Performance, Modification, and Excuse Flashcards
Under the UCC, what if something happens to the goods before the buyer receives them?
If seller bears the ROL = seller provide replacement goods
If buyer bears ROL = buyer must pay the price regardless
What is a carrier case?
parties to a sale of goods K agree to use common carrier (trucking firm, train, etc.)
What is a non-carrier case?
parties to a sale of goods K do not agree to use a common carrier
In a non-carrier case, when does the ROL transfer to the buyer?
If seller isn’t a merchant = as soon as goods are made available to him (tendered)
If seller is a merchant = once goods are physically in buyer’s possession
In a carrier case, when does ROL transfer?
Shipment contract = ROL passes to buyer when goods are delivered to the carrier
Destination contract = ROL passes to buyer when goods are tendered at the destination point specified in the K
What is a shipment contract?
ROL passes to buyer when goods are delivered to the carrier.
Identified as “FOB Seller” or K is silent (default rule)
Buyer bears ROL if goods are damaged in transit
What is a destination contract?
ROL passes to buyer when goods are tendered at the destination point specified in the K
Identified as “FOB Buyer”
Seller bears the ROL if the goods are damaged in transit
What is the common law preexisting duty rule?
a promise to increase compensation for duties already owed is unenforceable b/c there’s no consideration for the modification
What are exceptions to the preexisting duty rule?
(1) mutual modification
(2) unforeseen circumstances
What is the mutual modification exception to the preexisting duty rule?
Mutual Modification of an existing K is enforceable if both parties agree to different performance from what was originally required by the original K
What is the unforeseen circumstances exception to the preexisting duty rule?
Preexisting duty rule not applicable if increased compensation is given in exchange for a promised performance that has been rendered substantially more burdensome than reasonably anticipated when K formed
How can K’s be modified under the UCC?
Agreement modifying an existing K needs no consideration to be enforceable as long as made in good faith
How can K’s be modified under the common law?
Must have consideration to modify
Under what 4 doctrines can K performance be excused due to faulty assumptions?
(1) mistake
(2) impossibility
(3) impracticability
(4) frustration of purpose
What is a unilateral mistake?
1 party’s mistake about present material fact(s) is NOT excused UNLESS the other party knew/had reason to know of the party’s mistake
What is a mutual mistake?
A mutual mistake is voidable by the disadvantaged party when all three are met:
(1) mistaken assumption relates to material facts (not just value)
(2) mistake made by both parties; and
(3) disadvantaged party didn’t bear the risk of mistake under the K
What is the impossibility doctrine?
Both parties are excused if performance has been rendered impossible by events occurring after K formed
What are the requirements for the impossibility doctrine?
(1) impossibility must be OBJECTIVE: when performance is literally impossible for anyone due to circumstances beyond the control of the parties
(2) the contingency that creates the impossibility wasn’t known to the parties at the time the K was made; it happened after and was unanticipated
In what circumstances is impossibility likely to be obejctive?
(1) when the subject matter of the K is DESTROYED
(2) when there’s a personal services K and the performing party has DIED or become INCAPACITATED
(3) when supervening law or legal developments have rendered performance LEGALLY IMPERMISSIBLE
What is the impracticability doctrine?
A promisor may be excused from performance where the following two elements are proven:
(1) contingency causing impracticability was unforeseen; and
(2) increased cost/burden of performance would be far beyond what either party anticipated
What is the frustration of purpose doctrine?
Where a contingency occurs that dramatically reduces the value of performance to the receiving party
What are the three requirements for frustration of purpose?
(1) the principal purpose in entering the K is substantially frustrated;
(2) frustration was substantial in nature; and
(3) non-occurrence of the event that caused frustration was a basic assumption of the K
When is rescission permissible?
permissible where both parties to a K have remaining performance due. Consideration is provided by each party’s discharge of the other’s duties.
What is accord and satisfaction?
The parties may make an accord, which is permissible when one party has already performed and is waiting on the other party to finish performing.
