Page 41 Flashcards
What are the elements of impossibility?
- identified goods
- risk of loss
What does “identified goods” mean?
The subject matter of the contract must be specifically identified
What is casualty to identified goods?
Specifically considered goods in a contract get destroyed. Ie: I agreed to buy your golf clubs, but they get wrecked. If instead I ordered clubs from a company, no specific ones are identified, so they don’t become identified goods until the company ships them, or tags them to identify them as yours
How does risk of loss work in face-to-face transactions?
- seller is merchant: buyer must get physical possession for risk to pass
- seller is nonmerchant: seller must tender delivery of goods (make them available for a reasonable time with notice of their availability) for risk to pass
If you buy a computer, and tell them you will come back in an hour to pick it up, but the store burns down, who owned the item and had the risk of loss?
The store still owned it because you weren’t in physical possession and the seller was a merchant, so your duties are discharged
If you made an agreement to sell someone your laptop, and tell the guy to pick it up on Saturday afternoon, but your apartment burns down Saturday night, who has the risk of loss?
Because the seller is not a merchant, the risk of loss is on the buyer because the goods were available to him for a reasonable time with notice of their availability and the seller completed his duty
What are the three views on risk of loss for damage to property?
- majority: risk is on buyer because once the contract is made, he is the owner
- minority: risk is on the seller
- UVPRA: risk is on the buyer that is in possession or has legal title
What is impracticability?
Performance of an obligation is not impossible, but is extremely difficult or risky and contingency was unforeseeable
What are the possible responses to impracticability?
- can terminate and discharge the contract, or
- modify it with a substitution
To have impracticability, you need what?
Extreme or unreasonable difficulty, expense, injury or loss, etc.
Are small increases in expense of performance considered impracticability?
No, because a party assumes the risk of increase within a normal range.
But severe shortages, crop failure, or unforeseen shut downs that cause a large increase in price can be impracticability.
If an event or condition existed at the time of formation, but the party didn’t know or couldn’t have known, can impracticability still discharge the duty?
Yes
What are the two views on failure of contemplated mode of performance?
- Common Law: doesn’t matter if just minor like mode of delivery, then can make a commercially reasonable substitute, but if central to the contract, no substitute
- UCC: if means/manner of payment fails, seller can withhold or stop delivery unless buyer gives a payment that is substantially equivalent
What happens if performance is only partially impracticable?
- CL: the rest of performance that isn’t more difficult must be performed, and the other party must accept it with an appropriate offset
- R2: must find a substitute and substantially perform the rest of the contract
If a contractor agrees to build a house using a certain kind of pipe, but that product goes out of business, what is his duty?
His duty to use that kind of pipe is excused, but he still has a duty to build a house and use a substituted pipe, and the owner must pay for the house subject to offset for the change in pipe
