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Contracts & Sales > Modules 5-6 - Terms and Performance > Flashcards

Modules 5-6 - Terms and Performance Flashcards

1
Q

What is an “integration”?

A

when the parties to a k express their agreement in a WRITING with the INTENT that it embody the final expression of their bargain

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2
Q

Any other expressions, written or oral, made PRIOR TO the writing, as well as any oral expressions made CONTEMPORANEOUS with the writing are…

A

inadmissible to VARY the terms of the writing

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3
Q

Components of an integration

A

(1) whether the writing was INTENDED as a FINAL EXPRESSION of the agreement; and
(2) Whether the integration was intended to be COMPLETE or PARTIAL

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4
Q

Partial integrations

A

writing may not be CONTRADICTED but may be SUPPLEMENTED by proving consistent additional terms

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5
Q

What does the UCC presume with regard to writings?

A

all writings are PARTIAL INTEGRATIONS that can be supplemented with consistent additional terms

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6
Q

Merger clauses

A

recites that the agreement is the complete agreement between the parties

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7
Q

Exceptions to Parol Evidence Rule

A

(1) partially integrated writing
(2) defense against formation of k
(3) explain vague term(s)
(4) correct clerical errors

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8
Q

If a party is attacking validity of a k based on formation error, what can they bring to show the defect?

A

extrinsic evidence, like fraud, duress, mistake, and illegality

can also show that an oral agreement existed where the k would not become effective until A CONDITION OCCURRED; all evidence of the understanding may be offered and received

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9
Q

Example of validity/formation defect and parol evidence rule

A

Before J. Lo signed the lease, the manager told her that the Grand Ballroom was soundproof. It’s not. J. Lo seeks rescission because of this misrepresentation. Can J. Lo get this evidence in?

Yes, as the evidence will be proffered as a defense to enforcement of the contract on grounds that the subject matter of the contract was materially misrepresented

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10
Q

Outside of the Parol Evidence Rule: collateral agreements

A

parol evidence admissible if the alleged parol agreement is COLLATERAL to the written obligation (related to the subject matter, but not part of the PRIMARY PROMISE)

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11
Q

Outside of the Parol Evidence Rule: Naturally Omitted Terms Doctrine

A

allows evidence of terms that would naturally be omitted from written agreement

term would naturally be omitted if:
(1) it DOES NOT CONFLICT with the written integration; and
(2) it concerns a subject that similarly situated parties WOULD NOT ORDINARILY be expected to include in the written instrument

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12
Q

Outside of the Parol Evidence Rule: Interpretation

A

if uncertain/ambiguous terms, and the dispute arises as to the uncertain/ambiguous terms, parol evidence can be received to aid the fact finder in reaching correct conclusion

if meaning of agreement is PLAIN, parol evidence is INADMISSIBLE

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13
Q

Outside of the Parol Evidence Rule: showing “true consideration”

A

does not bar extrinsic evidence showing “true consideration” paid, such as evidence that the consideration stated in the contract was NEVER paid

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14
Q

Outside of the Parol Evidence Rule: reformation

A

party to written agreement ALLEGES FACTS (ex. mistake) entitling him to reformation of the agreement, parol evidence is INAPPLICABLE

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15
Q

Outside of the Parol Evidence Rule: subsequent modifications

A

can be offered to show subsequent modifications of a written k

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16
Q

Outside of the Parol Evidence Rule: additional terms under UCC Article 2

A

Party cannot contradict a written contract, but may ADD consistent additional terms, UNLESS:
(1) there is a merger clause; or
(2) courts find from ALL CIRCUMSTANCES that the writing was intended as a COMPLETE AND EXCLUSIVE statement of the terms of the agreement

Article 2 says that terms can be explained or supplemented by evidence of COURSE OF PERFORMANCE, COURSE OF DEALING, or TRADE USAGE (in that order)

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17
Q

Additional terms under UCC and parol evidence: course of performance (#1)

A

involves REPEATED OCCASIONS for performance by EITHER PARTY and the other party has the opportunity to object to such performance

any course of performance ACCEPTED or ACQUIESCED TO is relevant in determining the meaning of the k

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18
Q

Additional terms under UCC and parol evidence: course of dealing (#2)

A

sequence of conduct concerning PREVIOUS TRANSACTIONS between the parties to a particular transaction that may be regarded as establishing a COMMON BASIS OF UNDERSTANDING

