Performance Issues & Breach Flashcards
BREACH
nonbreaching party must show that they are willing and able to perform BUT FOR the breaching party’s failure to perform
common law breaches
once you determine there’s a breach of K, next step is to determine whether that breach is either minor or material
how to determine if it’s minor or material (courts look at):
- extent of performance by breaching party
- whether breach by breaching party was negligent or willful
- hardship to breaching party
- sufficiency of damages to nonbreaching party
under common law K, if one party has substantially performed, other party is obligated to perform and complete performance
minor v. material breach
- MINOR breach: it’s minor breach if the one party gains substantial benefit of bargain despite other party’s defective performance
minor breach just gives the nonbreaching party right to damages for minor breach; nonbreaching party still must perform - MATERIAL breach: if one party does NOT get the substantial benefit of their bargain, the breach = material
if breach is material, nonbreaching party can:
1) treat the K as at an end (any duty of counterperformance owed by them will be discharged), and
2) will have immediate right to all remedies for breach of the entire K
timeliness of performance
- failure to perform by time stated in K is generally not a material breach if performance rendered within reasonable time
- if the nature of the contract makes timely performance essential, or if the contract expressly provides that time is of the essence, then failure to perform on time is usually a material breach
minor breach coupled with anticipatory repudiation
if a minor breach is coupled with an anticipatory repudiation, nonbreaching party can treat as material breach (can sue immediately for total damages and are discharged from any duty of further performance)
- common law: courts hold that aggrieved party must not continue on (b/c doing so would failure to mitigate damages)
- UCC: permits party to complete manufacture of goods to avoid having to sell unfinished goods
perfect tender - sale of goods
- if goods or their delivery fail to conform to K in ANY WAY, buyer can reject all, accept all, or accept any units and reject rest
- buyer is entitled to damages
buyer accepts
- buyer indicates to seller that goods conform OR they’ll keep even though they don’t conform
buyer’s responsibility for goods after rejection
after rejecting goods, buyer has obligation to hold goods with reasonable care for a time sufficient to allow seller to remove them
if no instructions, buyer can (RSR):
1) RESHIP goods back to seller
2) STORE for seller’s account, or
3) RESELL them and give seller notice of intent to resell
*if buyer wrongfully exercises ownership over rejected goods, seller has action against buyer for conversion
to reject
buyer has to notify the seller of the rejection
buyer can REVOKE his ACCEPTANCE
once goods are accepted, buyer’s power to reject is gone and buyer needs to pay price (less any damages resulting from seller’s breach)
BUT buyer can REVOKE ACCEPTANCE already made (revocation has effect of rejection)
buyer can REVOKE if
- (1) goods have a DEFECT that substantially impairs their value to buyer AND
- (2) they accepted goods initially on belief that defect would be cured by seller and it hasn’t been, OR
- (3) they accepted goods b/c it was hard to discover the defects
revocation has to occur within reasonable time after buyer finds out about the defects, and before any substantial changes in the goods occurs
seller’s right to cure
- WITHIN TIME ORIGINALLY PROVIDED FOR PERFORMANCE: if buyer has REJECTED goods b/c of defects, seller can cure by making new tender of conforming goods that buyer can then accept
- FURTHER REASONABLE TIME: if buyer rejects nonconforming goods that the SELLER reasonably thought would be acceptable, seller, upon notice to buyer, has a further reasonable time beyond original K time within which to make conforming tender
seller can give notice that nonconforming goods were SHIPPED as ACCOMODATION
seller shipped (used as form of acceptance) nonconforming goods
***SHIPMENT IS USED AS A FORM OF ACCEPTANCE
did seller give notice that nonconforming goods were shipped as an ACCOMODATION?
- NO: shipment is ACCEPTANCE of buyer’s offer AND BREACH of the K –> buyer can accept all, reject all, or accept any number and reject rest (look at previous slides)
- YES: shipment is a COUNTEROFFER (buyer has option to accept or reject)
installment Ks and rejection
where delivery of goods occurs in separate lots
- rejection: buyer can only reject a delivery/installment if 1) nonconformity substantially impairs installment; and 2) nonconformity can’t be cured
- whole K is breached ONLY IF nonconformity substantially impairs the value of ENTIRE CONTRACT
divisible contract
- performance of each must be divided into 2 or more parts
- # of parts due from each party are the same
***if K is divisible, party who performed parts is entitled to collect K price for THOSE parts
