Excuse of Nonperformance of Contract

Question 1

What is anticipatory repudiation?

Answer 1

An unambiguous statement or conduct that the repudiating party will not perform made PRIOR to the time that performance was due.

Question 2

What effect does anticipatory repudiation of one party have on the other?

Answer 2

Excuses duty to perform.

Question 3

P contracts to paint O’s house with payment to be made on July 13. On March 10, before P has finished painting, O tells P that she is doing a great job, but that O is not going to pay. Is P excused from performing?

Answer 3

Yes

Question 4

Anticipatory repudiation generally gives rise to a claims for damages when? What exception?

Answer 4

Immediately

Exception = unless the claimant has already finished her performance.

Question 5

Anticipatory repudiation generally gives rise to a/an ________ claim for damages for _____ UNLESS the claimant has . . . .

Answer 5

Immediate

Breach

Already finished her performance.

Question 6

A contracts with B to paint B’s house. B tells A, “it is highly unlikely I can pay you.” Anticipatory repudiation? Explain.

Answer 6

No. This is not unambiguous enough. Still a chance of payment.

Question 7

P contracts to paint O’s house with payment to be made on July 13. On March 10, before P has finished painting, O tells P that she is doing a great job, but that O is not going to pay. P stops painting and sues O on March 11. Can P recover damages for breach of k on the 11th, even though the k date was July 13? Explain.

Is P excused from performing?

Answer 7

Yes. Anticipatory repudiation generally gives rise to an immediate claim for damages. P hasn’t finished painting, so the exception doesn’t apply.

Question 8

P contracts to paint O’s house with payment to be made on July 13. On March 10, P finished. O tells P that she did a great job, but that O is not going to pay. P sues O on March 11. Can P recover damages for breach of k on the 11th, even though the k date was July 13? Explain.

Answer 8

No. P must wait until July 13th, since performance was completed.

Question 9

In an anticipatory repudiation situation, when can the claimant sue if performance is finished?

Answer 9

When the breach would have occurred w/o the anticipatory repudiation.

Question 10

When can an anticipatory repudiation be withdrawn?

Answer 10

When there has not been a material change in position by the other party.

Question 11

If an anticipatory repudiation is timely retracted, the duty to perform is reimposed but performance can be delayed until the repudiator does what?

Answer 11

Provides adequate assurance.

Question 12

P contracts to paint O’s house with payment to be made on July 13. On March 10, before P has finished painting, O tells P that she is doing a great job, but that O is not going to pay. P stops painting and finds another job. O tells P that he has changed his mind–that he wants P to come back and start painting again. O further tells P that he has placed the money in escrow.

Has O effectively retracted his repudiation?

Is P still excused from performing? EXPLAIN

Answer 12

No, P has had a material change in position.

Still excused from performing

Question 13

P contracts to paint O’s house with payment to be made on July 13. On March 10, before P has finished painting, O tells P that she is doing a great job, but that O is not going to pay. Before P finds another job or moves his paint, O tells P that he has changed his mind–that he wants P to come back and start painting again. O further tells P that he has placed the money in escrow.

Has O effectively retracted his repudiation?

Is P still excused from performing?

Answer 13

Yes, timely retracted – no change of position.

No. Adequate assurance provided (escrow).

Question 14

Anticipatory repudiation requires an unambiguous statement or conduct indicating that a party will not perform. What if the words or conduct of a party merely makes performance uncertain? If the words or conduct of one party give “_____ _____ __ _________,” then the other party can, in writing, demand _____ _______ and, if it is “_______ ______,” can suspend performance until it gets adequate assurance.

Answer 14

Reasonable grounds for insecurity

adequate assurance

Commercially reasonable.

Question 15

What are the three elements required to excuse performance because of insecurity about whether the other party is going to perform?

Answer 15

Reasonable grounds for insecurity

Written demand for adequate assurance

Commercially reasonable to stop performance.

Question 16

In Jan., B contracts to buy custom-made widgets from S with B’s payment in March and S’s delivery in April. In Feb., B learn that S was late on all January widget deliveries to other customers and that a substantial number of the widgets delivered were ineffective.

Is B excused from making the advance payment? Explain.

Answer 16

Yes, IF B has

Reasonable grounds for insecurity

Written demand for adequate assurance

Commercially reasonable to stop performance.

Question 17

Under CL, only this type of breach by one excuses the other from performing a k.

Answer 17

Material.

Question 18

Whether a material breach is a question of law. True or false.

Answer 18

False. Question of fact.

Question 19

If there is substantial performance, when is it possible for there to be a material breach?

Answer 19

Never. If there is substantial performance, then the breach is not material.

