Performance of the Contract Flashcards
Substantial Performance (CL)
A party must substantially perform his part of the contract. A party who substantially performs may recover on the contract even though that party has not rendered full performance.
A delay in performance does not necessarily constitute a failure to substantially perform.
A party who has NOT substantially performed generally cannot recover damages based on the contract, but she may be able to recover through restitution.
A party who fails to substantially perform is in MATERIAL BREACH.
Perfect Tender (UCC)
Then parties must strictly perform all duties under the contract, or they will be in material breach.
The buyer has a right to inspect the good, and once he accepts them, he has an obligation to pay.
If either the tender or the goods are NONCONFORMING, then the buyer has the right to accept or reject all or part of the goods.
Right to Cure: If buyer rejects goods as nonconforming and time still remains to perform under the contract, the seller has the right to cure and tender conforming goods.
Installment Contracts (UCC)
An installment contract is defined as one in which the goods are to be delivered in multiple shipments.
Each shipment is to be separately accepted by the buyer. Payment is due upon each delivery UNLESS the price cannot be apportioned.
Nonconforming Segments: The buyer can reject only if the nonconformity substantially impairs the value of that shipment to the buyer and cannot be cured. If the seller makes adequate assurances that he can cure the nonconformity, then the buyer must accept the shipment. The buyer may cancel the entire contract only if the nonconformity substantially impairs the value of the entire contract to the buyer.
Express Conditions
Conditions express I the contract itself (e.g., “on the condition that”).
Must be met fully.
Implied Conditions
Conditions which a court may find exist because the nature of the contact suggests that then parties intended the condition.
Requires substantial performance.
Condition Precedent
Must occur before the other party has an obligation to perform.
Condition Subsequent
Duty to perform will be excused if the condition occurs.
Waiver
A condition may be waived by words or conduct; the waiving party would then have a duty to perform.
Impracticability
A duty may be discharged if:
- an unforeseeable event occurs (e.g., natural disaster) making the performance of the contract extremely difficult, and
- the nonoccurence of the event was a basic assumption at the time of the contract
The party seeking discharge must not be at fault.
Non-extraordinary increases in the cost of performance are NOT a sufficient basis for this defense.
Impossibility
An unforeseeable event occurs, making it objectively impossible for the party to perform.
Frustration of Purpose
If an unexpected event arises that destroy the party’s purpose for entering the contract, the party will be entitled to rescind the contract, even if performance is still possible.
The nonoccurence of the event must have been a basic assumption at the time of the contract and the party seeking discharge was not at fault.
Intended Beneficiary
Have the right to sue.
Ask: Does the third party know about the promise and have they changed position in reasonable reliance on the promise?
Rights Vest When:
1) the beneficiary detrimentally relies on the rights,
2) the beneficiary manifests assent to the contract, or
3) the beneficiary has filed a lawsuit to enforce the contract
Incidental Beneficiary
Does NOT have the right to sue.
Assignment of Rights
Almost all contract rights can be assigned.
Assignments are not allowed when they:
- materially increase the duty or risk of the obligor, or
- materially reduce the obligor’s chance of obtaining performance
Delegation of Duties
Generally, obligations under a contract can be delegated.
When obligations are delegated, the delegator is NOT RELEASED from liability.
