Round 2 Lecture 5 Flashcards
purpose of analysis
to determine whether a reach has occurred
effect of a condition
creates, extinguishes or limits a contractual duty- you are in favor of conditions if they create for you opportunities to escape contractual responsibility
types of conditions
express, implied-in-fact, or implied-in-law
express
using words - you contractually agree to do something “provided that “ or “subject to”
implied-n-fact
a condition that can be implied from the circumstances or the parties’ conduct
implied-in-law
constructive conditions- a condition to your obligation to pay rent to your landlord is the availability for occupancy of the apartment you rented
after a contract is entered into, what happens to the contractual duties of the parties if the duty was not made conditional or it is conditional but the condition has not been satisfied
- must be discharged by performance
- the parties by agreement agree to discharge each other from performance (mutual rescission)
- the obligor is excused from performing the duty
mutual rescission
the parties agree to end their contract
substituted contract
the parties agree to substitute for one contract a new contract
accord and satisfaction
the parties agree to substitute one type of performance of a duty for another that was in the original contract
if the duty is not discharged by performance
then the obligor is in breach of contract for failure to perform the duty
if the breach is material
the aggrieved party is excused from performing the contract
if the breach is nonmaterial
the aggrieved party is not excused from performing the contract but is entitled to damages from the breaching party for breach of contract
when are contractual duties discharged?
if they are performed
total performance
under certain circumstances it is reasonable to expect that the performance by a party under a contract will be strictly in accordance with the contract-other times, expecting such strict compliance is unreasonable and probably not achievable
2-601 perfect tender rule under UCC
perfection is the standard for seller’s performance under a sale of goods contract (but the seller has a right to cure imperfect performance)
doctrine of substantial performance
when does less than 100% performance not constitute a material breach which would discharge the non-defaulting party?
- applicable to certain contracts
- perfection or substantial performance
- breach must be unintentional and not in bad faith
if perfection is not the appropriate standard
performance must be substantial
measure of recovery
what damages can the parties recover
substantial but not perfect performance-recovery:
the aggrieved party will receive the cost of replacement or repair or in some jurisdictions the amount of diminished (reduced) value
not substantial performance - recovery:
- breach is material
- the aggrieved party has the right to not perform the contract, but the breaching party may be entitled to equitable recovery for value of work actually performed
time for performance
generally performance by the stated time or within a reasonable time thereafter is acceptable - a minor delay in performing is not a breach
“time is of the essence”
failure to perform by this time is an automatic material breach - newspaper ads specifically for 4th of July aren’t run till after the holiday
considerations for time of the performance
- is it of the essence?
- is that essence express or implied?
- effect-if it is of the essence failure to comply is material breach
perfect tender rule
time is of the essence as to sale of goods
why is timing important?
tells us if the breach was material or immaterial
factors of a material breach
- was performance substantial
- was time of the essence
- was breach serious
- was breach intentional
- does contract specify what breaches are material
excuses for non performance
the law provides you with an excuse for whatever would otherwise be your breach of the contract
- legal impossibility
- frustration of purpose
- commercial impracticability
legal impossibility
- death or incapacity of the promisor prior to the performance of a personal service contract
- the destruction of the subject matter of a contract prior to performance
- supervening illegality which makes performance of the contract illegal
frustration of purpose
some unanticipated event has occurred and as a result the contract now has no value to one party-one party’s principal purpose in making the contract is frustrated w/p the party’s fault by the occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made
commercial impracticability
mechanism for shifting risk in accordance with the parties’ presumed intentions-some unanticipated even has occurred and performing the contract would be extraordinarily difficult and unfair to one party (ex: weather related event, outbreak of war, earthquake)
elements of commercial impracticability
- did an unexpected event occur?
- did the event render performance impossible or impracticable
- did the non-performing party assume the risk that the event would occur
- was the nonperforming party at fault in causing the unexpected event
impracticable
forcing contract is no longer financially sensible- easier to show than impossibility
examples to which doctrine may apply to excuse a party from performance
- death or incapacity of a person necessary for performance
- destruction of subject matter necessary for performance
- failure of anticipated source of supply
- supervening illegality, gov. regulation, or order
- extraordinary weather event or other act of God
examples of non-examples
- increased costs
- labor disputes
- change of market conditions
purpose of remedies
to compensate the aggrieved party
common law remedies
legal remedies and equitable remedies
compensatory damages
to place aggrieved party in as good a position as if the other party had performed
reliance damages
to place party in as good a position as if the contract had not been made (used when compensatory, incidental, and consequential damages cannot be reasonably ascertained)
damages for misrepresentation
- rescission available as alternative remedy
- out of pocket damages
- benefit of bargain damages
out of pocket damages
difference between value of what is received and what is given
benefit of bargain damages
difference between value of what is received and what it would have been worth in absence of the misrepresentation.
remedies available to fraudulent misrepresentation.
allows benefit of bargain damages in majority of jurisdicitons
remedies to non-fraudulent misrepresentation
typically limited to out of pocket damages
foreseeability limitation on monetary damages
should breaching party have known that breach would result in aggrieved party’s losses? foreseeable if losses resulted from the breach:
- in the ordinary course of events or
- as a result of special circumstances about which the party in breach had reason to know
unforeseeable damages
not recoverable for loss if the party in breach did not have reason to foresee as probable result of the breach when the contract was made
mitigation of damages
the aggrieved party must take reasonable steps to lessen or mitigate damages that result from breach of contract-the injury party may not recover for damages for loss that he could have avoided with reasonable effort and without undue risk, burden, or humiliation
equitable remedies
-equitable remedies are generally not available if there is an adequate remedy at law available (money damages)
specific performance equitable remedy
if money damages are wholly inadequate as a remedy-compels actual performance
ex: sale of one of a kind painting
injunctions
a court order enjoining (requiring) a person from doing a specific act or engaging in specific conduct
reformation
permits the court to rewrite a contract to express the parties’ true intentions (ex: clerical error)
