question 5

What is modification? and when does it take effect?

Answer 5

Agreement to replace existing contract with new one; takes effect immediately

Question 6

What is accord and satisfaction?

Answer 6

Accord is an agreement to accept performance in future satisfaction of existing duty; satisfaction is performance of the accord; existing duty extinguished only when accord is satisfied

Question 7

What is novation?

Answer 7

Agreement to substitute new party for existing one; without both parties’ consent, simple delegation of duties that does not exonerate first party

Question 8

In general, what is impossibility?

Answer 8

Later, unforeseen event that makes performance impossible may provide seller with excuse for non-performance (Art. 2: impracticability)

Question 9

What are the four types of impossibility?

Answer 9

1) Destruction
2) Death/incapacity of essential person
3) Supervening government regulation
4) Increase in cost of seller’s performance

Question 10

Describe the type of impossibility where something necessary for performance is destroyed

Answer 10

Common law: excuse for non-performance
Art. 2: Same except (a) seller excused only if damaged/destroyed goods were identified to the contract; and (b) seller who bore ROL when goods damaged or destroyed excused by impracticability but buyer is not

Question 11

For there to be impossibly who must die or be incapacitated?

Answer 11

An essential person, and only then is non-performance excused.

Question 12

Does supervening governmental regulation excuse performance?

Answer 12

Yes

Question 13

What if my costs increase as a seller? i.e. it is more expensive to perform?

Answer 13

MBE: almost never excuses seller
NY: can excuse if % or $ increase is high enough.

Question 14

What is a frustration of purpose?

Answer 14

Buyer’s excuse (eg, rent apt. for view of event, event cancelled) if seller knew purpose and later, unforeseen event thwarted that purpose

Question 15

What is a failure of an express condition?

Answer 15

Definition: limits obligations created by other contract language, does not create independent obligation (eg, “as long as”, “provided that”)
Strict compliance required, failure provides excuse but not breach

Question 16

What is a satisfaction clause measured by?

Answer 16

Measured by reasonable person standard unless contract deals with art or matters of personal taste (eg, house painted, pay $5k if satisfied)

Question 17

What are the three types of express conditions?

Answer 17

1. Condition precedent (if rains July 4)
2. Condition concurrent (as long as X)
3. Condition subsequent (until X)

Question 18

When may the excusing of the occurrence of a condition occur?

Answer 18

Occurrence of a condition may be excused by later action or inaction of person protected by condition
Failure to cooperate provides excuse (eg, sell if mortgage at 5%, never tries to get mortgage; must now unconditionally buy house)
Waiver provides excuse (can retract for future payments to extent not relied upon)