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19
Q

Additional terms under UCC and parol evidence: usage of trade (#3)

A

practice or method of dealing REGULARLY OBSERVED in a particular business setting so as to JUSTIFY AN EXPECTATION that it will be followed in the transaction in question

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20
Q

When rules conflict under UCC and parol evidence

A

(1) EXPRESS TERMS are given GREATER weight than course of performance, course of dealing, and usage of trade;
(2) COURSE OF PERFORMANCE is given GREATER weight than course of dealing or usage of trade; and
(3) COURSE OF DEALING is given GREATER weight than usage of trade

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21
Q

Article 2 Gap Fillers: Price

A

if (1) nothing has been said as to price; (2) price is LEFT OPEN to be agreed upon by the parties and they FAIL TO AGREE; or (3) the price is to be fixed in terms of some standard set by THIRD PARTY or AGENCY and it IS NOT set…

= price is a REASONABLE PRICE at the time of DELIVERY

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22
Q

Article 2 Gap Fillers: Place of Delivery

A

if the place of delivery ISNT SPECIFIED, the place is usually the SELLER’S PLACE OF BUSINESS, or their home if they have no place of business

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23
Q

Article 2 Gap Fillers: Time for Shipment/Delivery

A

if the time for shipment or delivery ISNT SPECIFIED, shipment/delivery is due WITHIN A REASONABLE TIME

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24
Q

Article 2 Gap Fillers: Time for Payment

A

if time for payment ISNT SPECIFIED, payment is due at the TIME AND PLACE at which the buyer is to RECEIVE THE GOODS

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25
Q

Article 2 Gap Fillers: Assortment

A

if k provides that an assortment of goods is to be delivered (ex. blouses in various colors) and does not specify which party is to choose, assortment is at BUYER’S OPTION

if the party who has the right to specify the assortment DOES NOT DO SO SEASONABLY, the other party is EXCUSED from any resulting delay and may either PROCEED IN ANY REASONABLE MANNER or TREAT THE FAILURE AS BREACH

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26
Q

Express warranties

A

affirmation of fact or promise made by seller to buyer, any description of the goods, and any SAMPLE OR MODEL creates an express warranty if the statement, description, sample, or model is PART OF THE BASIS OF THE BARGAIN (basis of bargain = buyer could have relied on it when they entered into k)

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27
Q

Express warranty or not?

“This ring is solid 24 carat gold.”

A

express warranty

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28
Q

Express warranty or not?

“All parts of my widgets are ‘top notch’ and ‘best quality.’”

A

mere puffery/opinion, not a warranty

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29
Q

Is a statement of value an express warranty?

A

no

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30
Q

Implied warranty of merchantability

A

implied in EVERY contract for sale by a merchant who DEALS IN GOODS OF THE KIND SOLD; warranty that the goods are merchantable for the ORDINARY PURPOSE in which the goods are to be used

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31
Q

With regard to the implied warranty of merchantability, does it matter if the seller didn’t knowledge of the defect?

A

NO; makes no difference that the seller didn’t know of the defect or that they couldn’t have discovered it

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32
Q

Implied warranty of fitness for particular purpose

A

warranty implied on k for sale of goods whenever:
(1) ANY SELLER, merchant or not, has REASON TO KNOW the particular purpose for which the goods are to be used, and the buyer IS RELYING on the seller’s skill and judgment to select suitable goods; and
(2) the buyer DOES RELY on the seller’s skill or judgment

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33
Q

Warranty of title

A

ANY SELLER of goods warrants that the title transferred is good, that the transfer is RIGHTFUL, and that there are NO LIENS/ENCUMBRANCES against the title of which the buyer is unaware at the time of contracting

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34
Q

Does the warranty of title need to be mentioned in the contract?

A

no, arises automatically

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35
Q

Warranty against infringement

A

MERCHANT SELLER regularly dealing in goods of the kind sold also AUTOMATICALLY WARRANTS that the goods delivered are free of any patent, trademark, copyright, or similar claims

BUYER who furnishes SPECIFICATIONS for the goods to the seller MUST hold the seller harmless against such claims

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36
Q

Disclaiming warranties: Sellers can generally only disclaim what kinds of warranties?

