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62 Cards in this Set

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Excuse of Nonperformance/Improper Performance -- Material Breach

(Services only, never goods)
For excuse from non/improper performance

Repeated Ks, if performance less than 50% = Material Breach

OPPOSED to: Substantial Performance
Remedies for Unexcused Nonperformance -- Non-Monetary
(4)
1) Specific Performance
2) Injunction
3) Reclamation
4) Equitable Remedies
Excuse of Nonperformance/Improper Performance -- Article 2 alternative for Material Breaches
DO perfect tender and installment contract principles
Remedies for Unexcused Nonperformance -- Specific Performance
Usually last resort on Bar (so wrong answer)

Usually not goods, UNLESS - unique good

NEVER service Ks - can get injunction though
Excuse of Nonperformance/Improper Performance -- Divisible Ks
Contract law allows recovery for substantial performance of a divisible part even when material breach for entire K

payment = per task
Remedies for Unexcused Nonperformance -- Reclamation
(3)
1) Buyer insolvement at time of receipt
2) Seller demands goods w/in 10 days of receipt***
OR
r/s time if express representation of solvency before delivery
3) Buyer still has goods at time of demand
Excuse of Nonperformance/Improper Performance -- Express Condition
Limits obligations created by other K language

require STRICT COMPLIANCE

Can be EXTINGHUISHED with:
1) waiver (by benefitted party)
2) prevention (by benefitted party)

"only if, provided that, so long as, subject to, in the event that, unless, when, until, on condition that"
Remedies for Unexcused Nonperformance -- Money Damages

(GOAL in K)
GOAL in K: compensate plaintiff, not punish defendant
Excuse of Nonperformance/Improper Performance -- Condition Precedent/Subsequent
PRECEDENT -- condition must occur before any obligation to perform

SUBSEQUENT -- occurrence after performance excuses any further performance
Remedies for Unexcused Nonperformance -- Expectation Damages
(3)
Expectation protects contracting parties' belief the other other will not breach.

1) Dollar value of performance w/o breach
2) Dollar value of performance w/ breach
3) Compare two
Excuse of Nonperformance/Improper Performance -- Anticipatory Repudiation
Unambiguous statement or conduct indicating:
1) repudiating party will not perform
2) made prior to time performance was due

CAN LEAD TO:
1) excuse
2) claim for damages UNLESS claimant has already finished performance (then must wait for date of K breach to occur before claim for damages can be made)

RETRACTION possible when repudiating party takes back their position BEFORE any material changes in positions
Remedies for Unexcused Nonperformance

Expectation
Article 2
Seller BREACHES, Buyer KEEPS good --> FMV if perfect - FMV as delivered

Seller BREACHES, Seller KEEPS good --> market price at time of discovery of breach - K price OR replacement price - K price

Buyer BREACHES, Buyer KEEPS good --> K price

Buyer BREACHES, Seller KEEPS good --> Resale price + (maybe) provable lost profits


+ INCIDENTAL
-AVOIDABLE


ALTERNATIVES: Reliance, LD
Excuse of Nonperformance/Improper Performance -- Insecurity qw(Article 2 only) qw(3)
If words/conduct give "reasonable grounds for insecurity", then other party can:

1) Demand adequate assurance
2) If commercially r/s
3) Can suspend performance until adequate assurance
Remedies for Unexcused Nonperformance -- Lost Profits for Volume
Can recover when loss of two potential sales

Key concept -- "inventory"

Measure of Damages - Provable lost profit
Excuse of Nonperformance/Improper Performance -- Excuse by Later Contract
RECISSION -- depends if performance still remaining from both parties

ACCORD: later agreement in which one party to contract agrees to accept performance different from that originally promised

SATISFACTION: performance on the accord; discharges both accord and original debt

(IF and THEN)
Remedies for Unexcused Nonperformance -- Incidental Damages
Usually cost of finding replacement

ALWAYS recoverable regardless of foreseeability
Excuse of Nonperformance/Improper Performance -- Modification
Agreement by parties to an existing obligation to accept a different agreement in satisfaction of existing condition
Remedies for Unexcused Nonperformance -- Consequential Damages
on bar not GENERAL damages ANYONE could sustain


more SPECIFIC TO PLAINTIFF that Def has r/s knowledge to know of
Excuse of Nonperformance/Improper Performance -- Novation (4)
Later agreement that changes party that is going to perform K terms; excuse of performance (by substituting party)

1) previous valid contract
2) an agreement among all parties, including new party
3) immediate extinguishments of contractual duties as between original contracting parties
4) valid new contract
Remedies for Unexcused Nonperformance -- Avoidable
No recovery for damages that could have been avoided w/o undue burden on Plaintiff
Excuse of Nonperformance/Improper Performance -- Delegation
When a non-K party substituted as being responsible for performance

Does not require agreement of parties and does not excuse
Remedies for Unexcused Nonperformance -- Certainty
Keep an eye out for:
1) New Business
2) New Activity
Excuse of Nonperformance/Improper Performance -- Impossibility/Impracticability
Impossibility -- cannot be done by anyone (objective)

Impracticability -- cannot be done without undue hardship or expense

because of unforeseen circumstances that the parties could not anticipate at the time of K formation

Service Ks - neither party bears risk of loss

UCC -- generally seller assumes risk
Remedies for Unexcused Nonperformance -- Reliance
Alternative to expectation
Excuse of Nonperformance/Improper Performance -- Impossibility/Impracticability --

DEATH
Death does not make K obligation disappear

EXCEPTION -- Personal Service K (both parties must have intended specific person perform K)
Remedies for Unexcused Nonperformance -- Liquidated Damges
Contract provision that sets damages in instances of breach. Qw
1) Damages difficult to forecast at time of K
2) r/s forecast?

on bar exam -- set numbers are usually not LDC but a PENALTY
Excuse of Nonperformance/Improper Performance -- Impossibility/Impracticability --

Later Law or Regulation
K made illegal? Impossible.

