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J.Edits.Contract.Law > Performance, Modification, and Excuse > Flashcards

Performance, Modification, and Excuse Flashcards

1
Q

Define the preexisting duty rule?

A

At common law, a promise to increase compensation for duties already owed under an existing contract is unenforceable because there is no consideration for the increase.

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2
Q

What are the exceptions to the preexisting duty rule?

A
  1. Mutual Modification
  2. Unforeseen Circumstances.
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3
Q

What are the requirements for mutual modification?

A

At common law, a promise to increase compensation under an existing contract is enforceable as a mutual modification if:

  1. Both parties agree to a performance that is different from the original contract
  2. Difference from the original contract is not a mere pretense.
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4
Q

What are the requirements of the unforeseen circumstances exception to the preexisting duty rule?

A

The preexisting duty rule will not apply if: A promise of increase compensation occurs because performance has been rendered substantially more burdensome than reasonably anticipated.

(common law only)

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5
Q

What is required to modify a UCC contract?

A

An agreement modifying an existing contract for the sale of goods needs no consideration as long as it is made in good faith.

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6
Q

What is a seller’s obligation in the UCC?

A

To transfer and deliver the goods sold.

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7
Q

What is a buyer’s obligation in the UCC?

A

Accept and pay for the goods.

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8
Q

What are carrier cases?

A

When the parties to a contract agree to use a specified common carrier (transporter) to deliver goods.

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9
Q

What are non-carrier cases?

A

When the parties to a contract do not agree to use a common carrier to deliver goods.

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10
Q

In non-carrier cases, when does the risk of loss pass?

A
  1. If seller is not a merchant: Risk of loss passes to buyer upon tender of delivery
  2. If seller is a merchant: Risk of loss passes when the goods are physically in the buyer’s possession.
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11
Q

In carrier cases, when does the risk of loss transfer?

A
  1. If seller promises to turn goods over to the carrier: risk of loss passes to buyer once the goods are delivered to the carrier
  2. If the seller promises to tender delivery at a particular destination point: risk of loss passes to the buyer when the goods are tendered to the destination point.
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12
Q

When will a unilateral mistake excuse performance?

A

If one party enters into a contract under a faulty assumption about a material fact at formation, the mistaken part is not excused unless the other party knew or had reason to know the other party’s mistake.

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13
Q

When will a mutual mistake excuse a contract?

A
  1. The mistaken assumption relates to material facts
  2. The mistake is made by both parties

And

  1. The disadvantaged party did not bear the risk of mistake.
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14
Q

When will impossibility excuse both parties from a contract?

A

The contract becomes objectively impossible to perform+ The impossibility was not known at formation.

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15
Q

What are common examples of objective impossibility?

A
  1. The subject matter of the contract is destroyed
  2. There is a personal service contract and the performing party has died or become incapacitated
  3. When supervening law renders performance of the contract illegal.
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16
Q

When is performance objectively impossible?

A

The performance is literally impossible for anyone to perform in an manner due to circumstances beyond the control of the parties.

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17
Q

When will the doctrine of impracticability excuse perofrmance?

A
  1. The contingency causing the impracticability was unforeseen
  2. The increase in the cost of performance is far beyond what either party anticipated.
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18
Q

In what UCC cases is impracticability typically found?

A
  1. Shortages caused by war or embargo
  2. Crop failure
  3. Unforeseen shutdown of major sources of supply.
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19
Q

When will doctrine of frustration of prupose excuse performance?

A
  1. The parties principal purpose of entering the contract is frustrated
  2. The frustration is substantial

And

  1. The non-occurrence of the frustrating event must have been a basic assumption.
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20
Q

When will rescission excuse performance?

A

When both parties to a contract are mid-performance: consideration is provided by the discharge of the other’s duties.

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21
Q

When will accord and satisfaction excuse performance?

A
  1. The obligee promises to accept substituted performance in satisfaction of the obligor’s existing duty
  2. The obligor performs the substituted performance.
22
Q

When is an accord valid?

A
  1. When the accord involves an agreement for partial or substituted performance: the substituted performance differs significantly from the original performance or it’s obligation is doubtful (≠ a pre-existing duty).
  2. Where the accord involves an agreement for partial payment: there is a good faith or bonafide dispute about the amount owed.
23
Q

When may a contract be anticipatorily repudiated?

A
  1. A party’s definitive statement indicating it will commit a breach of contract

Or

  1. A party’s voluntary act that renders the party unable to perform its contractual obligations.
24
Q

When can a party request an assurance of performance?

A

If anticipatory repudiation cannot be established but there are: reasonable grounds for insecurity, the insecure party can make a demand for adequate assurance of performance.

25
Q

When can a party suspend performance due to insecurity?

A
  1. Upon making a demand for assurances, a party with reasonable grounds for insecurity may suspend his own performance so long as it is commercially reasonable to do so; The failure to respond with reasonable assurances constitutes a repudiation by the non-responding party. This can occur where the other party:

Does not respond to the demand within a reasonable time (30 days under the UCC)

Or

Does not respond in a way that provides reasonable assurances.

26
Q

Rights of the aggrieved party upon the repudiation of a contract?

A
  1. The aggrieved party can cancel the contract and terminate all obligations under the contact
  2. The party can bring an action for damages or specific performance

And

  1. The party can ignore the repudiation and continue under the contract.
27
Q

When can a repudiation not be retracted?

A

A party who has made an anticipatory repudiation to the other party may retract the repudiation unless and until the other party:

  1. Acts in reliance upon the repudiation
  2. Accepts the repudiation by signaling their acceptance to the breaching party

Or

  1. Commences a suit for damages or specific performance.
28
Q

Define express and implied conditions.

