Performance & Excuse of Nonperformance

Question 1

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what is a party’s basic duty at common law regarding performance?

Answer 1

party must substantially perform all that is called for in the contract

Question 2

what is a party’s duty regarding performance under article 2?

Answer 2

party must deliver perfect tender (delivery and condition of the goods must be exactly as promised in the contract)

Question 3

if goods are not perfectly tendered, what can a buyer do? (art. 2)

Answer 3

buyer can choose to reject all goods

Question 4

what is a seller’s duty of performance in noncarrier cases? (art. 2, 3 rqmts)

Answer 4

seller must
1) put and hold conforming goods at the buyer’s disposition for a time sufficient for the buyer to take possession
2) give buyer notice reasonably necessary to enable them to take possession, and
3) tender said goods at a reasonable hour

Question 5

what is a seller’s duty of performance to buyer in carrier cases where a particular destination is NOT agreed to? (shipment Ks)

Answer 5

seller need only:
1) put goods in the hands of a reasonable carrier and make a reasonable contract for their transportation to the buyer,
2) obtain/properly tender any docs necessary to enable the buyer to take possession, and
3) promptly notify the buyer of the shipment
**NOTE = seller NOT required to see that the goods reach the buyer

Question 6

what is a seller’s duty of performance to buyer in carrier cases where destination is IDENTIFIED? (destination Ks)

Answer 6

seller must, at the destination, put and hold conforming goods at the buyer’s disposition

Question 7

what is a buyer’s duty of performance in noncarrier cases?

Answer 7

price is due concurrently with tender of delivery

Question 8

generally, what is a buyer’s duty of performance in carrier cases?

Answer 8

price is due at the time and place at which the buyer receives the goods

Question 9

when is payment due in a shipment K? (carrier case)

Answer 9

due when goods are put in the hands of the carrier

Question 10

when is payment due in a destination K? (carrier case)

Answer 10

due when goods reach the named destination

Question 11

when can seller demand payment on an installment K?

Answer 11

seller can demand payment for each installment (if the price can be so apportioned)

Question 12

true or false: generally, under art. 2, a buyer has a right to inspect the goods before they pay.

Answer 12

TRUE

Question 13

in what 2 situations does a buyer NOT have a right to inspect goods before paying?

Answer 13

1) K provides for payment C.O.D. (upon delivery), or
2) K indicates that the buyer promised to pay without inspecting the goods

Question 14

true or false: paying for goods up front is an implied acceptance of those goods (no right to inspect).

Answer 14

FALSE

Question 15

when is payment by check NOT sufficient? (2 rqmts)

Answer 15

1) seller demands cash, and
2) gives buyer time to get it

Question 16

what is the consequence of a K provision stating that a party does not have a duty to perform unless some condition is fulfilled?

Answer 16

party’s failure to perform is justified if the condition was NOT fulfilled

Question 17

what is a “condition”?

Answer 17

either:
1) an event or state of the world that must occur or fail to occur before a party has a duty to perform, OR
2) an event or state of the world, the occurrence or nonoccurrence of which releases a party from their duty to perform
NOTE = conditions are promise-modifiers

Question 18

what is a “promise”?

Answer 18

a commitment to do or refrain from doing something

Question 19

what is the consequence of failing to perform according to the terms of an unconditional promise?

Answer 19

failure to perform = breach of K

Question 20

what is the consequence of the failure of a condition in a K?

Answer 20

NOT a breach of K BUT it discharges the liability of the promisor whose duties on the conditional promise never mature

Question 21

what determines whether a K provision is a promise or condition?

Answer 21

the intent of the parties

Question 22

what factors do courts consider in determining parties’ intent regarding a provision/condition?

Answer 22

words and phrases used by the parties, their prior practices, custom in the business community related to the provision, and whether performance is needed from a 3d party (if needed, more likely to be a condition)

Question 23

true or false: in doubtful situations, courts will hold that the provision in question is a promise and not a condition.

Answer 23

TRUE

Question 24

if both parties can render performance at the same time (conditions concurrent), what is the effect on a party’s ability to put the other party under an immediate duty to perform (and breach if they fail to do so)?

Answer 24

party seeking to put other party under immediate duty to perform MUST tender their own performance first

Question 25

if one party’s performance will take a period of time to complete while the other can be completed in an instant, what is the effect on the parties’ duty to perform?

