Page 33 Flashcards
What are the three major categories of performance?
- conditions
- discharge
- breach
If a contract has been formed, has consideration, and there are no defenses to formation, what should be discussed next on an essay?
- 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?
What is the good faith obligation to perform?
Each party has a duty of good faith and fair dealing in performance and contract enforcement
What does UCC good faith mean?
- honesty in fact
- merchants must observe reasonable commercial standards of fair dealing in the trade
What is bad faith?
Conduct that violates community standards of decency, fairness, or reasonableness
What are some examples of bad faith?
- lack of diligence
- willfully giving imperfect performance
- abuse of power to specify terms
- failing to cooperate
What is the leading theory on good faith called excluder theory?
Good faith has no meaning on its own, it just means the absence of bad faith
Once a condition is either excused or satisfied, then the duties become what?
Mature and absolute
What is a condition?
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
Why is passage of time not a condition?
Because it is certain to occur
What effect do conditions have on performance?
They hold it up and the contract doesn’t have to be performed unless they occur
If a condition is not met, it triggers what?
Either a duty to perform, or relieves a duty to perform
What is classic language to show a condition?
“Unless”
What is a condition subsequent?
A condition that takes away a party’s duty to perform when the specified event occurs
Failure of a condition can result in what?
Forfeiture
Is non-fulfillment of a condition considered a breach?
No, it is a forfeiture, which doesn’t result in liability
What is an express condition?
Language of the contract expressly states the condition and specifically uses words like “if”, “subject to”, “on condition that”, “provided that”.
What has to happen with a condition before a duty arises?
It must be fully and literally complied with
What are the two types of express conditions?
Implied and constructive
What is an implied condition?
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
What is an example of an implied condition?
“Dependent on financing” means an implied promise to use reasonable efforts to get the loan
What is a constructive condition?
Judge creates a condition because fairness requires it be included to avoid unjust results
When are constructive condition used?
If parties omitted a term that is essential, then the courts will supply a reasonable one
Must constructive conditions be fully complied with?
No, they just have to substantially occur, and minor discrepancies aren’t a problem
What is the reason that courts interpret doubtful language as a promise instead of a condition?
Because courts abhor forfeitures, which is the result of the failure of a condition
How do you know if something is a condition or a promise?
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
What is the difference for consequences between a promise and a condition failing?
- promise: breach of contract
- condition: duty is discharged (forfeiture)
What language is used for conditions versus promises?
- condition: provided that, if, when
- promise: promise, agree
