Contracts--18

Front 1

8) Problems of performance a) Good faith performance i) Introduction b) The doctrine of Substantial Performance

Front 2

(1) An important “implied in fact” condition is that neither party will act in _____ so as to hinder or prevent the performance of the other party.

Back 2

ii) An important “implied in fact” condition is that neither party will act in bad faith so as to hinder or prevent the performance of the other party.

Front 3

iii) Does a party to a contract have an implied obligation not to do anything to prevent the other party from carrying out his part of the agreement? [competition with other contracting party—Patterson v. Meyerhofer]

Back 3

(1) Yes (2) Any party that causes the breach of an agreement is precluded both from recovering damages for its nonperformance and from asserting the breach as a defense to a suit on the contract. (3) Every contract includes an implied undertaking by each party not to intentionally do anything to prevent the other party from carrying out the agreement.

Front 4

iv) Is a seller’s performance excused if the buyer makes the goods more expensive by making additional purchases? [Performance made difficult—Iron Trade Products Co. v. Wilkoff Co.,]

Back 4

(1) No.

Front 5

v) Can the amount in the Bank’s NSF (non sufficient funds) charges be considered a penalty for breach of contract and/or unconscionable (where they are higher than expected by customers)? Is a bank obligated to set its NSF fees in good faith?

Back 5

(1) No (2) Yes (3) Unconscionably is determined at the time the contract is formed so it applies to contract terms rather than performance.

Front 6

vi) In a suit for breach of a “best efforts” clause, must the performing party show there was nothing significant it could have done to perform that would not have been financially disastrous? [“Best efforts” clause—Bloor v. Falstaff Brewing Corp]

Back 6

(1) Yes (2) D at least had to explore whether steps not involving substantial losses could have been taken to stop or at least lessen the rate of decline of sales. Instead, D acted in total disregard to P’s volume of sales.

Front 7

vii) Does the requirement of good faith require a party to alert the other party to a contract to any terms of the contract that might be unfavorable to the other party? [Duty to Remind Other Party of Contract Term—Market Street Associates v. Frey]

Back 7

(1) No (2) To act in good faith, the court held that P should have reminded D about the option. (3) P was not required to alert D to the existence of the option, unless P was taking deliberate advantage of D’s oversight. P’s state of mind must be examined on remand.

Front 8

viii) May an at-will employment contract be breached by a bad faith termination? [“At Will” employment contract—Fortune v. National Cash Register co.]

Back 8

(1) Yes (2) D’s written contract contains an implied covenant of good faith and fair dealing. (3) Requirements of good faith are pervasive in our law and afford employees a certain stability of employment.

Front 9

i) Where complete performance by one party is a constructive condition precedent or concurrent to the other party’s duty of counter performance, that condition may be excused if the party has rendered ___...

Back 9

(1) Substantial performance.

Front 10

ii) Do courts use a case-by-case approach to define substantial performance?

Back 10

(1) Yes

Front 11

(1) Performance is considered substantial if there are no “____” defects

Back 11

iii) Performance is considered substantial if there are no “structural” defects

Front 12

(1) Some courts use the term “_____” to designate substantial performance

Back 12

iv) Some courts use the term “workmanlike” to designate substantial performance

Front 13

(1) Most modern authorities agree that the test for what is substantial performance should be whether the breach of contract by the performing party is a “_____ “ Or “____” one.

Back 13

v) Most modern authorities agree that the test for what is substantial performance should be whether the breach of contract by the performing party is a “material “ Or “minor” one.

Front 14

(1) When performance is substantial, the performing party may enforce the contract, but the other party is entitled to ___ or ____ from the normal deduction is for the amount it would cost to repair the deficiency or make the work conform fully to the contract.

Back 14

vi) When performance is substantial, the performing party may enforce the contract, but the other party is entitled to deduct or offset from the amount due whatever damages he has suffered from the defective performance.

Front 15

(1) If repair or reconstruction would involve substantial economic waste, the deduction would be amount by which the deficiency ____ the _____ of the completed structure.

Back 15

vii) If repair or reconstruction would involve substantial economic waste, the deduction would be amount by which the deficiency lessens the value of the completed structure.

Front 16

(1) Even if there is no substantial performance, the performing party may recover for the ____ ___ of _____ conferred.

Back 16

viii) Even if there is no substantial performance, the performing party may recover for the reasonable value of benefits conferred.

Front 17

ix) If complete performance in accord with contract specification s is a condition precedent to payment, and if substantial performance has been rendered, will a minor failure to perform be excused? [Substitution of materials—Jacob & Youngs v. Kent]

Back 17

(1) Yes. (2) If the omission is trivial and not willful, it will be excused and damages fro the minor breach of condition will be allowed rather than holding that there is a breach of condition forfeiting the entire contract.

Front 18

x) May a contractor claim he has substantially performed if half of the major systems of the structure have not been completed? [major portions of structure only half finished—Kreyer v. Driscoll]

Back 18

(1) No. (2) Wile a valid recession may require P to sue in quantum meruit, failure to rescind does not make unsubstantial performance substantial. (3) P still has a cause of action [half performing party] in quantum meruit.