A
  1. Express conditions: Those conditions that are expressly included in the contract as conditions.
  2. Implied conditions: A fiction employed by the courts to deal with the potential effects of breaches of contract Common Law contracts.
29
Q

What is the effect of the failure of an express condition?

A

It will discharge the party’s obligation to perform.

30
Q

When do failed express conditions not discharge performance?

A
  1. Waiver: The party who has been discharged by the failed condition, may waive that right and perform anyway
  2. Bad Faith Conduct: when a party acts in bad faith as to prevent the condition, his conduct will not be discharged
  3. Gross Forfeiture: courts will enforce a performance obligations so as to avoid a grossly disproportionate loss for a relatively minor infraction.
31
Q

What are the two types of failed implied conditions?

A
  1. Material Breach
  2. Substantial Performance.
32
Q

When is the failure of an implied condition a material breach?

A

If the breach is serious enough or performance is so bad, the court will treat the breach in the same way it would treat a failure of an express condition. The aggrieved party is discharged from his own performance obligations.

33
Q

When is does the failure of an implied condition result in substantial performance?

A

If the breach is not serious, the court will treat the party’s performance as substantial. The aggrieved party will not be discharged from his own performance obligations.

34
Q

What five factors are used to distinguish between material breach and substantial performance?

A
  1. The extent to which the aggrieved party will be deprived of the benefit that she reasonably expected to receive under the contract
  2. The extent to which the aggrieved party can adequately be compensated via damages for the defective performance
  3. The extent to which the breaching party will suffer forfeiture if a material breach is found
  4. The likelihood that the breaching party will cure his failure
  5. The extent to which the breach was willful or in bad faith rather than merely negligent or innocent.
35
Q

Where a condition has failed and performance cannot be excused, what other methods of enforcement available to mitigate the consequences to the breaching party?

A
  1. Divide the Contract

Or

  1. Quantum Meruit Common Law.
36
Q

What performance obligations remain when there is a failed condition in a divisible contract?

A

If the contract is easily apportioned into agreed equivalents, then the failure excuses the part of the divisible part that is breached but not for the other portions.

37
Q

Divisibility of the contract and quantum meruit allow for which party to recover?

A

The breaching party (common law).

38
Q

When does quantum meruit apply?

A

When a party failed to fulfill an express condition or is in material breach, he may still be able to recover in quantum meruit:

  1. The breaching party may recover the reasonable value of the benefits conferred
  2. Recovery will be reduced by the damages caused by his breach of contract.
39
Q

What is the effect of failed condition in the UCC?

A

Under the perfect tender rule, the terms of a contract for the sale of goods are enforced exactly. Every contract term is thus treated as an express condition, and a breach by seller will relieve the payment obligation of the buyer.

40
Q

Pursuant to the UCC: when is a seller in breach of a contract?

A

The goods tendered fail in any respect to conform to the contract.

41
Q

What is the perfect tender rule?

A

Under the perfect tender rule, in the UCC, the terms of a contract for the sale of goods are enforced exactly. Every contract term is treated as an express condition, and a breach by seller will relieve the payment obligation of the buyer.

42
Q

What are a buyer’s options if UCC seller fails to make a perfect tender?

A
  1. Reject goods
  2. Accept goods
  3. Accept part and reject part.
43
Q

What must UCC buyer do to reject goods?

A

Step 1: The buyer must exercise the right of rejection within a reasonable time and notify seller

Step 2: Sue for damages; unless, cure applies.

If the buyer does not effectuate rejection, then he has made a failed rejection, which is deemed an acceptance of the goods by the buyer.

44
Q

How does a buyer’s acceptance of seller’s goods occur?

A

The buyer must have a reasonable opportunity to inspect the goods+ signifies acceptance through:

  1. Stating to the seller that the goods conform to the contract
  2. Taking the goods despite their nonconformance
  3. Failing to make an effective rejection
  4. Taking any action inconsistent with seller’s ownership.
45
Q

What are the legal consequences of the buyer’s acceptance of the seller’s goods?

A
  1. The buyer must: pay the contract price of those goods

And

  1. The buyer may also: seek damages for any non-conformity if seller is notified.
46
Q

If the buyer accepts part of the seller’s goods and rejects part, the buyer can only divide the goods by?

A

Commercial units of the good (cannot accept 1/2 a unit).

47
Q

When does a seller of goods have the right to cure?

A

If a seller makes a nonconforming tender, but time for performance remains under the contract, then the seller may cure under the UCC.

48
Q

What are the requirements for a seller’s right to cure?

A
  1. Seller must give buyer reasonable notice
  2. Seller must cure by the contract deadline.
49
Q

How can a seller of goods overcome a breach of the perfect tender rule?

A
  1. Cure the breach
  2. Show reasonable grounds to believe delivery was acceptable

And

  1. Show reasonable grounds that the buyer would accept nonconformity.
50
Q

When can a seller of goods assert reasonable grounds to believe delivery was acceptable?

A

After the deadline for performance under the contract: Seller must:

  1. Give buyer reasonable notice of intention to cure
  2. Buyer accepts seller’s offer to cure

And

  1. Seller must cure within a reasonable time.
51
Q

How can a seller of goods prove that he had reasonable grounds to believe that the buyer would accept nonconformity?

A

Produce evidence of:

  1. Express assurances to that effect from the buyer

Or

  1. Nonconformity appropriate due to trade usage, course of dealing, or course of performance.

J.Edits.Contract.Law (8 decks)

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