Module 13 Flashcards
Because parties often don’t state the order of performance, constructive conditions will do what?
Fill the gaps based on common sense that the average person is familiar with by reason of experience
What are constructive conditions?
Conditions created by the courts to do justice
What must a party that performs over an extended period of time do to become entitled to?
Substantially perform
If Periodic payments have been agreed on, performance is a constructive condition to what?
To the first payment, and that payment is a constructive condition precedent to the next stage of work, etc.
What is a material breach?
No cure, but the aggrieved party can cancel the contract and Sue for total breach. Unless the breaching party has repudiated, the plaintiff can also elect to continue with the contract and Sue for partial breach. Justifies the suspension of performance
What is required for total breach?
Requires a showing that the plaintiff would’ve been ready, willing, and able to perform but for the bridge. Justifies cancellation of the contract
What happens if a breach is immaterial?
Plaintiff may not cancel the contract, but can sue for partial breach
Can a plaintiff withhold partial payment for the other party’s partial breach?
Split of authority
- UCC and some cases: withholding is authorized
- other courts: this is a material breach
What can be recovered for total breach?
Full damages
What Happens if a breach is partial?
The contract continues, but the plaintiff can recover damages caused by the partial bitch
How long can a breaching party cured by remedying the defect?
Until there is a total breach that justifies cancellation of the contract
What must the plaintiff do to allow cure?
Itemize the defects
What are the factors to consider in determining if a breach is material?
I) extent the contract has been performed
II) a willful breach is more likely to be material than a negligent one
III) a quantitatively serious breach is more likely to be material. Ratio of part performed to the part to be performed
IV) consequences like degree of hardship on the plaintiff, adequacy of damages, etc.
How does delay in performance affect the contract?
A party doesn’t need to perform on the precise day stated in the contract unless time is of the essence
If Time isn’t of the essence in a contract when must the performance be completed?
A reasonable delay in performing doesn’t constitute a total breach, but unreasonable delay does
If time is of the essence, what does that do to a delay?
Any delay is a total breach
What must be considered to determine breach?
The intention of the parties, in light of the document and surrounding circumstances, including the parties’ words, actions, and agreement
If time is of the essence, what must be done to make sure the contract is clear about that?
It must be clearly stated in the contract, just stating a time for performance doesn’t make time of the essence
How does the delay in performance rule apply to the UTC?
It doesn’t
If more than one promise is made, how does substantial performance apply?
Each promise doesn’t have to be substantially performed, overall substantial performance is fine
What is the split in authority about a willful breach?
- some courts say substantial performance doesn’t apply because the willful transgressor must except his penalty
- modern approach: a willful breach doesn’t prevent substantial performance, it is only one of the factors to be considered. Focus is on good faith and fair dealing
How are Trivial defects, even if willful treated?
Ignored because of de minimus non curat Lex
Is substantial performance full performance?
No, the party that has substantially performed is limited to contract price less appropriate allowance for the cost of completing omissions and correcting defects
What are the two views on splitting a claim?
A) logical view: you’re permitted to institute another action and shouldn’t be barred from recovery of the damages they couldn’t have been recovered in the first action
B) minority: theory of splitting an indivisible contract. There can only be one clean for the breach of one indivisible contract. Plaintiff should wait to bring an action until the consequences of the grades are clear because it is possible the defendant will not perform and the printer doesn’t want to be precluded from bringing a second action
What is the rationale behind the theory of splitting an indivisible contract?
Multiple actions on the same claim or unjust for the defendants, and the effect of the judgment is meant to extinguish a claim
What is the rule against splitting a cause of action ?
Even though there are successive breaches the plaintiff must sue for all the breaches that have occurred prior to the action’s commencement or lose the right to any cause of action not included
What is the UCC perfect tender rule?
Substantial performance doesn’t apply to sale of goods, instead of the buyer is free to reject the goods unless the tender conforms in every respect to the contract (not just quantity, quality, shipment details, etc.)
What is the purpose of UCC perfect tender rule?
To encourage parties to amicably resolve their own problems
What are criticisms of the perfect tender rule?
It is unfair, and impractical
Under the perfect tender rule, if the goods or the tender of the delivery fail in any respect to conform to the contract what are the three options the buyer has?
- can reject the whole
- accept the whole
- accept any commercial unit and rejects the rest
What are the exceptions made under the UCC for the perfect tender rule?
A) cure
B) rejection and acceptance of goods
C) revocation of acceptance
D) installment contracts
How does good faith apply to the perfect tender rule?
Rejection of goods that failed to conform is a breach if the motive for the rejection is to take advantage of something
How does cure work under the exception to the perfect tender rule?
Buyer can reject goods if they’re nonconforming in any respect, but the buyer’s rejection doesn’t discharge the contract because the UCC allows the seller a right to cure
Where the two situations where a seller is allowed to cure under the perfect Tender rule?
- when the time for performance hasn’t yet expired
- when the time for performance has expired, including two conditions
If the time for performance hasn’t yet expired, how does cure work in the perfect tender rule?
If the buyer rejects the seller’s tender before the time has expired, the seller has an unconditional right to cure by making a conforming delivery with in the contract time
When the time for performance has expired, how does a seller have a right to cure under the perfect tender rule?
