VII: Conditions and Performance Flashcards
Condition
Future event that must take place before rights or obligations are created.
Failure of a conditions
Relieves a party from the obligation to perform
Express K
Condition that must be complied w/ fully unless excused; substantial performance will not suffice
Implied
Those deemed part of a K because agreement suggests that parties truly intended the condition but failed to expressly include it, or because fairness requires its inclusion
Only need substantial performance to satisfy and implied condition.
UCC implies duty of cooperation when performance of one party depends on the cooperation of the other party.
Timing of conditions
Condition precedent: condition precedes obligation to perform
Condition subsequent: condition excuses the duty to perform after a particular event
Concurrent conditions: each party’s duty to perform is conditioned on the other party’s duty to perform (must perform simultaneously)
Satisfaction of conditions
Examined against objective; reasonable person standard unless aesthetic taste involve then subjective standard and party must use GF.
Order of performance
Unless language or circumstances indicate otherwise,
When 1 party’s performance requires a period of time: that party must complete his performance before the other party is required to perform.
When both parties performance can be rendered at the same time: both parties must perform at the same time; one party’s failure to perform excuses the other party’s performance.
Express condition precedent
Parties are generally held strictly to the condition; full compliance is required before the other party’s performance is due.
Implied or constructive condition precedent
a party who substantially complies w/ the condition can trigger the other party’s obligation to perform.
Damages
K price minus any amount it will cost party to obtain complete performance as promised.
Even if no substantial performance, potential recover through restitution
Failure to substantially perform is a material breach
Willful breach
More likely to be treated as material breach
Perfect tender under the UCC
Seller must transfer ownership and tender goods conforming to warranty obligations. Must be in conformance w/ K provisions or UCC if silent.
Buyer may inspected goods and, upon acceptance, has an obligation to pay for them
Perfected tender rule: substantial performance insufficient (except installment Ks)
Transferring ownership under the UCC
Automatic warranty of good title, rightful transfer, and goods free of security interest of which buyer is unaware
Actual knowledge of interes nullifies warranty
Tender at seller’s place of business
Seller’s place of business: seller must place goods at the disposition of the buyer and give the buyer notice, if necessary.
Shipment K
F.O.B. seller’s place of business: seller must deliver goods to a carrier and make a K for their shipment by 3rd party carrier.
Destination K
F.O.B. buyer’s place of business: seller must deliver goods to place specified in K and tender them there by holding them at the buyer’s disposition.
Buyer’s obligations when conforming tender
Buyer obligated to accept and pay K price, rejection amounts to breach.
Buyer has a right to inspect goods that are tendered, delivered, or identified in K for sale, unless K provides otherwise.
CL Divisible or installment K
Units of performance are divisible into distinct parts
Recovery limited to amount promised for the segment of K performed
Damages recoverable for breach of other segments
UCC Divisible or Installment K
Goods delivered in multiple shipments, each separately accepted.
Perfect tender doesn’t apply
Right to reject determined by substantial conformity standard: buyer can only reject if nonconformity substantially impairs value to buyer and cannot be cured
Buyer may cancel K only if nonconforming tender substantially impairs value of entire K
Waiver
Party whose duty is subject to condition can waive a nonmaterial condition by words or conduct;
the condition can be reinstated if: the waiving party communicates the retraction of the waiver before the condition is due and the other party has not suffered detrimental reliance.
Wrongful interference
If party whose duty is subject to a condition wrongfully prevents or interferes w/ occurrence of that condition, then the condition is excused and the interfering party has an absolute duty to perform. Per implied duty of GF and fair dealing.
Election
A party who chooses to continue with a K after a condition is broken effectively waives the condition.
Estoppel
Once a party waives condition, he can be estoppped from using that condition as a defense if other party reasonably relied on waiver
