Performance and Excuse of Nonperformance Flashcards
Performance at common law
A party’s basic duty at common law is to substantially perform all that is called for in the contract
-Essential purpose of contract
-Material breach not ok
Performance under Article 2
Requires a perfect tender
-The delivery and condition of the goods must be exactly as promised in the contract
-All parties must fact in good faith
Seller’s Obligation of Tender and Delivery
Non carrier cases (no intent for third party shipper)
-Tender is when the seller puts conforming goods on hold for a time sufficient for the buyer to take possession
-Seller must give buyer reasonable notice
-Tender must be at a reasonable hour
-Place of deliver is generally the seller’s place of business
Carrier cases (intent for third party shipper)
1. Shipment contract (seller has not agreed to tender at specific destination)
-Contract with carrier and give it the goods
-Obtain and promptly tender documents necessary for buyer to take possession
-Promptly notify the buyer of shipment
2. Destination contract (seller has agreed to tender at specific destination)
-Seller must, at the destination, put and hold conforming goods at the buyer’s disposition
Buyer’s Obligation to Pay
Shipment contract: price is due when the goods are put in the hands of the carrier
Destination contract: price is due when the goods reach the named destination
Non carrier case: price is due concurrently with tender of delivery
Installment contract: payment for each installment if the price can be apportioned
Payment by check
Tender of payment by check is sufficient unless the seller demands cash and gives the buyer time to get it
Buyer’s Right of Inspection
The buyer has a right to inspect the goods before they pay unless the contract provides for payment C.O.D. or provides otherwise
Promise vs. Condition
Conditions limit the obligation created by the contract
-Failure to comply with condition is not a breach of contract, but it discharges liability of the promisor
-Language: “if,” “as long as,” “until,” “when,” “provided that,” “on condition that”
Promises are commitment to do or refrain from doing something
-The failure to perform a promise is a breach of contract
-Language: “promise” or “agree”
Express condition
Express conditions must be perfectly satisfied
-i.e., a party will only pay if “satisfied” with the other’s performance (reasonable person), unless of personal judgement or taste (subjective)
-i.e., mechanical fitness, utility, or marketability in construction or manufacturing contract (reasonable person)
Condition precedent
Condition must occur before performance is due
-Creates duty
-Agreement to pay if X happens
Condition subsequent
Condition cuts off already existing duty
-Excuses performance
-Agree to pay unless X happens
Excuse of Conditions
- Other party fails to cooperate
- By waiver or estoppel
- Material breach by other party
- Anticipatory repudiation (other party indicates they won’t perform)
-Party can retract its repudiation any time before performance is due unless the other party changed their position in reliance on the repudiation - Effect of prospective failure
-Innocent party can suspend further performance until given adequate assurance
-If other party fails to provide adequate assurances, it is treated as anticipatory repudiation and the party is excused
Discharge by recession
Valid rescission of a contract will excuse both parties
-Both parties must have some performance remaining in mutual rescission
-A party can unilaterally rescind if nonperforming party offers new consideration, there is detrimental reliance, or the original offeree intends to make a gift
Partial discharge by modification of contract
If a contract is subsequently modified by the parties, it will discharge only those terms of the original contract subject to the modification
-Immediately excused
Discharge by accord and satisfaction
Agreement to do something different in lieu of the old obligation
-“If . . . then” language
- i.e., discharge a debt if the other party promises to do her yard work
-Only excused after new performance
-Must be supported by consideration even if lesser value than originally bargained-for consideration
Discharge by novation
Agreement to substitute a new party for the existing party and discharges the old contract
-Mere delegation is not sufficient
Elements
-Previous valid contract
-Agreement among all parties, including the new one
-Immediate extinguishment of original contractual duties
-Valid and enforceable new contract
Discharge by impossibility
Contractual duties will be discharged if it has become impossible to perform them
-Impossibility must be objective
-Must arise after contract has been entered
-Excuses both parties to duties that are not yet fulfilled, but part performance prior to impossibility is subject to quasi-contractual recovery
-Partial impossibility only discharges duty to that extent
-Temporary impossibility suspends the duties, but does not discharge them
Death or physical incapacity of a person necessary to effectuate the contract discharges the contract
-Services must be unique (cannot be delegated)
Supervening illegality (government regulation)
Subsequent destruction of contract’s subject matter or means of performance
-BUT a contractor’s duty to construct a building is not discharged by the destruction of the work in progress (entitled only to contract price)
-Repair or remodeling contract that is destroyed is excused + entitled to restitution
-Does not apply if the risk of loss has already passed to the buyer
Discharge by impracticability
The party to perform has encountered: (1) extreme and unreasonable difficulty and/or expense; and (2) its nonoccurence was a basic assumption of the party
-Increase in cost is not an excuse
-Shortage of raw materials due to war, strike, embargo etc. are sufficient
-Seller must deliver if only partial inability to perform
Discharge by frustration
Purpose of the contract has become valueless by virtue of some supervening event not the fault of the party seeking to discharge
Elements:
-Supervening act leading to the frustration
-Not foreseeable at time of contract formation
-Purpose of the contract has been completely destroyed by the act
-Purpose of the contract was realized by both parties
Common fact pattern:
-Person rents venue for a specific purpose known to the owner and a storm or death that was not reasonably foresee renders the purpose for renting the place moot
