Performance & Conditions

Question 1

Obligations under the UCC - Seller’s Obligations:

Answer 1

In non-carrier cases, seller has an obligation to tender delivery

In carrier cases, there is a default presumption that the K is a shipment K, wherein the seller generally need only put the goods in the possession of a carrier and make appropriate arrangements for them to be sent to the buyer

In a destination K, the seller has agreed to tender the goods at a particular destination

In Ks that specify that delivery is FOB (Free on Board), the FOB point is the delivery point.

Question 2

Obligations under the UCC - Buyer’s Obligations:

Answer 2

Unless otherwise agreed, the buyer’s tender of payment is a condition to the seller’s duty to tender and complete delivery

Absent some other agreement, the buyer has a right to inspect goods upon tender or delivery before making payment or acceptance. Payment before inspection will not constitute an acceptance of the goods or impair the buyer’s right to inspect or any of his remedies.

Question 3

Risk of Loss:

Answer 3

For carrier cases, the risk of loss shifts to the buyer when the seller has completed its delivery obligations

For non-carrier cases, if seller is a merchant, seller bears the risk of loss until the buyer takes possession; if seller is not a merchant, the seller bears the risk of loss until the seller “tenders” the goods (i.e., makes them available)

Question 4

Effect of Breach on Risk of Loss

Answer 4

If the seller breaches the K by making a nonconforming tender or delivery, the risk of loss remains on the seller until cure or acceptance.

If the buyer rightfully revokes acceptance, the buyer may - to the extent any deficiency in his effective insurance coverage - treat the risk of loss as having been on the seller from the beginning

If the buyer breaches before the risk of loss passes to the buyer, the seller may - to the extent of any deficiency in his effective insurance coverage - treat the risk of loss as resting on the buyer for a commercially reasonable time

Question 5

The Preexisting Duty Rule:

Answer 5

A promisor cannot provide consideration where that consideration is a duty the promisor is already obligated to perform

Question 6

Modification (non-UCC):

Answer 6

In a non-UCC K, consideration is required to support a modification

A promise to increase compensation under an existing K is enforceable as a mutual modification to the K if both parties agree to a performance that is different from the one required by the original K and the difference in performance is not a mere pretense of a newly formed bargain.

Question 7

Modification under the UCC:

Answer 7

The preexisting duty rule is abolished and an agreement modifying an existing K for the sale of goods needs no consideration to be binding; must only meet the UCC’s “good faith” test.

Question 8

Mistake:

Answer 8

Is when a party or parties made a faulty assumption about the present circumstances and enters a K on that basis

Question 9

Unilateral mistake:

Answer 9

occurs when only one party to the K is operating under a faulty assumption about material facts as they exist at the time of K-ing.

Unilateral mistake does not excuse the mistaken party’s K-ual duty to perform, unless the other party knew or had reason to know of the party’s mistake, or the mistake was based on clerical error.

Question 10

Mutual mistake:

Answer 10

when both parties have labored under a common faulty assumption regarding the present facts. The K will be voidable by the disadvantaged party where both parties were mistaken, and the disadvantaged party does not bear the risk of mistake the under the parties’ agreement.

Question 11

Impossibility:

Answer 11

The doctrine of impossibility excuses both parties from their obligations under a K if the performance has been rendered impossible by events occurring AFTER the K was formed

Question 12

Impracticability:

Answer 12

A promisor may be excused from performance when goods identified to the K are destroyed, performance becomes illegal, or performance is prevented by a nonforeseeable even the nonoccurrence of which was a basic assumption of the K.

Question 13

Frustration of Purpose:

Answer 13

Discharge a party’s obligations where:

1) The party’s principal purpose in entering the K is frustrated;
2) The frustration is substantial; and
3) The nonoccurrence of the event precipitating frustration must have been a basic assumption of the K.

Question 14

Mutual Rescission:

Answer 14

Rescission is where the parties agree to discharge each other’s remaining duties of performance under an existing K that it is at least partly executor on each side

Question 15

Accord & Satisfaction:

Answer 15

Accord: a K under which the oblige promises to accept substituted performance in satisfaction of the obligor’s existing duty.

Satisfaction: (Performance of the accord) discharges the original duty

Question 16

What is a promissory condition?

Answer 16

Where the K performance is conditioned on the occurrence of the promised performance by the other party.

Question 17

Pure promissory conditions

Answer 17

are where K performance is conditioned on the occurrence of events beyond the control of either party

(Ex: A K for fireworks performance “weather permitting.” Good weather is the pure condition of the performance obligation)

Question 18

At common law, where a party’s performance under the K is subject to an express condition, the failure of that condition will:

Answer 18

discharge the party’s obligation to perform

Question 19

Where bad faith conduct by the beneficiary of the condition occurs, the condition will be:

Answer 19

excused.

Question 20

Material Breach vs Substantial Performance:

Answer 20

Courts have an option to treat a breach as material, or as substantial performance where the parties have not addressed this by an express condition.

Material breach: when the breach is serious enough, it will be treated as a breach of an express condition. The aggrieved party is free to walk away from his own obligations and sue the breaching party for damages.

Substantial performance: where the breach is less serious, the court will treat performance as “close enough” and the aggrieved party will not be discharged of his performance obligations. Particularly applies to Ks for services and Construction Ks

Question 21

Total breach vs partial breach:

Answer 21

A material breach can be treated as either partial breach or total breach.

1) A claim for damages of total breach is one for damages based on all of the injured party’s remaining rights to performance
2) A claim for damages for partial breach is one for damages based on only part of the injured party’s remaining rights to performance

A non-material breach can only be a partial breach

Question 22

UCC - Perfect tender rule:

Answer 22

The terms of a K for the sale of goods are enforced exactly.

Every K term is treated as an express condition and there is no need to distinguish between express and implied conditions

Question 23

If a seller fails to make perfect tender, the buyer has 3 courses of action available:

Answer 23

1) He may reject the goods;
2) Accept the goods; or
3) Reject part and accept part

Question 24

A buyer who accepts goods must:

Answer 24

Pay for the good he accepts and may seek damages for the seller’s imperfect tender.

Question 25

If a seller makes a non-conforming delivery and had reasonable grounds to believe that delivery would be acceptable to the buyer, then he may:

Answer 25

substitute a conforming delivery if the seller gives the buyer reasonable notice of his intention to substitute, and seller makes a conforming delivery within a reasonable time.

Question 26

Under a UCC installment K, a breach with respect to one installment is:

Answer 26

a breach of the total K ONLY if the nonconformity substantially impairs the value of the entire K

Question 27

Under a UCC installment K, if the non-conforming tender substantially impairs the value of the installment but not the entire K:

Answer 27

buyer can reject the installment.