Question 20

O hires P to paint his house white. P paints the house white, but paints the closet off-white. O has to pay another paint $25 to repaint the closet.

Material breach?

Excuse from performance?

Damages?

Answer 20

No

No

Yes, $25.

Question 21

O hires B to build a house for $100k. K states that B will use only copper Reading Pipe. B instead uses copper Cohoe pipe. Court finds that Cohoe is roughly comparable to Reading and that use of Cohoe only reduces the houses value by $1,000. O refuses to pay B anything. B sues.

Is O excused by B’s breach? Explain.

Answer 21

No. Not a material breach. Substantial performance and roughly comparable.

Question 22

P contracts to paint ten identical apartments for O for $10k. P breaches after painting two apts. Was P’s breach a material breach? Explain.

Answer 22

Yes. 2/10 is clearly less than 50%.

Question 23

P contracts to paint ten identical apartments for O for $10k. P breaches after painting two apts.

Under k law, is O obligated to pay P for painting the two apartments? Explain.

Answer 23

No. Material breach excuses performance.

Question 24

P contracts to paint ten identical apartments for O for $10k. P breaches after painting two apts.

What remedy for P? Explain.

Answer 24

Use quasi-k!

Question 25

What is the divisible contract corollary?

Answer 25

In a divisible contract, there can be k law recovery for substantial performance of a divisible part even though there has been a material breach of entire k.

Question 26

P contracts to paint ten identical apartments for O for $10k, payable at a rate of $1000/apt. P breaches after painting two apts. Does P have any rights under k law to recover?

Answer 26

Yes, under the divisible contract corollary, P has a k law right to recover for the two acts that have been painted. This is because the k pays each apt. separately.

Question 27

What is an express condition?

Answer 27

Language in a k that limit obligations created by other language.

Question 28

The non-occurrence of an express condition results in ____, not _____.

Answer 28

Excuse

Breach

Question 29

S offers to sell B his house for $100k. B responds that she accepts “on condition that a mortgage at no more than 4% can be obtained.” Is there a k? Explain.

Answer 29

No. Language of condition is response.

Question 30

S and B enter into an agreement that states that B will buy and S will sell S’s house for $100,000 “on the condition that a mortgage at no more than 4% can be obtained.” Is there a k? Explain.

Answer 30

Yes. Language of condition in a CONTRACT, not a response.

Question 31

S and B enter into an agreement that states that B will buy and S will sell S’s house for $100,000 “on the condition that a mortgage at no more than 4% can be obtained.”

B is unable to obtain a mortgage for less than 5%. Is B excused from buying the house? Is B liable to S for breach if she doesn’t? Explain.

Answer 31

Yes, excused because of occurrence of express condition.

No, excused.

Question 32

What is the standard for determining whether an express condition has occurred?

Answer 32

Strict compliance.

Question 33

S and B enter into an agreement that states that B will buy S’s house on the condition that the house is appraised at no less than $100k. The house is appraised at $98k. Is B excused from buying? Explain

Answer 33

Yes. Non-occurrence of condition under a strict compliance standard.

Question 34

B contracts to build O’s house. The k state, “O’s payment for B’s work is conditioned on B’s using only copper Reading pipe.” B instead uses comparable Cohoe pipe. Is O excused from any k obligation to pay B. Explain.

Answer 34

Yes. Strict compliance test. Payment was CONDITIONED ON Reading Pipe.

Question 35

Some courts refuse to require strict compliance with express condition in situation where enforcement of the condition. . . .

Answer 35

Would cause excessive harm to the other party.

Question 36

What is the standard for determining the validity of a condition of personal satisfaction (e.g., B will only pay S is B is satisfied with the work)

Answer 36

Honesty and good faith.

Question 37

How can an express condition be eliminated so that its nonoccurrence does not affect performance obligations?

Answer 37

If only one person is benefitted or protected, then they can waive.

Question 38

B and S enter into a home sale k which provides that closing is conditioned on B’s obtaining a mortgage for no more than 5%. B is unable to find one for less than 5.5%. Can B still enforce S’s agreement to sell? Explain.

Answer 38

Yes. The Person protected by the express condition may waive it.

Question 39

What is the difference between a condition precedent and a condition subsequent.

Answer 39

Conditions precedent excuse performance unless and until they occur.

Conditions subsequent occur after the start of performance and excuse performance when they occur.

Question 40

Do conditions subsequent create new performance obligations?

Answer 40

No.

Question 41

When will courts generally consider evidence of an oral condition to a written k notwithstanding the parole evidence rule?

Answer 41

If there is a written k and prior to that written k the parties orally agreed that performance was conditional.

Question 42

B agrees to buy S’s car for $1k if the car passes inspection. Their written k does not mention the inspection condition. Under the Parole Evidence Rule, can a court consider evidence of their oral agreement about the inspection condition? Explain.

