Excuses To Performance And Anticipatory Repudiation

Question 1

Impossibility and Impracticability

Answer 1

A party’s duty to perform under a contract is discharged if:

An unforeseeable event occurs that makes performance extremely and unreasonably difficult or impossible;

The nonoccurrence of the event was a basic assumption of the contract;

AND

The party seeking discharge was NOT at fault.

Look for these common fact patterns:
Performance becomes illegal after the contract is formed;
The subject matter of the contract is destroyed;
There is a services contract to hire a “uniquely skilled” individual (e.g., a famous
artist) who dies or becomes incapacitated.

Question 2

Frustration of Purpose Excuse

Answer 2

A party’s duty to perform under a contract is discharged if:

Unexpected events arise that destroy one party’s purpose in entering into the contract (even if performance of the contract is not rendered impossible);

The event that arises is NOT the fault of the frustrated party;

AND

The nonoccurrence of the event was a basic assumption of the contract.

NOTE. The occurrence of the event need not be completely unforeseeable to the parties (it must be unexpected and not a realistic prospect).

Question 3

A party is excused from their obligations under a valid contract when there has been an accord and satisfaction:

Answer 3

An accord is an agreement between two contracting parties to accept alternate performance to discharge a preexisting duty between them.

The satisfaction is the subsequent performance of that accord. If satisfaction never occurs, the other side can sue on either the original obligation or the accord.

Question 4

An accord and satisfaction differs from a modification,

Answer 4

as a modification immediately discharges a preexisting duty where an accord and satisfaction does not discharge a preexisting duty until the satisfaction occurs.

Question 5

A novation arises when

Answer 5

BOTH parties agree that a substitute person will take over the contractual obligations. If there is a valid novation, the original promisor will be excused from performance (the substitute becomes 100% liable for the performance).

Question 6

Under the common law, anticipatory repudiation occurs when

Answer 6

a promisor clearly and unequivocally repudiates a promise before the time for performance is due (by words or conduct).

Question 7

Under the common law, repudiation may be retracted until the promisee:

Answer 7

Acts in reliance on the repudiation;

Signifies acceptance of the repudiation;

OR

Commences an action for breach of contract.

Question 8

Under the UCC, anticipatory repudiation occurs when:

Answer 8

The buyer or seller makes an unequivocal refusal to perform;

OR

Reasonable grounds for insecurity arise regarding either party’s ability or willingness to perform, and the repudiating party fails to provide adequate assurances within a reasonable time (not to exceed 30 days) upon the non- repudiating party’s demand for such assurances.

Under the UCC, anticipatory repudiation may be retracted until the non-repudiating party cancels the contract or materially changes his position.

Question 9

When an anticipatory repudiation occurs, the non-repudiating party may:

Answer 9

Treat the repudiation as a breach and sue immediately for damages;
(However, if the date of performance has not passed and the only performance left is payment, the non-repudiating party must wait until performance is due and the actual breach occurs before filing suit.)

OR

Ignore the repudiation, urge performance, and see what happens.
However, if the repudiation is ignored, then continued performance by the non-repudiating party must be suspended if the performance would increase the damages of the repudiating party.