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12 Cards in this Set

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Breach
Any deviation from perfect performance of any contractual obligation (includes non-performance & defective performance). An unexcused failure to fully perform a contractual obligation.
Defective Peformance
Defective or partial performance amounts to a breach, but the parties may choose to cure the defect.
Substantial Performance
The failure to substantially perform is a material breach. Substantial performance is a condition of the other party’s duty to continue performance.
Factors: Substantial Performance
1. Expected Benefit/Essential Purpose of Contract Satisfied

2. Compensability of Lost Expectation

3. Extent of Forfeiture

4. Likelihood/Feasibility of Cure
5. Extent of Good Faith Demonstrated
Late Performance
Late performance may give rise to damages for losses caused by the delay. Unless the contract provides a time for performance, a reasonable time for performance is presumed.
Late Payment Rule
1. Whether a delay in payment is a material breach depends upon the amount of the payment, its importance, and the length of delay.

2. If a payment is slightly late and does not cause any harm, then the delay will not be deemed to be material.
Late Progress Payment Rule
1. A slight deviation in amount or short delay of a progress payment should not justify rescission or abandonment, but a delay that is extended and unreason able will likely be found to be a material breach.

2. A delayed progress payment will more likely be considered to be at least a partial breach. A payment delayed beyond a reasonable time will render a partial breach into a complete material breach justifying rescission.
Right to Cure
1. The injured party must provide a reasonable opportunity to cure after a material breach in order to be entitled to rescind the contract.

2. The injured party is entitled to terminate the contract if the breaching party fails to cure the defect within a reasonable time.
Elements: Right to Cure
Notice of the defect must be given as well as a reasonable opportunity to cure.
Effect of Cure
If the defective performance is cured within a reasonable time, then the injured party must resume performance.
Material Breach: Options/Responses
1. Material breach is considered as a total breach of contract. Accordingly, the injured may terminate performance, rescind the contract, and seek to recover damages for performance yet due.

2. Suspend performance and give the breaching party an opportunity to cure. If the harm cannot be avoided by cure, then the injured party may seek to recover damages for the harm which resulted.

3. Treat the material breach as partial, continue performance, and seek to recover damages which may resuilt from the breach. (waiver?)
Effect of Material Breach
Suspend Performance: A party may suspend or terminate performance of its own obligations only if the other party’s breach is material.