Performance Flashcards
Approach
- Who are the parties?
- What are the parties’ promises?
- Are there any conditions protecting the defendant’s duty to perform?
a) Plaintiff can’t successfully sue unless he/she proves his/her conditions have been satisfied or excused. - Have those conditions been satisfied or excused?
- If promise is absolute (owing), it must be performed or discharged.
- If promise has neither been performed nor discharged, there is a breach. Is the breach major or minor?
- What are the appropriate remedies?
Conditions - definition
a) An event, the occurrence or nonoccurrence of which will create, limit, or extinguish the absolute duty to perform.
b) If condition has occurred or been excused, the promise is now absolute (meaning it is now owing).
c) If condition neither occurs nor is excused, what is the legal effect?
(1) If condition is precedent or concurrent, duty of counter performance never arises.
(2) If condition is subsequent, duty of performance is cut off.
Types - Express Condition
(1) Created by language of the parties (included in the contract)
(2) Words most typically used include, but are not limited to, “upon”, “in the event of”, “if”, “only”, “upon the condition”, etc.
Types - Implied in Fact Condition
(1) Imposed by courts; but if parties would have thought of them, they would have put them in the contract (e.g., conditions of cooperation)
Types - Implied in law condition
(1) Constructive condition precedent – where one party’s performance takes a period of time and other party’s performance can be performed in an instant of time, the former is a constructive condition precedent to other party’s obligation to perform (the thing that takes longer must be performed first)
(2) Constructive condition concurrent – whenever some time is fixed for performances and both are capable of simultaneous or near simultaneous performance, each party’s performance is constructive condition concurrent to the other. Such CCC will also be implied where no time is set for performance but both performances may occur simultaneously, or when both may be performed simultaneously but only one party has a set time.
(a) UCC transactions are CCC
Legal Effect - Conditions Precedent
An act or event must occur or be excused before duty of performance arises
Legal Effect - Conditions Concurrent
(1) Condition must occur or be excused before other party’s obligation to perform ripens.
(2) It has a duel effect: (1) discharges actor’s promise, and (2) causes other party’s promise to arise.
Legal Effect - Conditions Subsequent
(1) Occurrence or excuse of condition extinguishes a present duty to perform.
(2) For example, you agree to purchase $1 million of gold per month provided the price doesn’t exceed $270 per ounce. You have a present duty until price exceeds $270; then your duty is extinguished.
Ways to excuse condition
a) Major breach by party holding (being protected by) the condition.
b) Tender – offering performance
c) Divisibility or severability – will only excuse constructive conditions, not express conditions
d) Substantial performance (Restatement §241) – will only excuse constructive conditions, not express conditions.
e) Anticipatory repudiation – the unequivocal renunciation of a contract obligation before performance is due.
f) Prospective inability (voluntary disablement) – contract is refuted by conduct, rather than by words.
g) Waiver – When an obligor whose duty is conditional promises to perform despite the nonoccurrence of the condition or despite a delay in its occurrence.
h) Estoppel – one party leads other party into thinking condition will be waived and other party relies.
i) Prevention – sabotage condition from occurring.
Excusing Condition - Substantial performance
will only excuse constructive conditions, not express conditions.
(1) Does not apply to UCC transactions. UCC follows perfect tender rule (UCC 2-601 and UCC 2-508)
Excusing condition - Anticipatory Repudiation: General Rules
(a) Excuses any condition that protected the repudiator.
(b) Permanently suspends innocent party’s counter performance.
(c) Majority rule – gives immediate cause of action; minority rule – no action until performance is due.
(i) Exception to majority rule is if the only thing left to do is to collect money.
(d) Aggrieved party may:
(i) For a commercially reasonable time await performance by the repudiating party;
(ii) Resort to any remedy for breach
(iii) Suspend performance
Excusing Condition - Anticipatory Repudiation: request for assurances
(a) When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return. (UCC 2-609(1); Rest. 251)
(b) After receipt of a justified demand, failure to provide within a reasonable time not exceeding 30 days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract. (UCC 2-609(4); Rest. 251.)
(i) No 30 day maximum in non-UCC contracts; just a reasonable time (Rest. 251(2)
(c) An unreasonable demand for assurance will act as an anticipatory repudiation, if the words rise to that level.
Excusing Condition - Anticipatory Repudiation: Retraction of Repudiation
(a) Until the repudiating party’s next performance is due he can retract his repudiation unless the aggrieved party has since the repudiation cancelled or materially changed his position or otherwise indicated that he considers the repudiation final. (UCC 2-611(1).)
(b) Retraction may be by any method which clearly indicates to the aggrieved party that the repudiating party intends to perform, but must include any assurance justifiably demanded under the provisions of UCC 2-609. (UCC 2-611(2).)
(c) Retraction reinstates the repudiating party’s rights under the contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation. (UCC 2-611(3).)
Excusing Condition - Prospective inability
(1) The effect is the same as anticipatory repudiation except the minority view has a large following.
Excusing Condition - Waiver
(1) A waiver may be retracted and the condition reinstated unless:
(a) The other party has relied on the waiver, or
(b) The time for the condition to occur had already passed at the time the waiver was made.
