Performance and Excuse of Performance

Question 1

General Rule for CL Performance.

Answer 1

substantial performance is enough. Look to terms of contract and determine if substantial has been met. (meets contract essential purpose). Substantial performance does not occur if material breach.

Question 2

UCC 2 general rule for performance.

Answer 2

Perfect Tender Rule: Seller’s must deliver perfect goods, at the right place, at the right time. 100% perfect goods or buyer has right to reject all those goods. (even if 99% good).

Question 3

What is an installment contract and does the perfect tender rule apply?

Answer 3

Installment Contract: requires or permits delivery of goods in separate installments over specified period.

Installment Sales = no perfect tender rule. About substantial impairment.

Question 4

What is implied acceptance?

Answer 4

Keep goods after reasonable time to inspect. Sufficient as acceptance even if doesn’t say they accept. (month + is sufficient time)

Question 5

What are the main assumptions about form of payment?

Answer 5

(1) Cash unless otherwise agreed.

(2) Check’s generally okay unless otherwise agreed. Seller’s can refuse the check, but gives buyer reasonable time to come up with cash.

Question 6

What is a condition?

Answer 6

Limit obligation created by other language in contract. Don’t create own obligations b/c not promises.

Question 7

What level of performance applies to express conditions?

Answer 7

Express conditions must be strictly construed and perfectly satisfied (close is not close enough). unless waived. (no substantial performance for express conditions)

If express condition is not satisfied = grants excuse to innocent party.

Express conditions do not create obligations (not promise) and so cannot sue for breach.

Question 8

How are satisfaction conditions measured?

Answer 8

Satisfaction Conditions: Measured by reasonable person standard unless contract deals w/ art or personal taste, in which case you can use own personal satisfaction).

Question 9

What the 3 classification of conditions?

Answer 9

Conditions Precedent: must occur before performance is due. If not, buyer has excuse.

Conditions concurrent are those that are capable of occurring
together, and that the parties are bound to perform at the same time (for example, tender of deed for cash). Thus, in effect, each is a condition
“precedent” to the other.

Condition Subsequent: Events after performance that could terminate duty to pay. (pay you lease until zoning changes).

Question 10

What 2 step process should I apply to determine if a condition must be followed?

Answer 10

(1) who is protected by the condition and (2) did they do anything to ruin that protection?

Excuse, Waiver.

Question 11

What makes a condition excusable?

Answer 11

Condition excusable: conditions may be excused by action or inaction of person protected by condition.

Ex: Hindrance or failure to cooperate. Has to cooperate in good faith. / Anticipatory Repudiation

Question 12

Waiver of condition

Answer 12

Waiver of condition: Voluntary give up conditions protection.

Can retract a waiver for future payment if builder has not relied on it yet.

Question 13

Excuse of Condition by Anticipatory Repudiation

Answer 13

Early statement of non-performance.

Provides excuse in innocent party (don’t have to perform) unless retracted and party can sue.

Can be retracted so long as they have not been relied on it.).

Question 14

Failure to give adequate assurances: (UCC 2)

Answer 14

If (1) reasonable grounds for insecurity of performance, may, in (2) writing, ask for assurance other party will perform.

If Assurance not received = anticipatory repudiation and innocent party excused from own duties.

Cannot use adequate assurance to rewrite contract or demand certain assurance. Only entitled to adequate assurance (depends on facts of case).

Question 15

What are 4 types of subsequent agreements that might excuse a party’s performance?

Answer 15

Rescission

Modification

Accord and Satisfaction.

Novation.

Question 16

Rescission

Answer 16

Party’s mutual agreement to cancel contract. (valid mutual rescission excludes both parties)

• Each party must have some performance remaining.

Question 17

Modification Agreement

Answer 17

Modification Agreement: Replaces existing contract w/new immediately. Excuses original obligations immediately.

Question 18

Accord and Satisfaction

Answer 18

Accord & Sat. is an agreement to accept different performance in future satisfaction of an existing duty. The original duty is suspended by the accord b/c you have agreed to do something different. Original obligations are not excused until accord is satisfied.

?Can go after debt or accord until satisfied?

‘If… then…” = accord and satisfaction.

Question 19

How is “accord and satisfaction” different from modification agreement?

Answer 19

Modification = debt excused now.

Accord & Sat. = excused later (after accord satisfied).

‘If… then…” = accord and satisfaction.

Question 20

Novation

Answer 20

Agreement to substitute new party for existing party.

All parties (original + new) are in on new deal. (Lawn mower says he has a friend that can do the job and the customer agrees) = original party’s obligations are excused.

Not delegation (one party alone finds replacement party = original party’s obligations not excused).

Question 21

Impossibility / Impracticability

Answer 21

Impossibility (CL) / Impracticability (UCC): Later unforeseen event makes party’s performance impossible.

A contractual duty to perform may be discharged by objective impossibility (i.e., no one could have performed), but subjective impossibility (defendant could not perform) is insufficient

Question 22

Who has to die for the contract to be excused for impossibility?

Answer 22

Death or incapacity of essential person to contract excuses performance for impossibility.

Personal service contracts are discharged in this manner only if the services involved are unique. If the services are the kind that can be delegated, the contract is not discharged by the death of the person who was to perform them.

Tip: Typically not impossible for buyers to pay money. Even on death.

Question 23

Does supervision and gov. regulate excuse contract?

Answer 23

New laws / regulation that make performance illegal = excuse b/c impossibility.

Question 24

Impossibility due to destruction.

Answer 24

Destruction of contract’s subject matter excuses performance for impossibility under CL. (Music hall burned down).

Fact specific:
- If job was renovation that duties discharged b/c impossibility. (can recover for quantum merit)
- If job was build new building then duties not discharged but most courts will grant more time. The general rule is that a contractor is responsible for destruction of the premises under construction prior to completion. Once the residence is completed, risk of loss shifts to the owner.

Under the UCC, if a contract requires for its performance particular goods identified when the contract is made, and, before risk of loss passes to the buyer, the goods are destroyed without the fault of either party, the contract is avoided. [UCC §2-613]

Question 25

UCC 2 Interplay b/w impracticability and risk of loss rules.

Answer 25

Risk of loss - even if seller bears loss (risk of loss has not yet passed), can still look for excuse under impracticability.

Question 26

Frustration of Purpose

Answer 26

(1) Both parties understood the central purpose, and (2) contract’s essential purpose undermined = performance excused.

*King’s coronation loft.

Question 27

Under UCC-2, is does an increase in cost excuse performance?

Answer 27

An increase in cost of performance DOES NOT mean excuse.

Question 28

Impracticability

Answer 28

the party to perform has encountered extreme and unreasonable difficulty and/or expense, and its nonoccurrence was a basic assumption of the parties.