A

implied warranties

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37
Q

Disclaimer of warranty of title

A

disclaim or modify only by SPECIFIC LANGUAGE or CIRCUMSTANCES that give the buyer NOTICE that the seller DOES NOT CLAIM TITLE or that they are selling only such rights as THEY OR A THIRD PARTY would have

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38
Q

Specific disclaimers: warranty of merchantability

A

has to be specifically disclaimed or modified by mentioning the word MERCHANTABILITY; disclaimer has to be CONSPICUOUS

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39
Q

Disclaimer: warranty of fitness for particular purpose

A

disclaimed ONLY by CONSPICUOUS writing; sufficient if it says “there are no written warranties which extend beyond the description on the face hereof”

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40
Q

Defining “conspicuous” in disclaimers

A

A disclaimer is conspicuous if:
(1) it is larger type than the surrounding text;
(2) it is in a contrasting type, font, or color; or
(3) it is set off from the text by marks that call attention to it

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41
Q

Can a warranty be disclaimed with “as is” language?

A

YES, unless the circumstances indicate otherwise; applies to implied warranty of merchantability and implied warranty of FPP

ex. “as is,” “with all faults,” or other expressions that in common understanding call the buyer’s attention to the fact that there are NO implied warranties

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42
Q

Is this warranty disclaimed?

A contract for a machine provides that “all parts are guaranteed for two years.” What if it also provides that “all warranties are disclaimed?”

A

NO

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43
Q

Are there any implied warranties under this contract?

A contract provides for the sale of a machine “as is” or “with all faults.” The contract says nothing else about quality.

A

NO, all implied warranties disappeared

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44
Q

Disclaimer of warranty by examination or refusal to examine

A

if buyer has, BEFORE entering k, examined the goods or a sample/model as FULLY AS THEY DESIRE or has REFUSED to examine, there is NO WARRANTY as to defects that a REASONABLE EXAMINATION would have revealed

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45
Q

Disclaimer of warranty by course of dealing, etc.

A

implied warranties may also be disclaimed by COURSE OF DEALING, COURSE OF PERFORMANCE, or USAGE OF TRADE

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46
Q

Disclaiming express warranties

A

VERY difficult to disclaim; “negation or limitation is INOPERATIVE to the extent that such construction is UNREASONABLE”

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47
Q

Limiting damages in instance of breach of warranty

A

clauses limiting damages for breach of any warranty is generally okay, but limitation will not be upheld if it is UNCONSCIONABLE

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48
Q

Can a contract limit damages for personal injuries that are caused by a breach of warranty from CONSUMER GOODS?

A

NO NO NO NONONONONONO YOU CANNOT DO THIS

prima facie unconscionable

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49
Q

Can you get from damages from Al?

You buy an oven for your home from Al’s Kitchen Appliances. The contract provides: “All parts are guaranteed for two years” and “Al’s liability is limited to replacement parts.” A year later, a defect in the oven caused a fire that injures you.

A

ABSOLUTELY 100% YES. The oven is a consumer good, and there can be no limitation of damages that result from personal injuries that were caused by a breach of a warranty from consumer goods. The limitation clause is PRIMA FACIE UNCONSCIONABLE

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50
Q

Timing and effectiveness of disclaimers of warranties

A

Disclaimer of warranty or limitation on remedies MUST BE AGREED TO DURING THE BARGAINING PROCESS

Majority: warranty disclaimer or limitation on remedy included inside the packaging of goods is NOT effective against the buyer

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51
Q

Buyer’s damages for breach of warranty: general rule, difference between goods tendered and goods as warranted

A

breach for ANY WARRANTY (general rule): difference between the value of the GOODS ACCEPTED and the value of the GOODS AS WARRANTED

MEASURED AT THE TIME AND PLACE OF ACCEPTANCE

52
Q

Buyer’s damages for breach of warranty of title

A

buyer can rescind the contract, revoke acceptance of the goods, or sue for damages

Damages: VALUE OF THE GOODS AS WARRANTED (usually the purchase price)

53
Q

Buyer’s damages: appreciation and depreciation

A

value of the goods is measured at the time of DISPOSSESSION, rather than at the time of acceptance

Appreciation or depreciation: usually considered a “special circumstance”

54
Q

Who do warranties extend to?
“Alternative A”

A

Seller’s warranty liability is extends to ANY NATURAL PERSON WHO IS IN THE FAMILY OR HOUSEHOLD of the buyer, or who is a GUEST int he buyer’s home, if it is REASONABLE to expect that the person may USE, CONSUME, or BE EFFECTED by the goods, and that person SUFFERS PERSONAL INJURY because of the breach of warranty