Answer 25

completion of the longer performance must happen BEFORE (condition precedent to) the execution of the shorter/instant performance
**TLDR = instant performance not due until longer performance complete

Question 26

what is the remedy for parties that have fully or partially performed under a K that is no longer enforceable due to a failure/occurrence of a condition?

Answer 26

performing party can usually recover under unjust enrichment theories

Question 27

when does a duty of immediate performance with respect to a conditional promise become absolute? (2 situations)

Answer 27

absolute only when the conditions either:
1) have been performed or
2) are legally excused

Question 28

what is an express condition?

Answer 28

an express stmt in the K providing that either:
1) a party does not have a duty to perform unless some event occurs/fails to occur, or
2) if some event occurs or fails to occur, the obligation of the party to perform one or more of their duties under the K is suspended or terminated

Question 29

what is the effect of K provision stating that a party will pay only if “satisfied” with the other party’s performance?

Answer 29

promisor is under NO duty to pay unless they are satisfied (satisfaction = condition precedent)

Question 30

when is a condition of satisfaction fulfilled in Ks involving mechanical fitness, utility, or marketability?

Answer 30

satisfaction fulfilled by performance that would satisfy a reasonable person
**NOTE = it’s IMMATERIAL whether the promisor personally was satisfied so long as a reasonable person would have been

Question 31

when is a condition of satisfaction fulfilled in Ks involving personal taste or judgment (art, etc)?

Answer 31

fulfilled only if the promisor is personally satisfied
**NOTE = lack of satisfaction must be honest/in good faith (ie – if promisor refuses to examine performance or rejects in bad faith, condition of satisfaction is EXCUSED)

Question 32

when will a condition of satisfaction of a THIRD PARTY be fulfilled?

Answer 32

when the third party is actually personally satisfied
**NOTE = dissatisfaction must be honest/good faith (same as for promisors in Ks involving personal taste/judgment)

Question 33

what is the effect of a condition that clearly only benefits/protects one of the parties?

Answer 33

other party’s duty is NOT subject to the condition

Question 34

what is a condition precedent?

Answer 34

one that must occur before an absolute duty of immediate performance arises in the other party

Question 35

what is a condition concurrent?

Answer 35

those that are capable of occurring together and that the parties are bound to perform at the same time (each is a condition precedent to the other)

Question 36

what is a condition subsequent?

Answer 36

one that, when it occurs, cuts off an already existing absolute duty of performance

Question 37

what is a constructive/implied condition of performance?

Answer 37

condition that the duty of each party to render performance is conditioned on the other party either rendering their performance OR making a tender of their performance

Question 38

what is a constructive/implied condition of cooperation?

Answer 38

condition that the obligation of one party to render performance is impliedly conditioned on the other party’s cooperation in that performance

Question 39

when is a condition of notice usually implied?

Answer 39

when a party couldn’t reasonably be expected to know a fact (ie – need for repairs) that triggered the duty to perform unless notice was given

Question 40

true or false: a condition will be EXCUSED if a party whose duty to perform is protected by the condition wrongfully prevents the condition from occuring.

Answer 40

TRUE
**NOTE = doesn’t excuse conduct that the other party would have reasonably contemplated or assumed the risk for

Question 41

what is an excuse of a condition by waiver?

Answer 41

where the party having the benefit of the condition indicates by words or conduct that they will NOT insist on that condition being met

Question 42

true or false: generally, consideration IS required to waive a condition.

Answer 42

FALSE
**NOTE = but condition must be ancillary or collateral (NOT waiving the entire/substantially entire duty to perform/etc)

Question 43

when may a waiver of a condition be retracted?

Answer 43

at any time BEFORE the other party has changed their position in detrimental reliance on the waiver

Question 44

what is an election waiver of a condition?

Answer 44

when a condition doesn’t occur or a duty of performance is broken, BUT the party protected by the condition chooses to continue under the contract (impliedly waives that condition)

Question 45

can an election waiver of a condition be withdrawn?

Answer 45

NO (unlike an estoppel waiver)

Question 46

true or false: you can waive entitlement to the entire or substantially entire return performance.

Answer 46

FALSE

Question 47

true or false: a party waiving a condition does NOT as a result waive their right to damages (if performance is not rendered).

