Excusing Nonperformance

Question 1

Common law peformance

Answer 1

party’s duty generally at common law is to SUBSTANTIALLY PERFORM all that is called for in the K

Question 2

Article 2 Performance

Answer 2

Generally requires perfect tender

Question 3

Anticipatory Repudiation

Answer 3

UNAMBIGUOUS statement or conduct by a party that it will not perform, made PRIOR to the time that performance was due

Excuses the other party’s duty to perform

Gives rise to an IMMEDIATE claim for damages for breach, unless the claimant has already finished her performance. If finished performance, need to wait until K date to recover

Applies ONLY to bilateral contracts

Question 4

Retracting Anticipatory Repudiation

Answer 4

may be withdrawn so long as there has been NO MATERIAL CHANGE IN POSITION by the other party

Duty to perform is reinstated but performance can be delayed until ADEQUATE ASSURANCES are given

Question 5

Adequate Assurances

Answer 5

unlike AR, when words or conduct make performance merely UNCERTAIN

UCC: party may suspend performance and ask for adequate assurances if (1) reasonable grounds for insecurity, (2) written demand for adequate assurance, and (3) commercially reasonable to stop performance

Question 6

Improper Performance

Answer 6

Article 2: perfect tender rule

Common Law: only a MATERIAL excuses other from performing a common law K

Substantial performance is not material

NOTE: can always recover damages (nominal) for ANY breach, but material excuses nonperformance

Question 7

Material breach and quantity

Answer 7

Less than half is generally a material breach

Ex: K to paint 10 houses for 10K. Only paints 2 houses and breaches. Not obligated to pay, even for 2 houses painted under common law, but would recover under quasi-K.

Question 8

Divisible Contract

Answer 8

If a K is divisible and a party performs one of the units of the K, he is entitled to the agreed-on equivalent for that unit even if he fails to perform the other units

MBE: look for lump sum vs. per per performance payment

Ex: paint 10 houses, paid 1K PER HOUSE. Viewed as 10 different deals thus can recover for two houses painted even though material breach

Question 9

Express Condition nonoccurrence

Answer 9

Express condition is language IN A K that limits obligations

Triggered by if, only if, provided that, so long as, subject to, in the event that, unless, when, until, and on condition that

EXCUSE not a BREACH

DONT CONFUSED THIS WITH CONDITIONAL ACCEPTANCE which is counteroffer/reject

Question 10

Express condition compliance

Answer 10

must generally be strict compliance

Exception: FORFEITURE. some courts may not requires strict compliance if enforcement would cause excessive harm

Exception: condition of personal satisfaction of one of the parties – promise to pay only if “satisfied” is viewed under reasonable person, not subjective

Question 11

Waiver of condition

Answer 11

person protected by the condition may waive the condition

Question 12

Conditions subsequent

Answer 12

when occurs, cuts off duty to perform (until…)

Same law

Question 13

Parol Evidence Rule and conditions

Answer 13

If written K and parties orally agreed prior to K that performance was condition, courts GENERALLY will consider evidence of such an oral agreement

Question 14

Rescission

Answer 14

Discharges contractual duties.

May be discharged by MUTUAL rescission: an express agreement between the parties to rescind (but look out for 3rd party rights if vested, cant rescind w/o her consent)

Executory: Must still have performance REMAINING on each sides

Unilateral rescission generally won’t work. requires some other legal ground like mistake or duress

Question 15

Accord and Satisfaction

Answer 15

Agreement by parties to an already existing obligation to accept different performance in satisfaction of the existing obligation

Accord: the agreement accepted. Requires Consideration. SUSPENDS the right to enforce the prior contract until satisfaction

Satisfaction: performance of accord. discharges original contract AND accord contract

IF accord NOT performed, other party may recover on EITHER the original obligation or the accord

NOTE: on MBE, an accord for smaller amount will suffice if there is a bona fide dispute as to the claim or if there is some alteration (even slight) in debtor’s consideration

Question 16

Modification

Answer 16

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

Excuses performance of prior K IMMEDIATELY. A&S excuses only upon completion of the new accord

Substituted AGREEMENT vs. substituted PERFORMANCE (A&S)

“if, then” vs. “instead”

Question 17

Novation

Answer 17

Agreement between BOTH parties to an existing K to substitute a NEW PARTY. Same performance, but different party.

Excuses performance of the party who is substituted or replaced.

Unlike DELEGATION, Novation requires agreement of BOTH parties to the OG K and excuses the person replaced from liability. Delegation does not require agreement of both parties and does not excuse.

Question 18

Impossibility

Answer 18

Usually damage or destruction of the subject matter of the contract after the K has been made

Must affect ABILITY to perform, not merely the unanticipated COST of performance

UCC: go through risk of loss analysis. If risk of loss is on Buyer, buyer pays. If on Seller, B does not have to pay.

Question 19

Subsequent Law or Regulation

Answer 19

A law making PERFORMANCE illegal is an excuse by impossibility

If a later law makes an mutually understood PURPOSE of the K, it is excused by frustration of purpose

NOTE: if illegal at time of K, the K is invalid

Question 20

Death after K

Answer 20

Generally, DOES NOT make a person’s contract obligations disappear

Exception: death of a person who was to render unique services excuses performance for impossibility

Question 21

Frustration

Answer 21

Requires:

(1) SUPERVENING ACT or event leading to the frustration; (2) at time of K parties DID NOT REASONABLY FORESEE the act or event occurring; (3) the PURPOSE of the K has been completely or almost completely destroyed; and (4) the PURPOSE was realized at both parties at the time of making the K

MBE: look for renting a certain venue for a specific purpose known to the owner and a subsequent event that was not reasonably foreseeable destroys it

Usually raised by a buyer as a defense, since can’t raise impossibility or impracticability b/c paying money is hardly ever sufficient for impossibility

Question 22

Impracticability

Answer 22

Must have encountered

(1) Extreme and unreasonable difficulty and/or expense; and;
(2) its nonoccurrence was a BASIC ASSUMPTION of the parties