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Question 1

What are the three major categories of performance?

Answer 1

• conditions
• discharge
• breach

Question 2

If a contract has been formed, has consideration, and there are no defenses to formation, what should be discussed next on an essay?

Answer 2

• CONDITIONS: did it have express or implied conditions? Were they fulfilled or excused?
• PERFORMANCE: did a party perform substantially? Was the contract divisible, and if so, was it partly performed?
• BREACH: did one-party materially breach or repudiate? Was it anticipatory?
• could there have been assurances of performance?
• was failure to perform excused by impossibility or frustration?
• was contract discharged by rescission, release, accord/satisfaction, acceptance of full payment check?

Question 3

What is the good faith obligation to perform?

Answer 3

Each party has a duty of good faith and fair dealing in performance and contract enforcement

Question 4

What does UCC good faith mean?

Answer 4

• honesty in fact

- merchants must observe reasonable commercial standards of fair dealing in the trade

Question 5

What is bad faith?

Answer 5

Conduct that violates community standards of decency, fairness, or reasonableness

Question 6

What are some examples of bad faith?

Answer 6

• lack of diligence
• willfully giving imperfect performance
• abuse of power to specify terms
• failing to cooperate

Question 7

What is the leading theory on good faith called excluder theory?

Answer 7

Good faith has no meaning on its own, it just means the absence of bad faith

Question 8

Once a condition is either excused or satisfied, then the duties become what?

Answer 8

Mature and absolute

Question 9

What is a condition?

Answer 9

An act or event (other than lapse of time) that must occur before a duty to perform the contractual promise arises or that discharges a duty of performance that has already risen

Question 10

Why is passage of time not a condition?

Answer 10

Because it is certain to occur

Question 11

What effect do conditions have on performance?

Answer 11

They hold it up and the contract doesn’t have to be performed unless they occur

Question 12

If a condition is not met, it triggers what?

Answer 12

Either a duty to perform, or relieves a duty to perform

Question 13

What is classic language to show a condition?

Answer 13

“Unless”

Question 14

What is a condition subsequent?

Answer 14

A condition that takes away a party’s duty to perform when the specified event occurs

Question 15

Failure of a condition can result in what?

Answer 15

Forfeiture

Question 16

Is non-fulfillment of a condition considered a breach?

Answer 16

No, it is a forfeiture, which doesn’t result in liability

Question 17

What is an express condition?

Answer 17

Language of the contract expressly states the condition and specifically uses words like “if”, “subject to”, “on condition that”, “provided that”.

Question 18

What has to happen with a condition before a duty arises?

Answer 18

It must be fully and literally complied with

Question 19

What are the two types of express conditions?

Answer 19

Implied and constructive

Question 20

What is an implied condition?

Answer 20

The terms of the contract clearly indicate that the parties intended some event would occur before a duty would arise, even though no express language says it

Question 21

What is an example of an implied condition?

Answer 21

“Dependent on financing” means an implied promise to use reasonable efforts to get the loan

Question 22

What is a constructive condition?

Answer 22

Judge creates a condition because fairness requires it be included to avoid unjust results

Question 23

When are constructive condition used?

Answer 23

If parties omitted a term that is essential, then the courts will supply a reasonable one

Question 24

Must constructive conditions be fully complied with?

Answer 24

No, they just have to substantially occur, and minor discrepancies aren’t a problem

Question 25

What is the reason that courts interpret doubtful language as a promise instead of a condition?

Answer 25

Because courts abhor forfeitures, which is the result of the failure of a condition

Question 26

How do you know if something is a condition or a promise?

Answer 26

Language:

• condition: if it says “provided that,” “but if,” or a state of affairs has to exist before some other part of the agreement.
• promise: contract is specified to involve a state of affairs that one party tries to bring about

Question 27

What is the difference for consequences between a promise and a condition failing?

Answer 27

• promise: breach of contract

- condition: duty is discharged (forfeiture)

Question 28

What language is used for conditions versus promises?

Answer 28

• condition: provided that, if, when

- promise: promise, agree