Performance Flashcards
Performance issues
SPWCEA - Stevie Plays With Cats Every Afternoon
S - Substantial performance v. Perfect tender? P - Parol evidence rule? W - Warranties? C - Conditions? E - Excuses? A - Anticipatory repudiation?
Substantial performance vs. Perfect tender
Common law vs. UCC
What do courts consider when determining whether there is a breach?
CL = Substantial performance. Material breach = performance discharged. Courts consider:
Benefit lost to nonbreaching party (NBP) Adequacy of compensation for NBP's loss Cure likelihood Extent of forfeiture by BP if BP is denied BoB R2 §241
Warranties - type, disclaimer, recovery upon breach
Warranties = representation of “quality”
EW = basis of bargain (sample, affirmation)
Difficult to disclaim
§2-313
IW = MERCHANT, fit for commercial purpose
Disclaim conspicuous writing / Orally “merchantable”
§2-314
IWFPP = NOT just merchant, knowledge of B’s use
Disclaim IN WRITING conspicuous (“as-is”)
Recovery = Value as warranted - as accepted
Anticipatory repudiation
Definition
UCC vs. common law
What are P’s options?
By when may D retract under UCC?
Unequivocal communication of refusal to perform.
CL = unequivocal
UCC = unequivocal OR failing to assure when reasonably requested (<30 days)
Breach of K, suspend performance, discharge duty, ignore (mitigation)
D may retract before P materially alters position
§609
Condition
Definition
Promissory vs. pure condition
Satisfactory condition - traditional vs. modern
Party can either enforce or ______?
Once party relies on ______, what happens?
CONDITION is an event which is uncertain to occur, upon which duty of one of the parties depends
Nonoccurrence of a promise = BREACH
Nonoccurrence of a condition (NOC) = DISCHARGE OF PERFORMANCE
R2 §§225 (NOC)
R2 §246 (acceptance excusing NOC)
Satisfaction - subjective (traditional) / reasonable person (modern)
Types:
Waiver (words, conduct or written) - estopped from revoking waiver
Excuses
Definition
What are the 3 types?
Defense which exempts from a condition due to unforeseen circumstances.
Impracticable or impossible (nonoccurrence of a cond. is basic assumption on which K is made) (e.g., illegality, warehouse fire)
§261
Frustration of purpose - unforeseeable, not impossible, P not at fault (ticket for concert, headliner sick)
Precedent (prior), concurrent (same time), subsequent (discharges performance)
When conditions are not satisfied, performance may be excused unless a U-WEEP exception applies
U-WEEP
U - Untimely specifications W - Waiver E - Estoppel E - Excessive forfeiture P - Prevention
Parol Evidence Rule
Types of Ks relevant to PER and explanation
Extrinsic evidence prior or concurrent with K generally inadmissible.
Fully Integrated - complete and final agreement (look for complete/final agreement and MERGER clause) - EE cannot add OR contradict
R2 §213 / UCC §2-202
Partially - final but incomplete - EE can add but NOT contradict
Parol (extrinsic) evidence can be used to:
Establish the FACCS
F - Formation defects A - Ambiguities C - Conditions precedent C - Collateral agreements S - Subsequent modifications
Parol evidence - interpreting ambiguity - weight given to performance, dealing and trade usage
Course of performance > course of dealing > trade usage
Look at # of syllables
5 > 4 > 3
Parol evidence rule - definition
Extrinsic evidence to a contract offered to vary, supplement or explain K’s written terms.
Parol evidence - course of performance vs. course of dealing - When do they occur?
Course of performance - occurs after the K made.
Course of dealing - occurs before K made.
Condition - definition
- Uncertain event
- Must occur before
- Duty to perform arises
Effects of promissory vs. pure conditions on Ks
Nonoccurrence of a promise = BREACH
Nonoccurrence of a condition (NOC) = DISCHARGE OF PERFORMANCE
Waiver
knowing, voluntary, unilateral abandonment of a right
Satisfaction clause - Can a party’s subjective satisfaction determine whether a condition is met?
Yes, but if not specified in K, courts will apply reasonableness standard and my use trade standards or another objective benchmark.