55
Q

Effect of breach of k on risk of loss: defective goods

A

buyer has a right to REJECT the goods; risk of loss DOES NOT PASS TO BUYER until the defects are CURED or the buyer ACCEPTS THE GOODS in spite of their defects

56
Q

Effect of breach of k on risk of loss: revocation of acceptance

A

if buyer rightfully revokes acceptance, risk of loss is treated as having RESTED ON THE SELLER FROM THE BEGINNING to the extent of any deficiency in the buyer’s insurance coverage

57
Q

Risk of Loss Hierarchy (analysis)

A

(1) agreement allocates risk (ex. “buyer bears risk”)
(2) breaching party bears risk***
(3) if no common carrier, seller bears risk if they are a MERCHANT
(4) if common carrier, risk of loss shifts to BUYER when seller COMPLETES DELIVERY OBLIGATION (i.e., dropping goods off with common carrier)

58
Q

risk of loss in non-carrier case

A

if seller IS A MERCHANT, risk of loss passes to the buyer only when they TAKE PHYSICAL POSSESSION of the goods

if seller IS NOT A MERCHANT, risk of loss passes to the buyer upon TENDER OF DELIVERY (ex. telling the buyer where to go in a store to pick something up, like “its in the back bedroom” = tender)

59
Q

risk of loss in carrier case: shipment contracts

A

if k authorizes or requires seller to ship the goods by carrier, but DOES NOT require them to deliver the goods to a particular destination, it is a shipment k

risk of loss passes to buyer WHEN GOODS ARE DELIVERED TO CARRIER

Article 2 presumes shipment contracts absent an agreement otherwise

60
Q

seller’s duties under shipment contract

A

seller must:
(1) make a REASONABLE CONTRACT with the carrier on behalf of the buyer;
(2) DELIVER THE GOODS to the carrier;
(3) PROMPTLY NOTIFY buyer of the shipment; and
(4) provide buyer with any DOCUMENTS NEEDED TO TAKE POSSESSION of the goods upon delivery

61
Q

risk of loss in carrier case: destination contracts

A

if k requires seller to deliver goods AT A PARTICULAR DESTINATION, the risk of loss PASSES TO THE BUYER when the GOODS ARE TENDERED TO THE BUYER AT THE DESTINATION

must deliver goods to particular place WITHOUT DAMAGE

62
Q

What is FOB?

A

“free on board;” always indicates a location, and can be shipment OR destination ks

risk of loss passes to buyer AT NAMED LOCATION; seller bears the risk and expense of getting the goods to the named location

63
Q

What is FAS?

A

“free alongside;” generally used when the goods are to be shipped by boat

risk of loss passes to buyer once the goods are delivered TO THE DOCK

64
Q

Risk in sale or return

A

treated as ordinary sale and above rules apply; if returned to seller, RISK REMAINS ON BUYER while the goods are in transit

65
Q

Risk in sale on approval

A

risk of loss DOES NOT pass to buyer until they ACCEPT

66
Q

Goods destroyed before risk of loss passes

A

If goods that were IDENTIFIED WHEN K WAS MADE are destroyed (1) without fault of EITHER PARTY and (2) BEFORE the risk of loss passes to the buyer = CONTRACT AVOIDED

if goods WERE NOT IDENTIFIED until AFTER the k was made, seller would have to prove IMPRACTICABILITY

67
Q

Performance of k at common law

A

substantial performance (terms of k, meet essential terms)

68
Q

Performance of k under UCC

A

PERFECT TENDER RULE: delivery and condition of the goods must be EXACTLY AS PROMISED in k

69
Q

Example of PTR: Seller contracts to deliver 50 purple T-shirt to Buyer. Seller delivers 49 purple T-shirt, and 1 gold T-shirt. What are Buyer’s rights?

