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36 Cards in this Set

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Performance & Breach issues
1) Substantial performance 2) Perfect Tender 3) Anticipatory Repudiation
Performance Rule Statement
CL - A party's basic duty is to substantially perform all that is called for in the contract. Failure to substantially perform is a material breach of the contract.

UCC - Article 2 requires perfect tender, the delivery and condition of the goods must be exactly as promised in the contract.
Under CL, what happens when there is a minor breach?
Contract is still enforceable. P can sue for the value of the minor breach. P must still perform.
Perfect Tender
Delivery and condition of goods must be exactly as promised in the K.
UCC Obligations of Tender & Delivery
Noncarrier cases - give the buyer reasonable notice to take posession, tender at a reasonable hour, generally at the seller's place of business.
Carrier Case/Shipment K - Put goods into hands of a reasonable carrier, tender any documents required to allow buyer to take posession, notify buyer of teh shipment.
Destination Contract - Seller tenders goods at a particular destination, seller must hold goods.
Buyer's obligation to pay
Noncarrier cases - payment at time of tender.
Carrier - price is due at the time and place the buyer recieves the goods.
Check is always sufficient.
In an installment contract, a seller can demand payment for each installment.
Buyer has a right to inspect goods before paying unless COD.
Anticipatory Repudiation, general rule
Prior to the time of performance, a party indicates he will not perform. Such a statement must be unequivocal.
Effect of Anticipatory Repudiation
The non-repudiating party has four alternatives:
1) treat it as total repudiation and sue immediately
2) suspend his own performance and wait to sue until performance date
3) treat the repudiation as an offer to rescind the K, and treat the K as discharged.
4) Ignore the repudiation and urge the promisor to perform (not a waiver)
Retraction of Repudiation
A repudiating party can withdraw his repudiation unless the other party has canceled, materially changed her position in reliance on the repudicaiton or indicated she thinks the repudiation is final.
Excuse (Attack)
Material Breach
Conditions
Insecurity
Accord and Satisfaction
Impossibility
Impracticability
Frustration of Prpose
Damage or Destruciton of Subject Matter
Death
Subsequent Law
Requirements K
Mutual Mistake
Material Breach (as an excuse)
Material breach excuses the other party from performing on the contract.
Types of Conditions
Conditions either make performance necessary (condition precedent) or release a party from the duty to perform (condition subsequent).
Questionable conditions
Courts will look to the intetn of the parties. If an action from a 3rd party is required, more likely a condition. When in doubt the courts will hold that the provision in question is a promise.
Mechanical Fitness, utility or marketability as a condition
Use a reasonable person standard
Personal taste or judgment as a condition.
Must be honest and in good faith.
Constructive Conditions (Implied)
- implied that performance is conditional on the other party's performance.
- cooperation
- notice that performance is due
Removing a condition
- through actual performance or waiver of that condition.
Preventing a condition
If a party having a duty subject to a condition prevents the condition from occuring, the excuse is wrongful and the party will not be excused from performance.
Prosepctive Inability/Unwillingness to perform
Different from anticipatory repudiation - not unequivocal. Party can suspend further performances and reuqest adequate assurances. If no adequate assurances, it can be treated as a repudiation.
Removal of a condition through substantial performance
The courts will excuse/remove a condition if substantial performance has occured and it is a constructive condition.
Divisible contracts
Three part test
1) perfromance of each party must be divided into two or more parts
2) number of parts due from each party is the same
3) performance of each part is the equivalent of the corresponding part from the other party. Quid pro quo.
UCC Divisible conracts
Assumption that they aren't devisible unless it authroizes delivers in several lots.
Waiver of a condition
- The party for whom the waiver is meant to benefit may choose to waive the condition and require performance from the other party under the K.
- If a party waives a condition, they can withdraw their waiver unless the other party has detrimintally relied on thier waiver.
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Waiver of condition in installment contracts
Even if one party hasn't insisted on strict compliance in one installment, he can after giving notice that he is revoking the waiver.
Discharge by Illegality
If the subject matter of a contract has become illegal due to a subsequently enacted law, performance will be discharged.
General Rule Regarding Impossibility, Impracticability or Frustration of Purpose.
Where nonoccurence of the event was a basic assumption of the parties and neither party has expressly or impliedly assumed the risk of the event occuring, contractual duties may be discharged for impossibility, impracticability or frustration of purpose.
Discharge by impossibility
Must be objectivley impossible. Impossibility must arise after K was entered into. Each party is excused. Either party may sue for recission and get restitution.
Partial impossibility
Duty may be discharged on the the partial extent.
Temporary impossibility
only temporarily suspends contractual duties.
Impossibility & Death or Incapacity
Only wherethe person is necessary to effectuate the contract. (Unique services).
Destruction of Contract's Subject Matter
This is treated as imipossibility. But a contractor's duty to build something is not discharged by it's destruction b/c the contractor can still rebuild.
Impracticability
1) extreme and unreasonable difficulty and or expense
2) nonoccurence was a basic assumption of the parties.

Generally a seller of goods assumes the risk of the unforseen events unless extraordinary.

Shortage of raw materials from war, etc. Catastrophic crop failure. Mere increases in costs are insufficient.
Frustration of purpose
1) Supervening act or event that leads to frustration
2) at the time of the contract, parties did not reasonably foresee the act/event occuring
3) purpose of the K has been destroyed or nearly destroyed.
4) both parties knew of the purpose of the K.

Think of the coronation...
Impossibility, Impracticability & Frustration of purpose and PAYMENTS
The party who is supposed to pay will usually raise frustration of purpose. Paying money is never impractiable.
Recission
Mutual recission through express agreeement. For unilateral contracts where performance has occured, recission can only occur wheh new consideration, promissory estoppel or manifestation of intent to make a gift.

Unliateral recission can occur when there is mistake, misprepresentaiton, duress or failure of consideration.
When is a writing required for recission?
When the original contract falls within the statute of frauds.