Performance, Modification, and Excuse (MBE) Flashcards
What is The Preexisting Duty Rule?
Coverage?
A promise to increase compensation for duties already owed under an existing contract is unenforceable because there is no consideration
Common law contracts
Exceptions to the Preexisting Duty Rule
(2)
- Mutual Modification
- Unforseen Circumstances
Mutual Modification Requirements?
Effect?
Coverage?
1) Both parties agree to a performance that is different from the original contract; and,
2) Difference is not a mere pretense
then, A promise to increase compensation under an existing contract is enforceable as a mutual modification
Common Law only
Unforseen Circumstances Requirements?
Effect?
Coverage?
The preexisting duty rule will not apply if:
A promise of increase compensation because performance has been rendered substantially more burdensome than reasonably anticipated
Common Law only
Modification requirements under the UCC
an agreement modifying an existing contract for the sale of goods needs no consideration as long as it is made in good faith
Seller’s Obligation under the UCC
transfer and deliver the goods
Buyer’s Obligation under the UCC
accept and pay for the goods
What are carrier cases
when the parties to a contract agree to use a common carrier
What are Non-carrier cases
Apply when the parties do not agree to use a common carrier
In non-carrier cases, when does the risk of loss pass?
(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
In carrier cases, when does the risk of loss transfer?
(1) Critical distinction:
(a) Shipment contract: seller promises to turn goods over to the carrier
Risk of loss passes to buyer once the goods are delivered to the carrier.
(b) Destination contract: 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.
When will Unilateral Mistake excuse performance?
(a) Defined: a single party operating under a faulty assumption about a material fact at formation
(b) The rule: A single party mistaken is not excused
1) Exception #1: Mistake excused if other party knew or had reason to know the other party’s mistake
When will a Mutual Mistake excuse a contract?
1) The mistaken assumption relates to material facts;
2) The mistake is made by both parties; and,
3) The disadvantaged party did not bear the risk of mistake
When will impossibility excuse both parties from a contract?
Requirement #1: The impossibility must be objective
Requirement #2: The impossibility was not known at formation
In what circumstances are we likely to find objective impossibility?
(3)
Circumstance #1: Where the subject matter of the contract is destroyed
Circumstance #2: where there is a personal service contract and the performing party has died or become incapacitated
Circumstance #3: When supervening law renders performance legally impermissible
Objective impossibility occurs: where
the performance is literally impossible for anyone because of circumstances beyond the control of the parties
When will the doctrine of impracticability excuse perofrmance?
(a) The contingency causing the impracticability was unforeseen; and,
(b) The increase in the cost of performance is far beyond what either party anticipated
UCC cases where impracticability has been found typically involve (3)
Shortages cause by war or embargo
Crop failure
Unforeseen shutdown of major sources of supply
When will doctrine of frustration of prupose excuse performance?
Requirement #1: It must be parties principal purpose of entering the contract is frustrated
Requirement #2: The frustration was substantial in nature. Big frustration, total frustration
Requirement #3: The non-occurrence of the frustrating event, must have been a basic assumption
When will Rescission exclude performance
both parties to a contract are mid-performance. Consideration is provided by the discharge of the other’s duties
When will Accord & Satisfaction excuse performance
The parties may make an accord, which is: a contract under which the obligee promises to accept substituted performance in satisfaction of the obligor’s existing duty
When obligor performs accord, then there is satisfaction.
When is an Accord Valid?
(a) where 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 à cannot be a pre-existing duty.
(b) where the accord involves an agreement for partial payment: there is a good faith or bonafide dispute about the amount owed.
When may a contract be anticipatoryly repudiated?
a. a party’s definitive statement indicating it will commit a breach of contract;
b. a party’s voluntary act that renders the party unable to perform its contractual obligations
When can a party request an assurance of performance
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.