A

Buyer can reject EVERYTHING because this was not a perfect tender

70
Q

Seller’s obligation of tender/delivery in non-carrier cases: tender of delivery

A

seller must PUT AND HOLD conforming goods at buyer’s disposition for TIME SUFFICIENT for buyer to take possession

seller must GIVE THE BUYER NOTICE reasonably necessary to enable the buyer to take possession; tender must be at reasonable hour

71
Q

Seller’s obligation of tender/delivery in non-carrier cases: place of delivery

A

in absence of agreement otherwise, place of delivery is SELLER’S PLACE OF BUSINESS, or his residence if he doesnt have place of business

72
Q

Seller’s obligation of tender/delivery carrier cases: shipment contracts

A

seller only needs to:
(1) put goods into hands of REASONABLE CARRIER and make reasonable k for their transportation
(2) obtain/tender any documents required by k or usage of trade or otherwise necessary for BUYER TO TAKE POSSESSION
(3) promptly NOTIFY buyer

73
Q

Seller’s obligation of tender/delivery in carrier cases: destination contracts

A

seller must, AT THE DESTINATION, put and hold conforming goods at the buyer’s disposition

74
Q

Buyer’s obligation to pay: delivery/payment concurrent conditions

A

NONCARRIER case: sale is for cash and price is due concurrently with delivery (unless stated otherwise)

CARRIER case: price is due only at the TIME AND PLACE at which the buyer RECEIVES the goods

Shipment k: price is due when goods are put into hands of CARRIER

Destination k: price is due when the goods are put into the hands of the BUYER

75
Q

Buyer’s obligation to pay: installment k

A

seller may demand payments for EACH INSTALLMENT if the price can be so apportioned, unless contrary intent appears

76
Q

Buyer’s obligation to pay: buyer’s right of inspection

A

buyer has a right to inspect the goods before they pay UNLESS the k provides payment or otherwise indicates that the buyer has PROMISED TO PAY W/O INSPECTING

77
Q

Buyer’s obligation to pay: payment by check

A

check is sufficient UNLESS seller demands cash and GIVES BUYER TIME to get it

if check DISHONORED, seller may sue for price or recover the goods

78
Q

Conditions on performance

A

k may provide that party DOES NOT have duty to perform unless some condition is fulfilled; party’s failure to perform is JUSTIFIED if the condition is NOT fulfilled

79
Q

What is a promise?

A

commitment to do or refrain from doing something

if unconditional, failure to perform is a breach of k

80
Q

What is a condition?

A

normally means either:
(1) event or state of the world that must occur or fail to occur BEFORE a party has a duty to perform; or
(2) an event or state of the world, the occurrence or nonoccurence of which RELEASES a party from their duty to perform

condition = PROMISE MODIFIER; there can be no breach of promise until the promisor is UNDER AN IMMEDIATE DUTY TO PERFORM

81
Q

failure of condition vs. breach of k

A

failure of contractual provision that is ONLY a condition is NOT a breach of k; discharges liability of the promisor if the condition never happens

82
Q

interpretation of provision as promise or condition

A

look to INTENT OF THE PARTIES; if doubtful, courts will likely hold it is a promise

83
Q

promisor’s satisfaction as condition precedent

A

promisor under no duty to pay unless they are satisfied (determined on objective reasonable person standard)

84
Q

mechanical fitness, utility, marketability (ex. construction or manufacturing)

A

condition is satisfied by performance that would satisfy a reasonable person; does not matter that the promisor was not personally satisfied if a reasonable person would have accepted and approved of the performance tendered

85
Q

personal taste/judgment (ex. artwork)

A

if k involves personal taste/judgment, a condition is satisfied only if the promisor is PERSONALLY SATISFIED; lack of satisfaction must be in GOOD FAITH

86
Q

satisfaction of third person as condition

A

most courts require the ACTUAL PERSONAL SATISFACTION of the person; condition will be excused if the dissatisfaction is NOT honest and in good faith

87
Q

when purpose of condition is to benefit one party

A

when it is clear that the purpose of a condition is to protect or benefit only ONE of the parties, the other’s party’s duty WILL NOT BE SUBJECT to the codition

88
Q

definition of condition precedent**

A

one that must occur BEFORE an absolute duty of immediate performance arises in the other party

89
Q

definition of conditions concurrent

A

those that are capable of being performed TOGETHER; parties are bound to perform at same time

90
Q

definition of conditions subsequent**

A

one that, when it occurs, CUTS OFF an already existing absolute duty of performance

91
Q

definition of constructive conditions of performance

A

duty of each party to render performance is conditioned on the OTHER PARTY either rendering THEIR performance or making a TENDER of their performance

92
Q

constructive condition of cooperation

A

obligation of one party to render performance is IMPLIEDLY CONDITIONED on the other party’s cooperation in that performance

