Performance, Excuses, and Breach Flashcards
Anticipatory Breach/Repudiation
Occurs when, after a contract’s formation, one party informs the other that they do not intend to perform, effectively breaching the contract.
How must a party convey their intent to an anticipatory repudiation?
The party must do so clearly and unequivically.
When can a party retract a repudiation?
1) Other party has not cancelled the contract
2) Other party has not materially relied on the repudiation and changed position
3) Other party has not begun a suit against the breaching party
What are a non-breaching party’s options when faced with repudiation?
1) Accept repudiation and cancel contract
2) Ignore and wait for performance
3) If performance has passed, may sue other party for breach
Adequate Assurances re: Anticapatory Breach
Under the UCC, when there are reasonable grounds for insecurity arise with respect to the performance of either party, a part may provide a written request for adequate assurance to confirm that the other party is capable of performing.
Other party needs a “reasonable amount of time” to respond. (30 days)
What is an ambiguous term and how do courts deal with them?
A term in the contract that is subject to more than one interpretation.
Courts will apply the plain meaning rule, where the “objective definitions” of the contract control the meaning.
If the court can understand a term through it’s plain meaning, it is not amibigious.
What if a term is ambiguous even after using the plain meaning rule?
Court’s will use extrinsic evidence to determine the meaning. Order of priority:
1) Express contract terms (plain meaning
2) Course of Performance: Current conduct between parties
3) Course of Dealing: Prior transactions
4) Trade Usage and Local Customs
What is the Parole Evidence Rule
Under the PER, evidence of prior or contemporaneous negotiations and agreements, written or oral, that contradict or modify contractual terms is inadmissible to vary the terms of the contract as written.
How can a court determine if a contract is a final agreement between the parties?
Whether or not the contract is integrated.
Total: Completely expressly all of the terms of the party’s agreement
Partial: Sets forth the parties agreement about some, but not all, terms
Look or a merger clause, or facts that support that party’s intend this to be a final agreement!
For partial integrations, what sort of evidence is permitted?
Oral or written extrinsic evidence, so long as the terms of the evidence is consistent with the writing of the final contract.
What are the exceptions to the Parole Evidence Rule?
1) Defense to formation or enforcement of K
2) Separate and distinct deal
3) Condition precedent
4) Ambiguity and Interpretation
5) Subsequent agreements
7) Trade usage and course of dealing or performance
Regarding performance, what is required under common law?
All that is required is substantial performance!
This means that, even with a breach, the nonbreaching party still has to perform.
Nonbreaching party can still obtain remedies!
May a breaching party recover if they have substantially performed under common law?
Yes! So long as it is a minor breach.
What is perfect tender under the UCC?
Under the UCC, the seller must make a perfect tender of the goods, including delivery of the goods by the contract due date.
What is the defense of impossibility?
Discharges one’s duty to perform because of:
1) Death
2) Physical Incapacity
3) Illegality
4) Destruction of Subject Matter
What is the defense of impracticability?
Duty to perform may be discharged if:
1) Due to an unforeseeable event
2) Nonoccurrence of event was basic assumption of contract
3) Contract becomes commercially impracticable
4) Not at the fault of moving party, nor did they assume the risk
Release from Performance
A release is a writing that manifests intent to discharge another party from an existing duty.
For common-law contracts, the release must generally be supported by consideration to discharge the duty.
UCC Right to Cure
The seller has a right to cure a defective tender if:
(i) Time for performance under the contract has not elapsed or
(ii) Seller has reasonable grounds to believe buyer would accept despite nonconformity.
Under the UCC, does perfect tender also mean the good is free of defects?
Yes!
Even if a seller attempts to remedy the defects, if the remedies are neither permanent nor adequate, then the argument will likely fail.
Under the UCC, may a buyer revoke their acceptance of goods?
Yes! Permitted if:
1) Nonconformity substantially impair value to buyer
2) Buyer accepted goods without discovery of nonconformity, or discovery would have been difficult because seller gave assurances of conformity.
3) Buyer informs seller within reasonable time of discovering nonconformity or when it should have been discovered