Answer 47

TRUE (just severs the right to treat the failure of the condition as a total breach that excuses performance; can still get damages if no performance)

Question 48

what is excuse of condition by actual breach?

Answer 48

an actual breach of the contract when performance is due will excuse the duty of counterperformance

Question 49

what kind of breach will excuse a duty of counterperformance at common law?

Answer 49

ONLY a material breach (minor breaches merely suspend performance)

Question 50

what is anticipatory repudiation?

Answer 50

when a promisor, prior to the time set for performance of their promise, indicates that they will not perform when the time comes

Question 51

what two things must be true for there to be a valid anticipatory repudiation?

Answer 51

1) contract is bilateral with unperformed duties on both sides, and
2) the words/conducts of the promisor are UNEQUIVOCAL in indicating they cannot/will not perform (mere doubt = not enough)

Question 52

when can anticipatory repudiations be effectively retracted?

Answer 52

at any time unless…
1) the other party has cancelled
2) the other party has materially changed their position in reliance on the repudiation, or
3) the other party has indicated they are treating the repudiation as final

Question 53

what is the effect of a party failing to give adequate assurances when asked?

Answer 53

treated as an anticipatory repudiation

Question 54

what are the nonrepudiating parties options after a party has repudiated? (4)

Answer 54

1) treat the AR as a total repudiation and sue immediately
2) suspend their own performance and wait to sue until the performance date
3) treat the repudiation as an offer to rescind the K and treat the K as discharged, or
4) ignore the repudiation and urge the promisor to perform

Question 55

what is a prospective inability or unwillingness to perform?

Answer 55

when a party has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance is due

Question 56

true or false: propsective inability to perform is treated as an anticipatory repudiation.

Answer 56

FALSE (does not excuse counterperformance or count as breach)

Question 57

what is the effect of a prospective inability/unwillingness to perform?

Answer 57

innocent party can suspend their performance until they receive adequate assurances that performance will be forthcoming

Question 58

when may prospective inability/unwillingness to perform be treated as an anticipatory repudiation?

Answer 58

only when a demand for adequate assurances were made and the other party fails to provide them (innocent party can treat this as a repudiation)

Question 59

when can a party effectively retract their prospective inability/unwillingness to perform? (2 rqmts)

Answer 59

when they
1) regain their ability/willingness to perform, and
2) notify the innocent party of this fact

Question 60

what is an excuse of condition by “divisibility” of contract?

Answer 60

if a contract is divisible and a party performs one of the units of the contract, they are entitled to counterperformance as to that unit even if they fail to perform for other units

Question 61

what can an innocent party do when the other performs only as to some units of a divisible contract (but does NOT perform the others)?

Answer 61

they have a cause of action for failure to perform the other units and may withhold their counterperformance as to the unperformed units

Question 62

when is a contract “divisible”? (3 rqmts)

Answer 62

contract is divisible if
1) performance of parties is divided into two or more parts under the K
2) the number of parts due from each party is the same
3) the performance of each part by one party is agreed on as the equivalent of the corresponding part from the other party (quid pro quo)

Question 63

when may the price be demanded for each unit of an installment contract? (2 rqmts)

Answer 63

price may be demanded for each unit if…
1) the price can be apportioned as to each unit, and
2) the K doesn’t contradict this

Question 64

what must happen when it is determined that a party is under an immediate duty to perform?

Answer 64

the duty to perform must be discharged

Question 65

what is the effect of the occurrence of a condition subsequent?

Answer 65

it will discharge the duty to perform

Question 66

when will illegality discharge duty to perform?

Answer 66

when the subject matter of the K has become illegal due to a subsequently enacted law (ie – supervening illegality)

Question 67

what is mutual rescission?

Answer 67

when a contract is discharged by an express agreement between the parties to rescind (forms a binding K supported by consideration in the form of each party giving up their right to demand counterperformance from the other)

Question 68

what must be true about both parties’ performance in order for mutual rescission to effectively discharge a contract?

Answer 68

both parties must have some performance remaining

Question 69

true or false: mutual rescission must be written to be effective.

Answer 69

FALSE (may be an oral agreement)

Question 70

when may a contract NOT be discharged by an otherwise valid mutual rescission?

Answer 70

when the rights of a third party beneficiary have already vested

Question 71

what is an accord?

