Performance of the Contract Flashcards
Common Law: Substantial performance
Under CL, substantial performance is required, which means performance will be satisfied so long as there is not material breach of contract. If material breach, non-breaching party’s performance is excused. If breach is not material, non-breaching party’s performance not excused.
UCC: Perfect tender
Under UCC, perfect tender required, which means seller must deliver conforming goods in accordance with terms of contract (ie, perfect goods and perfect delivery). A nonconformity is a breach that allows buyer to reject all or portion of goods.
UCC: Perfect tender - Exceptions
Three main exceptions: (1) parties can contractually change default rules to include substantial performance; (2) installment contracts do not have to satisfy perfect tender - buyer can reject specific installment delivery when there’s a substantial impairment that cannot be cured; (3) if seller fails to tender perfect goods, buyer must give seller chance to cure nonconformity if time for performance under contract has not yet expired or seller has reasonable grounds to believe buyer would accept replacement for nonconformity.
UCC: Perfect tender - Revocation of acceptance
If buyer fails to reject nonconforming goods after having reasonable opportunity to inspect goods, buyer is deemed to have accepted goods. Buyer may revoke acceptance if: (1) nonconformity substantially impairs value of goods; (2) revocation occurs within reasonable time after buyer discovers or should have discovered nonconformity and before any substantial change in condition of goods; or (3) buyer accepted goods on reasonable assumption nonconformity would be cured and it hasn’t been seasonably cured, or without discover of nonconformity his acceptance was reasonably induced by either difficulty of discover or by seller’s assurances.
Conditions
Condition is future event that must occur before party’s contractual rights or
obligations are created, destroyed, or enlarged.
Conditions - Express condition
Express condition in contract makes performance condition upon completion of condition. Express conditions must be satisfied strictly, unless condition is excused by waiver where party receiving protection of condition either (1) waives condition with words or conduct, or (2) wrongfully interferes or hinders occurrence of condition when judged by good faith standard.
Discharge of duty to perform: Impracticability
Party’s duty to perform under contract is discharged based on impracticability if: (1) unforeseeable event occurs that makers performance extremely and unreasonably difficult or impossible; (2) nonoccurrence of event was basic assumption of contract; and (3) party seeking discharge was not at fault.
Discharge of duty to perform: Impossibility
Party’s duty to perform under contract is discharged under impossibility if an unforeseeable event occurs, making it objectively impossible for party
to perform.
Discharge of duty to perform: Frustration of purpose
Party’s duty to perform under contract is discharged under frustration of purpose if unexpected event arises that destroys party’s purpose for entering into contract. Party will be entitled to rescind contract, even if performance is still possible. Nonoccurrence of event must have been basic
assumption at time of contract and party seeking discharge was not at fault.
Third party beneficiary contracts
Third-party beneficiary contract results when parties to a contract intend that
performance by one of parties is to benefit third person who is not a party to contract.
Third party beneficiary contracts - Intended vs. Incidental beneficiaries
When contract benefits persons other than parties to contract, third party can enforce contract if third party is an intended beneficiary. Otherwise, third party is an incidental beneficiary who cannot enforce contract
Assignments of rights
A party can assign rights and benefits, in whole or in part, under contract to third party unless contract explicitly prohibits or invalidates assignments. Assignments are not allowed when they (i) materially increase duty or risk of obligor or (ii) materially reduce obligor’s chance of obtaining performance.
Delegation of duties
Generally, obligations under contract can be delegated. When obligations are delegated, delegator is not released from liability. Delegator is only released from liability if other party to contract agrees to a novation to release delegator as a party to contract and substitute a new one.
