Performance - Excuses to Conditions

Question 1

Excuse of Condition by Hindrance or Failure to Cooperate

Answer 1

• if party having duty of performance that’s subject to a condition (i.e. party protected by the condition) prevents the condition from occurring, the condition will be excused if the prevention is wrongful
  -> wrongful if other party would not have reasonably contemplated or assumed the risk of this type of conduct

Question 2

List of Possible Excuses

Answer 2

• excuse of condition by hindrance or failure to cooperate
• excuse of condition by waiver or estoppel
• excuse of condition by actual breach
• excuse of condition by anticipatory repudiation
• excuse of condition by prospective inability or unwillingness to perform
• excuse of condition by substantial performance
• excuse of condition by divisibility of contract
• excuse of condition by impossibility, impracticability or frustration

Question 3

Excuse of Condition by Waiver or Estoppel

Answer 3

• one having the benefit of a condition under K may indicate by words or conduct that they will not insist on that condition’s being met
• consideration isn’t required for valid waiver of condition

Question 4

Estoppel Waiver

Answer 4

• whenever a party indicates they’re waiving a condition before it’s supposed to happen, or they’re waiving some performance before it is to be rendered, + the person addressed detrimentally relies on the waiver, the courts will hold this to be a binding (estoppel) waiver
• note though that promise to waive may be retracted at any time BEFORE other party has changed position to their detriment

Question 5

Election Waiver

Answer 5

• when a condition doesn’t occur or a duty of performance is broken, beneficiary of the condition or duty must make an election -> they may:
  1) terminate the liability OR
  2) continue under the K
• if choose to continue, will be deemed to have waived the condition or duty
• requires neither estoppel nor consideration
• can’t be withdrawn, even if other party hasn’t relied on it

Question 6

Conditions That May Be Waived

Answer 6

• if no consideration is given for the waiver, the condition must be ancillary or collateral to the main subject + purpose of K for waiver to be effective
  -> can’t waive entitlement to entire or substantially entire return of performance

Question 7

Waiver In Installment Ks

Answer 7

• if waiver isn’t supported by consideration, beneficiary of waived condition can insist on strict compliance w/ terms of K for future installments (as long as no detrimental reliance has occurred), by giving notice that he’s revoking the waiver

Question 8

Right to Damages for Failure of Condition

Answer 8

• important to note that waiver severs only right to treat failure of the condition as a total breach excusing counterperformance
• waiving party does NOT thereby waive right to damages

Question 9

Excuse of Condition by Actual Breach

Answer 9

• duty of counterperformance excused by actual breach of K when performance is due
  -> at common law, only if breach = material (minor breach may suspend duty, but won’t excuse)

Question 10

Excuse of Condition by Anticipatory Repudiation

Answer 10

• occurs if promisor, prior to time set for performance of their promise, indicates they won’t perform when time comes
• if certain reqs met, anticipatory repudiation will excuse conditions

Question 11

Anticipatory Repudiation - Executory Bilateral K

Answer 11

• ant rep applies only if there’s a bilateral K w/ executory (unperformed) duties on both sides

Question 12

Anticipatory Repudiation - Unequivocal

Answer 12

• anticipatory repudiation stems from words or conduct of promisor UNEQUIVOCALLY indicating cannot or will not perform when time comes
  -> if not unequivocal, not repudiation

Question 13

Effect of Anticipatory Repudiation

Answer 13

Nonrepudiating party has 4 alts:
1) treat anticipatory repudiation as total repudiation + sue immediately
2) suspend own performance + wait to sue until performance date
3) treat repudiation as offer to rescind + treat K as discharged
4) ignore repudiation + urge promisor to perform (can still sue for breach + excused from performing unless promisor retracts repudiation

Question 14

Retraction of Repudiation

Answer 14

• repudiating party may at any time before next performance due withdraw repudiation unless other party has canceled, materially changed position in reliance on repudiation, or otherwise indicated they consider the repudiation final
• withdrawal may be in any manner that clearly indicates intention to perform, but must include any assurances justifiably demanded

Question 15

Excuse of Condition by Prospective Inability or Unwillingness to Perform

Answer 15

• prospective failure of condition occurs when party has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance due

Question 16

Prospective Inability/Unwillingness to Perform - Distinguish from Actual + Anticipatory Repudiation

Answer 16

• prospective inability/unwillingness involves conduct or words raising DOUBTS that party will perform, NOT unequivocal

Question 17

Effect of Prospective Failure

Answer 17

• allows innocent party to suspend further performance until receive adequate assurances that performance will be forthcoming
  -> if other side fails to provide ad assurances, innocent party may be excused from own performance + can treat such failure as repudiation
• retraction possible, but must be communicated

Question 18

Excuse of Condition by Substantial Performance

Answer 18

• if party has rendered substantial performance, condition of complete perf may be excused
  -> party rendering sub perf can enforce K, but other party can still deduct damages suffered due to any incompleteness
• BUT courts generally apply only if constructive condition involved (NOT for express ones)
• inapplicable if breach willful
• also inapplicable to sales of goods

Question 19

Excuse of Condition by Divisibility of K

Answer 19

• if K = divisible + party performs one of the units of the K, they’re entitled to agreed-on equiv for that unit even if they fail to perform the other units
  -> not a condition precedent to other party’s liability that entire K be performed
• BUT other party has cause of action for failure to perform other units + may w/hold counterperformance for those units

Question 20

What is a Divisible K?

Answer 20

3 tests must be concurrently satisfied for K to be divisible:
1) performance of each party divided into two or more parts under K
2) number of parts due from each party is the same
3) performance of each part by one party is agreed on as equiv of corresponding part from other party
-> each perf = quid pro quo of other

Question 21

Sales of Goods + Divisible Ks

Answer 21

• Art 2 assumes K NOT divisible unless authorizes delivery in several lots -> in which case, called installment K
• in installment Ks, price can be demanded for each lot unless contrary intent appears

Question 22

Excuse of Condition by Impossibility, Impracticability or Frustration

Answer 22

• conditions may be excused by any of these