Answer 42

Yes. If there is a written k and prior to that written k the parties orally agreed that performance was conditional, courts will generally consider evidence of an oral condition to a written k notwithstanding the parole evidence rule.

Question 43

Another word for rescission is . . .

Answer 43

Cancellation

Question 44

When and only when can a rescission be valid (i.e., what is they key)?

Answer 44

There must be some performance still remaining from EACH of the parties to the k.

Question 45

P contracts to paint O’s house for $1000, with payment to be made when the work is completed. P begins work. Before P completes the work, P and O agree to rescind the k. Is the rescission valid? Explain.

Answer 45

Yes. Some performance remains for each party. P still has work to do, and O hasn’t paid.

Question 46

Accord and satisfaction means _____ ______.

Answer 46

Substituted performance

Question 47

On MBE, accord questions will have an agreement by the parties to an already existing obligation to accept a different ______ in satisfaction of the existing obligation.

Answer 47

Performance.

Question 48

What is the effect of an accord and satisfaction?

Answer 48

If the new agreement (the accord) is performed (satisfaction), then performance of the original obligation is excused.

Question 49

D borrows $1k from C and agrees to pay the loan with interest. Later, D and C agree that if D delivers 20 widgets by the end of the month, then the debt will be excused. D delivers the 20 widgets before the end of the month. Can C still recover on the original loan agreement? Explain.

Answer 49

No. There is an accord (C and D agreed that D delivers 20 widgets) and a satisfaction (D delivers the 20 widgets).

Question 50

D borrows $1k from C and agrees to pay the loan with interest. Later, D and C agree that if D delivers 20 widgets by the end of the month, then the debt will be excused. D does not deliver the widgets. Can C recover on the original loan agreement? The accord? Neither? Both? Explain.

Answer 50

C can recover on EITHER the original loan agreement OR the accord, but NOT both.

There is never a right to recover on both deals.

Question 51

_________ is an agreement by parties to an existing obligation to accept a different agreement in satisfaction of the existing obligation.

Answer 51

Modification.

Question 52

D borrows $1k from C and agrees to pay the loan with interest. Later, D and C agree that D will deliver 20 widgets by the end of the month instead of paying the $1000 loan with interest. D does not deliver. Can C recover on the original loan agreement? Explain.

Answer 52

No. A modification excuses the original obligation. The modification controls.

Question 53

How does an Accord and Satisfaction differ from a Modification?

Answer 53

A and S only erases the old deal once it is completed.

Modification erases the old deal as soon as it is agreed to.

Question 54

What is a novation?

Answer 54

An agreement between BOTH parties to an existing k to the substitution of a new party (i.e., same performance, different party).

Question 55

Under a novation, who is excused from liability?

Answer 55

The party who is substituted for or replaced.

Question 56

P contracts to paint O’s house. Subsequently, P, O, and X agree that X can paint the house instead of P. X does not paint the house. Can O recover damages from P for beach? Explain.

Answer 56

No. All parties agreed to the novation, so P is excused from liability.

Question 57

How is a delegation different from a novation?

Answer 57

Novation requires the agreement of BOTH parties to the original k AND excuses the person who is replaced from any liability for nonperformance.

Delegation does not require the agreement of both parties and does not excuse.

Question 58

P contracts to paint O’s house. Subsequently, P, without consulting O, asks X to do the work and X agrees. X doesn’t paint. Can O recover damages from P for breach? Explain.

Answer 58

Yes. This is a delegation, not a novation. Under a delegating, the delegating party remains liable for the actions of the delegatee.

Question 59

For performance to be excused by reason of a later, unanticipated event at CL (i.e., impossibility, impracticability), what three things must be true of the obligor?

Answer 59

He says he’s excused

He has an obligation

The post-contract occurrence affecting his ability to perform (not just the cost)

Question 60

P contracts to paint O’s house for $1000. After P begins painting, the house burns down. Is P excused from performing on this k so that P is now free to take another painting job? Explain

Answer 60

Yes.

P says he’s excused

P had an obligation to paint.

The post-k fire precludes P from performing.

Question 61

B contracts to build a house for O. After B begins to work, the house burns down. Is B excused from performing on this k so that B is now free to take another construction job? Explain

Answer 61

No.

B says he’s excused

B had an obligation to build

HOWEVER, the post-k fire does not prevent B from performing. He can still build a house for O.

Question 62

For performance to be excused by reason of a later, unanticipated event under Article 2 foe the sale of goods (i.e., impossibility, impracticability), what analysis should we do first?

Answer 62

Risk of loss.