The seller has a right to cure after the time for performance is passed, provided that:
- The seller has reasonable grounds to believe that the tender would be accepted, and
- The seller’s seasonably notified the buyer of the intention take care and cures the nonconforming tender within a further reasonable time
When nonconforming goods are tendered, under the perfect tender rule, what are the two choices a buyer has?
Can accept or reject them, although this power only lasts for a reasonable time, or if the buyer fails to seasonably notify the seller of the rejection (then right to rejection is lost)
Once a buyer accepts, how does that affect the right to rejection?
It is lost
Upon rejection, the buyer must do what?
State all defects discoverable by reasonable inspection. If this is not done the buyer can’t justify rejection on any unstated unconformity that the seller could have cured had he been given notice
What are three ways of buyer can accept goods?
- By failing to make an effective rejection
- An express acceptance (buyer after reasonable opportunity to inspect the goods tells the seller that they are conforming, or that he will take them despite their nonconformity)
- I doing an act inconsistent with the sellers ownership:
Use of goods after a rejection or revocation is generally wrongful, except when?
If the seller won’t accept the buyer’s decision
Once goods have been accepted, sometimes a buyer can revoke the acceptance, so long as what?
- The nonconformity substantially impairs the value to the buyer
If the seller has substantially performed, can the buyer revoke?
No, but if the seller material he breached, the buyer can revoke by satisfying one of two requisites.
A buyer can revoke by satisfying one of two requisites by showing that the acceptance was:
- on the reasonable assumption that it’s nonconformity would be cured, and it has not been seasonably cured, or
- even if the buyer didn’t discover the nonconformity when excepting, if his acceptance was reasonably induced either by difficulty of discovery before acceptance, or by the seller’s assurances
How much time does a buyer have to revoke?
Reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods occurs which is not caused by their own defects
When is a revocation effective?
When the buyer notifies the seller of it
What is an installment contract?
The contractor separate lots are to be delivered and separately paid for and accepted. Perfect tender rule does not apply. Buyer can only reject and cancel the contract when a nonconformity regarding one or more installments substantially impairs the value of the whole contract.
What does the UCC say about late payment?
It is a material breach
What does failure of consideration mean?
Failure to perform (losing popularity because of confusion)
Can a defaulting plaintiff that hasn’t substantially performed be entitled to restitution in quasi-contractual action?
Sometimes, especially for building and service contracts, and employment contract
What is the UCC rule about allowing defaulting buyers of goods to obtain restitution of payments?
They can obtain restitution minus one of two figures. $500 or 20% of the obligation, whichever is less. The claim is also further subject to depletion from seller’s actual damages and the value of benefits received by the buyer as a result of the contract
What does the majority say about parties insubstantial default having a remedy?
A defaulting party has no remedy regardless of the degree of hardship and forfeiture
What is a divisible contract?
If performance by party is divided into two or more parts and the other party’s performance is also divided so that the second party’s performances are agreed exchanges for the corresponding parts by the other party
What types of contracts are almost always divisible?
Employment
What types of contracts are almost always entire?
Construction
What is an independent/unconditional promise?
Promises that are unqualified or nothing but the lapse of time is necessary to make the promise presently enforceable. Must be performed even though the other party has not performed
What kind of events can relieve an independent promise of performance?
Repudiation by the other part
Why are very few promises independent?
Because it is presumed that promise isn’t intended to be independent unless contrary intention is clearly manifested
What kinds of promises do leases usually contain?
Independent ones, where the landlord agrees to make repairs, and tenant agrees to pay rent. Tenants duty to pay is independent of the landlords promise to serve.
If the landlord nonperformance is extreme, what can that mean?
Can amount to a constructive eviction that justifies canceling the lease by the tenant
If parties entered two contracts at substantially the same time, but they aren’t part of the same exchange, does breach of one affect the other?
No
When a contract is made to perform work, and no agreement is made about payment, how must the work be performed?
Must Have substantial performance before payment can be demanded
In concurrent conditions, neither party can place the other in breach for failure to perform, without what?
A tender: a readiness and willingness to perform in case of the concurrent performance by the other party with the present ability to do so, and notice to the other party of such readiness of its own performance
Is a measure of allowance always the cost of replacement?
, Not if it would be great, is the difference in value. The owner is entitled to the money which will permit him to complete, unless the cost of completion is grossly and unfairly out of proportion to the good to be attained. When that is true, the measure is the difference in value
How does an agency relationship work?
The omissions and commissions of the agent are regarded as the acts of the client he represents, and the agent’s neglect is equivalent to the client’s neglect. Client is bound by all the agent’s acts within the apparent scope of the employment
Why is it dangerous to determine on your own that a material breach has occurred and repudiate a contract?
Because if The court decides that it wasn’t a material breach, the repudiate or himself will be guilty of material breach and become the aggressor
What is the modern assumption about mutual promises?
They are dependent
If the contractor’s performance fails to constitute substantial performance, that may justify the owner in doing what?
If using to make a progress payment. Then the contractor is not justified in abandoning work, because that is a wrongful repudiation and causes a breach
When does a person receive notice?
When it is duly delivered to his place of business, or when it comes to his attention