Disproportionate forfeiture elements
MRL - it would be IMmoRaL to hold the party responsible for nonoccurrence of a condition when:
- M - Condition not MATERIAL
- R - Obligee substantially relied
- L - Obligee’s loss»_space; if condition enforced
How may a merchant disclaim merchantability? 3 ways.
- As-is/with all faults - WRITING
- Using “merchantability” or a variant - ORAL
- Buyer refuses to inspect
NO OTHER METHODS
Requirements to revoke acceptance of goods under the UCC?
- Reasonable expectation of seller’s cure
- Seller assures conformity
- Difficulty in discovering nonconformity
In a contract for the sale of goods delivered by carrier, when does the risk of loss pass to the buyer if no destination is specified?
No destination specified = delivered to carrier
Destination specified = tenders delivery
What 3 types of events will constitute the excuse of impossibility?
When D has another _______, performance be excused.
On what standard is impossibly judged?
- Death or incapacity
- Destruction
- Law
Destruction only if risk not assumed.
When D has another contractual obligation which conflicts, such as destruction of subject matter causing delay, then courts will allow impossibility excuse.
Impracticability - elements
UBDCR
- U - Unforeseen circumstances
- B - Nonoccurrence of condition was Basic assumption of K
- D - Performance difficult
- C - Party didn’t cause event
- R Party did not bear risk of event
Purpose substantially frustrated if
Performance has become virtually worthless.
Frustration of purpose - elements
Because frustrated, VARU became virtually worthless.
- V - Performance Virtually worthless
- R - Risks not assumed
- A Basic Assumption on which K was made
- U - Unforeseen circumstances
“Frustration of purpose” excuses performance of a duty IF:
* the purpose or value of the contract, * which the parties knewwhen they entered into the contract, * has been completely or almost completely destroyed * by asupervening actor event not foreseenor caused by the parties.
If a K does not specify a time of payment, when is it generally due?
What type of condition is delivery and payment?
When buyer receives the goods.
Concurrent condition. If the buyer does not pay, the seller does not have to deliver goods, and vice versa.
Default delivery under UCC
and
How described (FOB …)
Shipment K
FOB “seller’s city”
Shipment K - When does risk of loss pass?
and
Who pays shipping?
RoL passes at common carrier
Buyer pays shipping
Shipment K is default (FOB seller’s city)
Non-default delivery under UCC
and
How described (FOB…)
Destination K
FOB “anywhere else” besides seller’s city
When does risk of loss pass under a destination K (FOB anywhere else but seller’s city) - non-default method
Stays with seller until arriving at buyer
Who pays shipping under a destination K?
Seller
When does risk of loss generally pass when seller is not a merchant
and
when seller is a merchant?
Goods made available to B when non-merchant
If merchant, then upon B’s possession
Which party bears risk of loss in a breach under UCC?
- Nonconforming/seller breach = seller until buyer accepts
- Revokes acceptance = seller all along (to extent of deficiency in buyer’s insurance coverage)
- Buyer repudiates before RoL passes, treated as buyer having RoL (to extent seller’s insurance deficient).
If a K does not specify a place of delivery, where is the seller obligated to deliver?
Nowhere. Seller is required to make them available at seller’s place of business.
Under UCC perfect tender rule, buyer can reject any or all unless:
UNLESS PIC:
P - Parties agree to substantial performance
I - Installment Ks (B can reject specific installment when SUBSTANTIALLY impaired)
C - Cure nonconformity (B must give S if not expired or B might accept replacement)
§2-508
Buyer fails to reject, deemed accepted unless
B fails to reject, DEEMED accepted, UNLESS VaCaTeD:
Va - Value substantially impaired (by nonconformity)
C - Cured - B reasonably expected nonconformity to be
T - Time of revocation is reasonable after acceptance
D - Difficulty to discover nonconformity
Accord and satisfaction - definition
- An agreement in which a party to an existing contract
- agrees to accept different consideration,
- in lieu of the original consideration they were to receive,
- the completion of which constitutes a satisfaction and binding agreement.
Impossibility - elements
- Objectively not able to perform
- Similarly situated (very fact-specific)
Look for other contractual obligations which could make it objectively not possible.