93
Q

constructive condition of notice

A

often required that the other party GIVE NOTICE that performance is due; most commonly applied where a party COULDN’T REASONABLY BE EXPECTED TO KNOW OF A FACT that triggered the duty to perform unless notice was given

94
Q

simultaneous performance: conditions concurrent

A

absent excuse, each party must FIRST tender THEIR OWN performance if they wish to put the other under a duty of IMMEDIATE PERFORMANCE that would result in breach if they fail to perform

95
Q

one performance takes time - conditions precedent

A

if one performance will take a period of time to complete while the other can be rendered in an instant, completion of the LONGER PERFORMANCE is a constructive condition precedent to the execution of the SHORTER PERFORMANCE

96
Q

Equitable remedy for condition failing

A

if k unenforceable due to occurrence or failure of condition to occur, and one of the parties has FULLY OR PARTIALLY PERFORMED, they can usually recover under UNJUST ENRICHMENT

97
Q

excuse of conditions

A

duty of immediate performance with respect to a conditional promise doesnt become ABSOLUTE until the conditions:
(1) have been PERFORMED; or
(2) LEGALLY EXCUSED

98
Q

Ex. Beyoncé agrees to buy my house, provided she obtains a $1.5 million mortgage at 5% or less. She makes no effort to get a mortgage, then claims that she is excused from performing because the express condition was not met. Is she right?

A

NO; she was protected by the condition, but since she made no effort to get the mortgage (to meet the condition), she has forfeited the protection of the condition

99
Q

estoppel waiver

A

party indicates that they are waiving a condition before it is to happen/waiving some performance before it is to be rendered, and the person addressed DETRIMENTALLY RELIES ON the waiver, courts will hold this to be a BINDING ESTOPPEL WAIVER

promise to waive condition may be retracted AT ANY TIME BEFORE the other party has changed their position to their detriment

100
Q

election waiver

A

condition doesnt occur or duty of performance is broken, beneficiary of the condition/duty must make an election:
(1) terminate their liability; or
(2) continue under the k (if choose this option, they waive the condition/duty)

101
Q

can an election waiver be withdrawn?

A

NO, even if the other party has not relied on it

102
Q

Conditions may be waived

A

if NO CONSIDERATION is given for the waiver, the condition must be ANCILLARY/COLLATERAL to the main subject and purpose of the contract for the waiver to be effective

103
Q

waiver in installment contracts

A

if a waiver isnt supported by consideration, beneficiary of waived condition can insist on STRICT COMPLIANCE with the terms of the k for future installments BY GIVING NOTICE THAT HE IS REVOKING THE WAIVER

104
Q

right to damages for failure of condition

A

waiving party does not waive their right to damages

105
Q

excuse of condition by actual breach

A

excuses the duty of counter performance ONLY IF the breach is MATERIAL

106
Q

excuse of condition by anticipatory repudiation

A

valid if:
(1) there is a bilateral k with EXECUTORY (unperformed) duties on BOTH sides; and
(2) anticipatory repudiation must be UNEQUIVOCAL (they absolutely will not be performing)

107
Q

effect of anticipatory repudiation: nonrepudiating party has 4 options

A

(1) treat anticipatory reputation as TOTAL REPUDIATION, and sue immediately;
(2) suspend their own performance and WAIT TO SUE until the performance date;
(3) treat the repudiation as an OFFER TO RESCIND and treat the contract as DISCHARGED; or
(4) ignore the repudiation and urge the promisor TO PERFORM

108
Q

retraction of repudiation

A

can withdraw at any time before new performance date UNLESS the other party has CANCELLED, MATERIALLY CHANGED THEIR POSITION in reliance on repudiation, or otherwise indicate that they consider the repudiation FINAL

109
Q

Article 2 and anticipatory reputation: nonrepudiating party has right to demand assurances

A

innocent party can suspend further performance until they receive ADEQUATE ASSURANCES that performance will be forthcoming

if they do not receive adequate assurances, innocent party is EXCUSED from their own performance and treat the failure to provide assurances as REPUDIATION

110
Q

excuse of condition by substantial performance

A

if a party has completely or substantially performed, the other party’s duty of counter performance becomes ABSOLUTE

111
Q

substantial performance arises if breach is MINOR

A

same rules as determining materiality of breach

112
Q

substantial performance inapplicable where breach was willful

A

flip me back over and read again dummy

113
Q

substantial performance and damages offset

A

other party will be able to mitigate by deducting damages suffered due to the first party’s incomplete performance

114
Q

Substantial performance is generally AVAILABLE/NOT AVAILABLE for contracts for the sale of goods

A

NOT AVAILABLE

115
Q

What is a divisible contract?

