EXCUSES FROM PERFORMANCE Flashcards
OTHER PARTY’S BREACH IN ARTICLE 2 SALE OF GOODS
If seller’s performance is not perfect in every respect (perfect tender), buyer has pretty much free reign
- Can reject all goods (not just non-conforming)
- Can accept all goods
- Can accept some and reject the rest
AND still get damages for the breach
OTHER PARTY’S BREACH UNDER THE COMMON LAW
Injured party can recover damages for ANY breach of K, but ONLY A MATERIAL BREACH provides an excuse
DIVISIBLE CONTRACTS
Under common law
Where payment is to be made on a per-unit basis, breaching party can recover K price for any unit on which he has substantially performed
ANTICIPATORY REPUDUATION
Occurs when a K is executory on both sides, and one party indicates unequivocally that he will not perform
Generally = a material breach
FAILURE TO GIVE ADEQUATE ASSURANCE
A party with reasonable grounds for being insecure about the other party’s performance may request, in writing, adequate assurance that the other party will perform
If adequate assurance NOT provided, can be treated as anticpatory repudiation
RESCISSION
An agreement to cancel the parties’ obligationsT
To be effective, each party must have at least some performance remaining (for consideration)
MODIFICATION TO REPLACE AN EXISTING K
Agreements to replace an existing K with a new one take effect IMMEDIATELY - parties are excused by the modification
ACCORD AND SATISFACTION
- Accord is an agreement to accept performance in FUTURE satisfaction of a duty
- Satisfaction is performance of the accord
- Existing duty is extinguished only when the accord is satisfied
- If the agreement takes effect in the FUTURE - it is an accord/satisfaction
- If IMMEDIATE - modification
NOVATION
An agreement to substitute a new party for an existing one
? Requires consent ?
DISTINGUISH: mere delegation of duty (if no consent?)
Novation extinguishes rights against the original party, but under delegation, the delegator still liable
IMPOSSIBILITY/IMPRACTICABILITY
Seller’s remedy
Later unforeseen event makes performance impossible, or impracticable (Article 2)
IMPOSSIBILITY:
DESTRUCTION OF SOMETHING NECESSARY FOR PERFORMANCE
Common Law: Destruction provides an excuse for non-performance
Article 2 UCC: Destruction provides an excuse for non-performance BUT:
- A seller who bore the risk of loss when goods were damaged or destroyed is excused from performance by impractability
- Seller is excused only if the goods that were damged or destroyed had been “identified to the contract” (i.e. set aside for this particular buyer)
IMPOSSIBILITY:
DEATH OR INCAPACITY OF AN ESSENTIAL PERSON
Party must have a unique skill, cannot be replace
Only people with special talent/expertise get a free pass
If injured and unable to perform, need to delegate the duty to someone else
Death/incapacity never relieves the obligation to pay
IMPOSSIBILITY SCENARIOS
(1) Destruction of something necessary for performance (common law vs. UCC distinction)
(2) Death or incapacity of an essential person
(3) Supervening Governmental Regulation (illegality)
(4) Increase in the Cost of Seller’s Performance (MBE vs. NY)
IMPOSSIBILITY: INCREASE IN THE COST OF SELLER’S PERFORMANCE
(MBE VS. NY)
ON THE MBE: increase in seller’s costs almost NEVER excuses performance
IN NY:
Look to absolute dollar amount of increase and to the % of increase
FRUSTRATION OF BUYER’S PRIMARY PURPOSE
Can provide an excuse if seller knew the buyer’s purpose when the K was entered