K purpose made legal? Frustration of Purpose.
Remedies for Unexcused Nonperformance -- Reliance
Damages based on Defendant's actual costs based on reliance
Express Warranty
Has to do with the quality or description of goods and is no different in kind from other express terms of a K such as price, delivery or quantity

Determined based on the intention of the parties, views in the light of the surrounding circumstances

Once made, an express warranty cannot be disclaimed
Ways express warranties are created by seller (3)
1) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods

2)Any description of the goods which is made part of the basis of the bargain

3) Any sample or made which is made part of the basis of the bargain
Implied Warranty of Merchantability
If not modified or waived, the goods must at a minimum be fit for the ordinary purpose for which goods are used.

seller must be a merchant in goods of the kind or holds himself out as having expertise in the goods of the kind.
Implied Warranty of Fitness for a particular purpose
Goods must fit the buyer's needs

Sellar knows or has reason to know:
1) the buyer's particular purpose
2)That the buyer is relying on the seller's advice and still/expertise in furnish a good suitable for sale
2 Types of Implied Warranties
1) Fitness for a particular purpose
2) merchantibillity
Warranty disclaimers
An attempt to eliminate a warranty altogether or in some way narrow the circumstances under which the warranty will operate

Express warranty cannot be disclaimed

Implied warranty limitations
1)"as-Is" --> must be conspicuous
2)Defect that buyer should have noticed upon inspection
Duress
Duress: when can a party disaffim a contract

Element of Duress
An improper threat by the promisee or a third party
that left the promisor with no reasonable alternative but to assent
Undue influence
Elements:

Relationship
The domination of one party over another OR
A confidential relationship

Unfair persuasion or excessive press applied to induce a manifest ion of assent by one vulnerable to such pressure
Misrepresentation
An assertion/statement that is not in accord with the facts that is either fraudulent or material that induced the recipient to make the K and the recipient's reliance must have been justified

Fraudulent: a misrepresentation is fraudulent if it is consciously false and intended to mislead another

Material: likely to induce a reasonable person to manifest his assent, lily to have an impact on the decision making
Unconscionability
in light of the situation, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract

2 types:

Procedural--manner in which K was negotiated and circumstances of the parties

Substantive: actual terms of the agreement
Invalidation: Public Policy
Courts look at what is best for society as a whole, will not allow a party to use the mechanism to do anything that will be injurious to the public

Deterrence
Mutual Mistake
A mistake
As to basic assumptions
That has a material effect on the exchange
where the party seeking relief has not assumed the risk
Unilateral mistake
A mistake by one of the parties will not excuse his or her performance of the K Unless:

The party seeking relief establishes all the elements of mutual mistake AND else establish either:

1)That the other party knew or should have known about the mistake OR
2)That enforcing the K despite the mistake would be unconscionable

AND

that the party seeking to be excused does not bear the risk of mistake
Impossiblity
The thing promised simply could not be performed at all

Subject matter has been destroyed
Frustration of purpose
Could be performed but "why bother anymore?

Elements:
substantial reduction of value

Because of the occurrence of the event, the nonoccurrence of which was the basic assumption of K

Without party's fault

The party seeking relief does NOT bear the risk of that occurrence of the event either under the language of the K or the surrounding circumstances
Impracticability
It becomes substantially more burdensome to perform; something happened, cost of performance too great
Force Majeure clause
An event or effect that cannot be anticipated or controlled, includes acts of nature and acts of people such s riots, strikes and wars

typically provide excuse where performance is prevented or delayed by circumstances beyond the control of the party seeking excuse
Modification
Modifier must have a legitimate commercial reason for seeking a modification

Threats intended to coerce modification are in bad faith
Novation
Form of substituted contract. It is one where either the creditor or the debtor is replaced by a third party
Accord
an agreement to settle a prior unliquidated or disputed obligation
Satisfaction
Performance of accord
Substituted K
intent to discharge original obligations
Only one remedy--accord
Material Breach
Critical Factors:

The extent to which the injured party will be deprived of the benefit which is reasonably expected

The extent to which the party failing to perform or to offer to perform will suffer forfeiture

The likelihood that the party failing to perform or to offer to perform will cure his failure

Davis likes to focus on whether the breach goes to the essence of the non-breaching parties expectations
Anticipatory Repudiation
If either party to a contract in advance of the time set for performance repudiates the K, the repudiation may excuse the other party from perfomring
Acts sufficient for Anticipatory Repudiation
something
Retraction of repudiation
something
Total breach
something
difference between material and total breach
something
partial breach
something
Nominal damages
something
Expectation interest
something
Reliance interest
something
Expectation Damages
something
Incidental Damages
something