Performance and Excuse of Performance

Question 1

UCC: how must goods be delivered and what right does buyer have if they are not properly delivered?

Answer 1

Perfect Tender Rule

seller must deliver:

(a) perfect goods
(b) right place/right time

If not, then buyer MAY reject the goods

Question 2

UCC: if seller does not make perfect tender, what right does seller have?

Answer 2

Option to Cure

If time to perform under the K has not expired: seller has option to cure

If time to perform under the K has expired: seller does not have option to cure, unless seller had reason to believe buyer would accept non-perfect goods based on prior dealings

Question 3

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

Answer 3

An installment K requires/authorizes seller to deliver in separate installments (e.g. once a week) instead of a single delivery

Perfect tender rule does not apply (because seller can fix non-conformity in the next installment). Buyer may reject only for substantial impairment.

Question 4

UCC: How can buyer accept the goods without saying so?

Answer 4

Implied acceptance

buyer keeps goods after having opportunity to inspect them (look for time delay)

Once buyer accepts, it’s too late for buyer to reject, but buyer can still get damages for seller’s breach.

Question 5

UCC: Can buyer revoke acceptance of goods he’s already accepted?

Answer 5

A buyer cannot revoke acceptance of goods

Exception: if the non-conformity substantially impairs the value of the goods and it was difficult to discover (e.g. latent defect)

Question 6

UCC: What are the consequences of rejection or revocation of acceptance?

Answer 6

• Return at seller’s expense
• Refund from seller
• Damages from breach of K

Question 7

UCC: Is seller obligated to accept a check?

Answer 7

Seller is not obligated to do so.

If seller rejects check and then deadline to pay passes, buyer still has a reasonable time to pay in cash.

Question 8

UCC: If perfect tender rule not met, what are buyer’s options?

Answer 8

1. reject all goods
2. accept all goods
3. accept some goods

Question 9

Common law: Does performance have to be perfect?

Answer 9

No. All that is required is substantial performance in order for the contract to not be excused.

Party that substantially performs is able to enforce the contract, but damages are offset by failing to perform the whole contract.

• substantial performance typically inapplicable if the breach was willful

Question 10

Common law: if performance was not substantial, what remedies?

Answer 10

Buyer is excused from paying the contract, but must give unjust enrichment (restitution) for any work that other party did.

Question 11

What is an anticipatory repudiation?

Answer 11

Party indicates it will fail to perform before performance is due.

Provides an excuse (as long as other person did not rely on it) unless retracted

e.g. “I am not going to pay you” after someone starts job

Question 12

UCC: What is failure to give adequate assurance and is it grounds for an excuse?

Answer 12

A party that has reasonable grounds to doubt the other party’s performance may, in writing, request adequate assurance that the other party will perform the K.

If other party fails to give this assurance, other party can treat it as an anticipatory repudiation.

But can’t use this provision to re-write K.

Question 13

What is the difference between rescission and modification?

Answer 13

Rescission: agreement to cancel K (both parties must have some performance remaining)

Modification: replace existing K with new terms. Effect immediately when made.

Question 14

What is accord/satisfaction?

Answer 14

accord is an agreement to accept performance in future satisfaction of an existing duty

e.g. “If you mow my lawn for a year, then I’ll forgive your debts” (accord/satisfaction) instead of “If you mow my lawn for a year, I’ll forgive your debts now.” (modification)

Must be supported by consideration (can be less, but just has to be different)

Question 15

What is novation?

Answer 15

Agreement to substitute a new party for an existing one

non-substituting party must also consent (otherwise it’s just a delegation of duties)

Question 16

What is the impossibility/impracticability (art. 2) defense?

Answer 16

unforeseen event that occured after time of contracting makes performance impossible/impracticable

Question 17

What are examples of excusing performance for impossibility/impracticability?

Answer 17

• Destruction of something necessary for performance
  art. 2: seller who bore ROL when goods damaged/destroyed is excused (don’t need excuse if don’t bear ROL)
  art. 2: seller only excused if the goods damaged or destroyed had been identified to the contract (e.g. whole warehouse of same computers not identified unless which exact computers to be shipped are picked out)
• Death/Incapacity of Person ESSENTIAL to K
• Supervening Govt. Regulation
• Substantial Increase in Cost of Seller’s Performance (typically doesnt apply on MBE)

Question 18

What is the excuse of frustration?

Answer 18

(a) a later unforeseen event severely impedes the buyer’s purpose for entering into the K; and
(b) seller knew of buyer’s purpose at time of contracting.