Answer 71

an agreement to accept a different, future performance to satisfy an existing duty

Question 72

what is the effect of an accord?

Answer 72

merely suspends the right to enforce the original contract in accordance with the accord contract

Question 73

what is satisfaction?

Answer 73

the performance of the accord agreement

Question 74

what is the effect of satisfaction?

Answer 74

discharges both the original contract and the accord contract

Question 75

how is an accord/satisfaction different than partial discharge by modification?

Answer 75

discharge by mod = excused immediately
discharge by A+S = only excused when satisfied

Question 76

true or false: an accord must be supported by consideration.

Answer 76

TRUE

Question 77

what kind of consideration is sufficient for an accord? (2 types)

Answer 77

sufficient if
1) it’s a different type than the consideration under the OG K, or
2) it’s to be paid to a third party

Question 78

what is a novation?

Answer 78

when a new contract substitutes a new party to receive benefits and assume duties that orginally belonged to one of the original parties under the terms of the old contract

Question 79

what are the 4 requirements for a valid novation?

Answer 79

1) a previous valid K
2) an agreement between all parties (including the new party to the K)
3) the immediate extinguishment of contractual duties as between the original parties, and
4) a valid and enforceable new K

Question 80

what is a delegation?

Answer 80

situation where one party to a K finds a replacement party to perform BUT the OG party still remains on the hook (OG party’s duty not discharged)

Question 81

what is discharge by impossibility?

Answer 81

contractual duties discharged where it has become impossible to perform them

Question 82

true or false: impossibility is determined by an objective standard (ie – duties can’t be performed by anyone).

Answer 82

TRUE
**NOTE = if duties can be performed by someone other than promisor, the duty won’t be discharged by impossibility

Question 83

when must an impossibility arise to be effective to discharge duties?

Answer 83

must arise AFTER the contract has been entered into
**NOTE = if facts giving rise to impossibility already existed, question becomes whether K is voidable bc of mistake

Question 84

true or false: a party that has partially performed a K that has since been discharged by impossibility MAY get restitution for their performance already rendered.

Answer 84

TRUE (ie – get back good delivered, payments made, etc)

Question 85

what is the effect of a partial impossibility on the duty to perform?

Answer 85

duty is discharged ONLY to the extent of the impossibility (remaining performance – even if more difficult – is still enforceable)

Question 86

what is the effect of a temporary impossibility?

Answer 86

will only SUSPEND the duty (not discharge it)

Question 87

what is the effect of the death or incapacity of a person necessary to the K?

Answer 87

serves to discharge it (person is considered essential to the K performance – if incapable, dead, it now becomes impossible)

Question 88

true or false: generally, if a K’s necessary subject matter or designated means of performance are destroyed, the contractual duties are discharged.

Answer 88

TRUE

Question 89

true or false: a contractor’s duty to construct a building will be discharged by destruction of the work in progress.

Answer 89

FALSE (will NOT be discharged)
**RATIONALE = construction is not impossible, contractor can always rebuild (but this will likely extend the deadline so long as contractor was not responsible for the destruction)

Question 90

if the risk of loss has already passed to the buyer, what is the effect of destruction of subject matter of the contract?

Answer 90

rules relating to discharge b/c of destruction do NOT apply (applies only if the risk is still with the seller)

Question 91

when will contractual duties be discharged due to impracticability? (2 rqmts)

Answer 91

discharged if party to perform has encountered
1) extreme and unreasonable difficulty and/or expense, AND
2) the nonoccurrence of this difficulty/expense was a basic assumption of the parties

Question 92

true or false: generally, a price increase alone WILL be treated as a sufficent impracticability.

Answer 92

FALSE (generally not sufficient to discharge duties for impracticability)

Question 93

what is discharge by frustration?

Answer 93

when the purpose of the contract has become valueless by virtue of some supervening event that is not the fault of the party seeking discharge (courts will discharge even though performance is still possible)

Question 94

what are the 4 requirements for a valid frustration (so as to discharge K)?

Answer 94

1) some supervening act or event leading to frustration,
2) at the time of entering K, parties did NOT reasonably foresee teh act or event occurring,
3) the purpose of the K has been completely or almost completely destroyed by this act or event, and
4) the purpose of the K was realized/known by both parties at the time of making the K