A

ALL THREE must be met:
(1) performance of each party is divided into TWO OR MORE parts under the k;
(2) number of parts due from each party IS THE SAME; and
(3) performance of each part by one party IS AGREED ON AS EQUIVALENT OF THE CORRESPONDING PART from the other party, meaning each performance is the quid pro quo of the other

116
Q

divisible contracts and Article 2

A

assumes that k is not divisible unless it authorizes delivery in several lots (installment k); price may be demanded for EACH LOT unless contrary intent appears

117
Q

Ways that an absolute duty to perform is discharged (1-5)

A

(1) performance or tender of performance;
(2) occurrence of a condition subsequent;
(3) subject matter has become illegal due to subsequently enacted law/other governmental act;
(4) rescission (mutual - express agreement, giving up their right to counter performance from the other; unilateral - INEFFECTIVE where one party still has duty to perform, can only rescind if mistake, misrepresentation, duress, failure of consideration);
(5) partial discharge by modification (doesnt discharge entire contract, only what was modified and modification takes the original’s place);

118
Q

Ways that an absolute duty to perform is discharged (6-10)

A

(6) discharge by cancellation (parties must manifest their intent to have destruction/surrender of written k to discharge them);
(7) discharge by release (release/k not to sue WILL serve to discharge legal duties; must be IN WRITING and supported by NEW CONSIDERATION or promissory estoppel);
(8) discharge by substituted k (parties to k enter second k that IMMEDIATELY REVOKES first k expressly or impliedly);
(9) discharge by accord and satisfaction (agreement to accept different performance than what was promised);
(10) discharge by novation: (1) previous valid k; (2) agreement among all parties [including new party or parties] to new k; (3) immediate extinguishment of contractual duties between original parties; and (4) valid, enforceable new k

119
Q

Ways that an absolute duty to perform is discharged (11-

A

(11) discharge by impossibility, impracticability, or frustration (nonoccurence of the event was a basic assumption of the parties in making the k and NEITHER PARTY has expressly/impliedly assumed the risk of the event occurring, duties may be discharged) –> sue for rescission/restitution
(12) discharge by account stated (pay final balance due)
(13) discharge by lapse (time is of the essence, and neither party has satisfied conditions concurrent)
(14) statute of limitations (duties are not discharged, only remedies are gone)

120
Q

elements of impracticability

A

(1) EXTREME AND UNREASONABLE difficultly and/or expense; and
(2) its nonoccurrence was a BASIC ASSUMPTION of the parties

Article 2: seller discharged TO THE EXTENT OF THE IMPOSSIBILITY OR IMPRACTICABILITY

121
Q

discharge by frustration

A

elements:
(1) some SUPERVENING ACT or event leading up to the frustration;
(2) the 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) purpose of the k was realized by BOTH PARTIES at the time of making the k

122
Q

breach of accord before satisfaction: breach by debtor

A

creditor may sue either on the ORIGINAL UNDISCHARGED K or for breach of the ACCORD AGREEMENT

123
Q

breach of accord before satisfaction: breach by creditor

A

if creditor sues on ORIGINAL K, debtor can either:
(1) raise the accord agreement as an EQUITABLE DEFENSE and ask the k action be dismissed; or
(2) WAIT UNTIL DEBTOR IS DAMAGED, then bring an action at law for damages for breach of accord k

124
Q

accord vs. modification

A

accord: parties to existing obligation agree to accept a DIFFERENT FUTURE PERFORMANCE in satisfaction of the original obligation; if “agree-to” provision is satisfied, original k obligation is DISCHARGED

modification: parties to an existing obligation want to change their agreement, so they agree to a different agreement; duties of the parties change IMMEDIATELY and the original terms are NO LONGER IN EFFECT and cannot be enforced

125
Q

Article 2 requires a ___________ rescission or modification if the original contact to be rescinded or modified ___________________ requires a ___________ rescission.

A

written; expressly; written

Contracts & Sales (3 decks)

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