Discharges duty to perform

Question 19

What are conditions to performance and how do they differ from promises to perform?

Answer 19

Limits obligations created by other contract language but does not create an independent legal obligation like a promise would.

if condition not met, there is no breach, but duty to perform does not exist.

e.g. I agree to buy the house, as long as it is appraised at more than $300k.

Question 20

What are the three types of conditions?

Answer 20

Condition Precedent: event must occur before performance is due

Condition Concurrent: performance due at the same time condition is met (e.g. tender of deed for cash)

Condition Subsequent: event occurring shuts off existing duty

Question 21

Can express conditions be excused?

Answer 21

yes, if

(a) person condition is protecting fails to cooperate; or
(b) person condition is protecting waives condition

Question 22

What is a satisfaction clause and what standard is used to determine whether it is met?

Answer 22

an express condition that party will pay only if it is satisfied with the other party’s performance

Fitness, utility, or marketability contracts: reasonable person standard

Personal taste or judgment contracts: subjective standard where buyer must be satisfied

Question 23

How do you determine whether something is a condition or a promise?

Answer 23

intent of the parties

look to words (“agree” vs. provided that”), prior dealings, customs, etc.

Question 24

What are the two types of conditions?

Answer 24

• Express

- Implied

Question 25

What are constructive conditions of cooperation and notice?

Answer 25

Cooperation: obligation of one party to render performance is impliedly conditioned on other party cooperating (e.g. I will sell you the car if you get financing)

Notice: implied obligation to give notice before performance is required; usually found when a party could not reasonably be expected to know a fact (e.g. needed repair) that triggered duty to perform without notice.

Question 26

What happens if contract is not enforceable due to failure of a condition, but one of the parties has fully or partially performed?

Answer 26

She can usually recover under unjust enrichment theory.

Question 27

How can conditions be excused?

Answer 27

• one party hindering the condition from happening
• one party failing to cooperate
• anticipatory repudiation (must be unequivocal)

Question 28

Is failure to perform by a time stated in the contract a a material breach?

Answer 28

No, unless it is clear that time is of the essence.

Question 29

What is a divisible contract?

Answer 29

(i) performance of each party is divided into two or more parts;
(ii) number of parts due from each party is the same; and
(iii) performance of each part by one party is agreed on as the equivalent of the corresponding part from the other party

e.g. price per unit, installment contract

Question 30

What happens if only some part of a divisible contract is delivered?

Answer 30

Buyer responsible for the units that were delivered but is excused from paying for the rest.

Buyer may bring action for the rest.

Question 31

Can anticipatory repudiations be retracted?

Answer 31

Yes, before performance is due unless other party relied on the anticipatory repudiation

Question 32

What is prospective inability or unwillingness to perform?

Answer 32

Conduct or words that merely raise concerns (not unequivocal like anticipatory repudiation) that other party will perform.

Question 33

What is the effect of prospective inability or unwillingness to perform?

Answer 33

Innocent party is suspended from performing until she can receive adequate assurances that performance will happen.

Question 34

Can prospective inability or unwillingness to perform be retracted?

Answer 34

Retraction is possible if non-defaulting party receives notice of intent to retract.

Question 35

What is temporary and partial impossibility?

Answer 35

Temporary: duty to perform returns once duty is no longer impossible
Partial: duty is discharged only to the extent it cannot be performed.

Question 36

What happens if a party partially performs prior to impossibility?

Answer 36

The remaining performance is discharged, but partially performing party can still get quasi-contract restitution at either the contract rate or the reasonable value of performance.

Question 37

Is contractor’s duty to construct a building discharged by destruction of the work in progress?

Answer 37

No, even though the subsequent destruction of a contract’s subject matter typically leads to an impossibility defense, the building can still be constructed in this case.

Question 38

Under the UCC, what constitutes impossibility/impracticability?

Answer 38

• seller generally assumes the risk (unless otherwise noted) that shit may happen that make performance less appealing (price fluctuations, etc.) and must continue to perform even if it becomes prohibitively expensive
• If it is actually impossible to perform (raw material shortage, embargo, war, strike), seller is generally excused

Question 39

UCC: What must seller do if its inability to perform is only partial?

Answer 39

Allocate deliveries among its customers

Question 40

What is discharge by release?

Answer 40

Releases parties from performing or suing under the contract.

Must be in writing and supported by consideration/promissory estoppel.

Question 41

When does a minor breach relieve the other party of performing its duties?

Answer 41

if the minor breach is coupled with an anticipatory repudiation