Performance & Breach Flashcards
Restatement § 224 Condition Defined
A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.
Restatement § 226 How an Event May Be Made a Condition
An event may be made a condition either by the agreement of the parties or by a term supplied by the court.
Restatement § 225 Effects of the Non-Occurrence of a Condition
(1) Performance of a duty subject to a condition cannot become due unless the condition occurs or its non-occurrence is excused.
(2) Unless it has been excused, the non-occurrence of a condition discharges the duty when the condition can no longer occur.
(3) Non-occurrence of a condition is not a breach by a party unless he is under a duty that the condition occur.
Restatement § 235 Effect of Performance as Discharge and of Non-Performance as Breach
(1) Full performance of a duty under a contract discharges the duty.
(2) When performance of a duty under a contract is due any non-performance is a breach.
Restatement § 235 Effect of Performance as Discharge and of Non-Performance as Breach
Discharge by Performance
A contracts to build a house for B for $50,000 according to specifications furnished by B. A builds the house according to the specifications.
A’s duty to build the house is discharged.
Restatement § 235 Effect of Performance as Discharge and of Non-Performance as Breach Effect of Non-Performance
A contracts to build a house for B for $50,000 according to specifications furnished by B. A builds the house according to the specifications except for an inadvertent variation in kitchen fixtures which can easily be remedied for $100.
A’s non-performance is a breach.
Restatement § 237 Effect on Other Party’s Duties of a Failure to Render Performance
Except as stated in § 240, it is a condition of each party’s remaining duties to render performances to be exchanged under an exchange of promises that there be no uncured material failure by the other party to render any such performance due at an earlier time.
Restatement § 237 Effect on Other Party’s Duties of a Failure to Render Performance First Material Failure of Performance
A, a contractor, and B, a subcontractor, make a contract under which B promises to install sewer pipe in a trench which A is to dig and maintain during installation. A unjustifiably so fails to maintain the trench that it fills with water, severely hindering installation. B thereupon stops work and refuses to continue unless the breach is cured. A does not cure his breach.
If A’s breach is material (§ 241), it operates as the non-occurrence of a condition of B’s duty to build the sewer, discharging it, and A has no claim against B. If A’s breach is not material, B’s duties are not discharged, and B’s stopping work and refusing to continue is a breach.
Restatement § 237 Effect on Other Party’s Duties of a Failure to Render Performance Substantial Performance
A contracts to build a house for B, for which B promises to pay $50,000 in monthly progress payments equal to 85% of the value of the work with the balance to be paid on completion. When A completes construction, B refuses to pay the $7,500 balance claiming that there are defects that amount to an uncured material breach.
If the breach is material, A’s performance is not substantial and he has no claim under the contract against B, although he may have a claim in restitution (§ 374). If the breach is not material, A’s performance is said to be substantial, he has a claim under the contract against B for $7,500, and B has a claim against A for damages because of the defects.
Restatement § 241 Circumstances Significant in Determining Whether a Failure Is Material
In determining whether a failure to render or to offer performance is material, the following circumstances are significant:
(a) how much injured party won’t get what he reasonably expected;
(b) the amount the injured party can be adequately compensated for what he didn’t get
(c) how much which the failing party suffer forfeiture;
(d) the likelihood that the failing party will cure his failure, taking account of all the circumstances including any reasonable assurances;
(e) if the failing party acts according to the standards of good faith and fair dealing.
Restatement § 241 Circumstances Significant in Determining Whether a Failure Is Material Nature of Significant Circumstances
A, a subcontractor, contracts to do excavation and earth moving on a housing subdivision project for B, the owner and general contractor, and to do all work “in a workmanlike manner.” B is to make monthly progress payments for the work performed during the preceding month less a retainer of ten percent. A negligently damages a building with his bulldozer causing serious damage and denies any liability for B’s loss. When B refuses to make further progress payments until A repairs the damage or admits liability, A notifies B that he cancels the contract.
If the court determines that A’s breach is material, A has no claim against B. B has a claim against A for damages for breach of contract.
Restatement § 241 Circumstances Significant in Determining Whether a Failure Is Material Nature of Significant Circumstances
A contracts with B to do specified work on B’s subdivision. A is to do the excavation and grading of lots and streets for a lump sum price of $75,000, payable on completion of that part of the work. A is then to make street improvements, including the installation of curbs and gutters, for stated unit prices, payable on completion of that part of the work. A is to provide separate performance bonds for each part. A completes the part concerned with the excavation and grading of lots and streets but fails in a minor respect to comply with the specifications, but then unjustifiably refuses to make street improvements.
If a court determines that the failure is not material, A has a claim against B for $75,000 under the contract for the excavation and grading. B has a claim for damages against A for his failure fully to perform as to excavation and grading and also for his unjustified refusal to make street improvements.
Restatement § 241 Circumstances Significant in Determining Whether a Failure Is Material Forfeiture by Party who Fails
A contracts to sell and B to buy 300 crates of Australian onions, shipment to be from Australia in March. A has 300 crates ready for shipment in March, but government requisitions prevent him from loading more than 240 crates on the only ship available in March. B refuses to accept or pay for the onions when they are tendered.
Under the circumstances stated in Subsections (a) and (c), A’s failure is material and A has no claim against B. If A’s failure is unjustified, B has a claim against A for damages for partial breach because of the delay even if A cures his failure, and has a claim against A for damages for total breach if A does not cure his failure (§ 243).
Restatement § 241 Circumstances Significant in Determining Whether a Failure Is Material Forfeiture by Party who Fails
A promises to sell to B a lot in a subdivision for $8,000. B promises to pay in four annual installments of $2,000 each, beginning one year after execution of the contract. A promises to begin to make improvements and pave the streets within 60 days and to complete work within a reasonable time and promises to deliver a deed at the time of the final payment. A fails to pave the streets, and B thereupon refuses to pay any installments. B can have the part of the street in front of his own lot paved for $500, but this will not give him the expected access to his lot because the rest of the street is not paved.
Under the circumstances stated in Subsections (a), (b), and (c), the failure of performance is material and A has no claim against B. If A’s failure is unjustified, B has a claim against A for damages for partial breach because of the delay even if A cures his failure, and has a claim against A for damages for total breach if A does not cure his failure (§ 243).
Restatement § 241 Circumstances Significant in Determining Whether a Failure Is Material Uncertainty
A contracts to sell and B to buy land for $25,000. B is to make a $5,000 down payment and pay the balance in four annual installments of $5,000 each. A is to proceed immediately to have abstracts of title prepared showing a marketable title and to deliver them prior to the time for payment of the first annual installment. Without explanation, A fails to have abstracts prepared for delivery prior to the time for payment of the first annual installment. B refuses to pay that installment.
Under the circumstances stated in Subsections (a)-(d), the failure of performance is material and A has no claim against B. B has a claim against A for damages for partial breach based on the delay if A cures his failure and a claim for damages for total breach if he does not (§ 243).
