Performance Flashcards
Express conditions
Express conditions are created by language such as “only if,” “provided that,” or “on the condition that.”
Express conditions must be strictly satisfied unless excused.
Express conditions: satisfaction conditions
An objective standard applies unless the contract involves aesthetic taste, although the party claiming dissatisfaction can still breach if so claiming in bad faith.
If the buyer accepts the performance while asserting in good faith that the satisfaction condition was not met, the seller would only be able to collect on an unjust enrichment theory.
Express conditions: waiver
They can be waived by words or conduct, but only by the party receiving the protection of the condition.
Wrongful interference with the occurrence of the condition constitutes waiver.
The condition may be reinstated if the waiving party communicates a retraction of the waiver before the condition is due to occur, and the other party has not already suffered detrimental reliance.
Constructive condition of exchange: substantial performance
Each party’s performance is conditioned on that of the other party.
Substantial performance suffices to satisfy the constructive condition of exchange.
Accord and satisfaction
Under an accord agreement, a party to a contract agrees to accept a performance from the other party that differs from the performance that was promised in the existing contract—in satisfaction of the other party’s existing duty.
Accord and satisfaction: consideration
When a party agrees to accept a lesser amount in full satisfaction of its monetary claim, there must be consideration or a consideration substitute for the party’s promise to accept the lesser amount.
Consideration can exist if the payment is of a different type than called for under the original contract.
Express conditions: implied duty of good faith
The duty of good faith, which is implied in every contract, imposes an obligation on the party protected by the express condition to make reasonable efforts to meet the condition—e.g., obtaining financing for the transaction.
Anticipatory repudiation
Anticipatory repudiation occurs when:
(1) there has been an unequivocal refusal of the buyer or seller to perform; or
(2) when a party creating reasonable grounds for insecurity fails to provide adequate assurances within 30 days of demand for such assurances.
Anticipatory repudiation: nonbreaching party’s options
Upon repudiation, the promisee can generally:
(1) treat the repudiation as a breach and immediately sue the promisor; or
(2) ignore it and demand performance.
If the repudiation is ignored, then continued performance by the promisee must be suspended if the performance would increase the damages of the promisor.
Anticipatory repudiation: full performance by the nonbreaching party
Anticipatory breach is inapplicable, and the promisee must wait until the promisor’s performance is due before filing suit if:
(1) the date of performance has not passed; and
(2) the promisee has fully performed.
Generally, this situation arises when the promisor’s obligation is payment of money.
Anticipatory repudiation: retraction
Until the repudiating party’s next performance is due, she may retract unless the nonbreaching party:
(i) acts in reliance on the repudiation;
(ii) signifies acceptance of the repudiation; or
(iii) commences an action for breach of contract.
Notice of the retraction must be sufficient enough to allow for the performance of the promisee’s obligations.