Question 63

For performance to be excused by reason of a later, unanticipated event under Article 2 foe the sale of goods (i.e., impossibility, impracticability), if the risk of loss is on the buyer, what obligations does the buyer still have?

Answer 63

He still has to pay.

Question 64

For performance to be excused by reason of a later, unanticipated event under Article 2 foe the sale of goods (i.e., impossibility, impracticability), if the risk of loss is on the seller, what obligations does the buyer still have?

Answer 64

No. He does not have to pay.

Question 65

E contracts to sell Conviser his 73 Caddy for $700. After E had tendered the car to Conviser so that the risk of loss had passed to Conviser, the Caddy is destroyed by an unseasonable flood. Who can recover what from whom? Explain.

Answer 65

E can recover $700 from Conviser. The risk of loss post-tender is on the buyer.

Question 66

E contracts to sell Conviser his 73 Caddy for $700. After the k but before risk of loss shifted, the Caddy is destroyed by an unseasonable flood. When E fails to perform, Conviser sues Epstein for breach alleging that the FMV of the Caddy was $1000.

Can Conviser recover from Epstein? Explain.

Answer 66

No.

E says he’s excused

E had an obligation to deliver.

HOWEVER, the post-k flood prevents E from delivering the Caddy. It is an identified, specific item.

Question 67

When a seller seeks performance to be excused by reason of a later, unanticipated event under Article 2 foe the sale of goods (i.e., impossibility, impracticability) and the goods destroyed/lost/etc, when is the seller OFF the hook?

Answer 67

When the goods are identified and specified (e.g., a unique, 73 Caddy)

Question 68

When a seller seeks performance to be excused by reason of a later, unanticipated event under Article 2 foe the sale of goods (i.e., impossibility, impracticability) and the goods destroyed/lost/etc, when is the seller ON the hook?

Answer 68

When the goods are general and non-specific (i.e., a sack of grits.)

Question 69

E contracts to sell Conviser 300 sacks of grits for $300. After the k but before risk of loss shifted, the grits is destroyed by an unseasonable flood. When E fails to deliver, Conviser sues Epstein for breach, alleging that the FMV of the grits is $700.

Can Conviser recover from E? Explain.

Answer 69

Yes.

E says he’s excused

E had an obligation to deliver.

HOWEVER, E can still deliver grits. They are a general and non-specific item.

Question 70

If a law/rule/reg/etc enacted subsequent to the k makes performance illegal, the performance is excused by . . .

Answer 70

Impossibility (legal).

Question 71

Conviser contracts with the legendary Gold Club to be the featured dancer in the club’s legendary Bottom’s Up Review. After the k but before Conviser dances, the town passes a new law outlawing nude dancing. Nonetheless, Conviser comes to the club nude, ready to dance. Is the Gold Club excused from performing? Explain.

Answer 71

Yes.

GC says it’s excused

GC had an obligation to deliver.

HOWEVER, GC can no longer permit Conviser to dance due to new law. Impossibility (legal).

Question 72

If a later law makes mutually understood purpose of k illegal, then there is excuse by . . . .

Answer 72

Frustration of purpose.

Question 73

Conniver tells his plastic surgeon that he needs PS so that he will be a “lean, mean, nude dancing machine” when he dances at the Gold Club. Connivers and Surgeon agreed that C will pay S $7,000 for the necessary procedures. After the k but before the surgery, the town passes a law outlawing nude dancing. Is Conviser excused from performing? Explain.

Answer 73

Yes. The mutually understood purpose of the surgery is frustrated, so excuse by frustration of purpose.

Question 74

Death does/does not make a person’s contractual obligations disappear.

Answer 74

Does not

Question 75

D borrows $10k from C and signs a k promising to repay the $10k. D dies, leaving an estate of $30k. Under k law, can C recover the $10k from D’s estate? Explain.

Answer 75

Yes Death does not make a person’s contractual obligations disappear.

Question 76

Conviser contracts with P to paint his house for $25,000. After contracting but before Conviser’s paying or P’s painting, P dies. Conniver hires another painter, AP, who charges $30,000 for painting Conviser’s house.

Conviser sues P’s estate for breach, seeking expectation damages of $5k. Under k law, can C recover the $5k from P’s estate? Explain.

Answer 76

Yes. Death does not make a person’s contractual obligations disappear.

Question 77

What is the lone exception to the rule that death does not make a person’s contractual obligations disappear?

Answer 77

If the person who died was a “special” person.

Question 78

Owen Wilson contracts with HBO to star in the made for TV movie movie: Law School Legend–The David Epstein Story.” Before filming starts, Wilson dies. HBO sues Wilson’s estate for breach of contract. Is Wilson’s nonperformance of the k excused by impossibility? Explain.

Answer 78

Yes. He is a “special” person.