Excuses for Non-Performance

Question 1

Other Party’s Breach

Answer 1

MAY provide an excuse for non-performance…

Sale of Goods (Art. 2)

• If seller’s performance is not perfect in every respect (PTR), buyer has pretty much free reign– 3 options:
  (1) Reject ALL goods, not just wrong ones
  (2) Accept ALL goods (wrong and right)
  (3) Accept some and reject the rest
• In all cases, buyer can still get DAMAGES

CL Ks

• Injured party can recover damages for ANY breach of K (material or not)
• ONLY a MATERIAL breach provides an excuse for performance
• finishing the job late is NOT a material breach UNLESS time is “of the essence”
• remember: breaching party can be entitled to restitution for value of the work done up to breach
• DIVISIBLE K: must pay for performance despite material breach if payment was to be made on PER UNIT BASIS

Question 2

Anticipatory Repudiation

Answer 2

• Provides an excuse UNLESS RETRACTED
• A/R comes BEFORE performance is due
• A/R = material breach
• Can be retracted as long as other party has not relied on it

Question 3

Failure to Give Adequate Assurance (Art. 2)

Answer 3

• Buyer can, IN WRITING, ask for adequate assurance from seller re: goods ordered
• Designed to give nervous party peace of mind
• If seller does not provide buyer with adequate assurance, buyer can treat it as Anticipatory Repudiation

Question 4

Later Agreement by the Parties

Answer 4

Rescission = agreement to cancel the K

• MUST have consideration
• each party MUST have at least some performance remaining

Modification = agreement to replace an existing K with a new one IMMEDIATELY

Accord and Satisfaction

• Accord is an agreement to accept performance in FUTURE satisfaction of an existing duty
• The duty is suspended by the accord, but it is NOT excused until the accord is satisfied (performed)

Novation = an agreement to SUBSTITUTE a new party for an existing one
- BOTH parties must CONSENT (or else it’s just a delegation of duties)

Question 5

Impossibility

Answer 5

• A later unforeseen event that makes performance impossible may provide seller with an excuse
• Under Art. 2 = IMPRACTICABILITY

Destruction of Something Necessary for Performance

• CL = provides excuse for non-performance
• Sale of Goods (Art. 2) = same rule but 2 tricks: (1) seller who bore ROL when goods were damaged/destroyed is excused by impracticability; (2) seller is excused ONLY IF damaged goods had been “identified to the K” (i.e., tagged or set aside for sale to this particular K)

Death/Incapacity of an ESSENTIAL Person

• consider whether performance could be delegated to another person
• in theory, anyone can pay $!

Supervening Governmental Regulation = statute, reg., etc. gets passed that prevents/excuses performance

Increase in the Cost of Seller’s Performance

• on MBE increase in cost almost NEVER excuses the seller
• on TBE seller MAY be excused (look at both how much more $ and the % increase)

Question 6

Frustration of Buyer’s Primary Purpose

Answer 6

• Buyer’s version of impossibility/impracticability

- Applies if the other party knew the purpose when they entered into the K

Question 7

Failure of an Express Condition

Answer 7

• Limits obligations created by OTHER K language, but does NOT create an independent obligation
• Look for “if,” “as long as,” “when,” “provided that,” “on condition that” and “unless”
• STRICT COMPLIANCE is required with express conditions
• Satisfaction clauses: “satisfaction” is measured by a REASONABLE PERSON standard unless K deals with ART or matters of PERSONAL TASTE
• Occurrence of condition may be EXCUSED by the later action or inaction of the person protected by the condition
  (1) Failure to cooperate (i.e., buyer makes no effort to obtain a mortgage = buyer loses protection)
  (2) Waiver = voluntarily giving up protection (may be retracted as long as other party has not relied)