Contracts Ii

Front 1

Material breach

Back 1

When a performance of a duty under a contract is due, any non-performance is a breach. To determine whether there is a material breach we must ask the following: how much will the injured party be deprived of what they reasonably expected to get out of the contract? Can the injured party be adequately compensated? How much will the breaching party lose if the court determines there is a material breach? How likely is it that the breaching party will cure the breach? and How much did the breaching party exhibit good faith and fair dealing.

Front 2

Anticipatory Repudiation

Back 2

Anticipatory repudiation occurs when, before performance is due, one party tells the other that they do not intend to perform under the contract. There must be a clear and unequivocal statement or an act by the party who is obligated to perform that they are going to breach the agreement. Once a party declares that they are going to anticipatorily repudiate, the non breaching part has a duty to mitigate the damages. Once there is a repudiation, it can be retracted if the injured party has not materially changed their position in reliance on the repudiation.

Front 3

Assurances

Back 3

UCC 2-609 allows the insecure party to demand assurances in writing, and the insecure party can suspend their own performance until the assurance has been received. However, to be able to ask for assurances, there must be reasonable grounds for the insecurity. Additionally even if the insecure party accepts improper delivery or payment, it doesn't preclude them from demanding assurances for future payments. Failure to respond to demand for assurance within 30 days will be treated as a repudiation.

Front 4

Installment Contracts

Back 4

An installment contract is a contract where goods are delivered at separate times in separate lots over a long period of time. Even if a contract contains a clause that each delivery is a separate contract, the court can characterize the separate contract as one installment of one entire contract. The court will look at the substance of the contract to determine if it is a single/individual contract or an installment contract. Additionally, a buyer can reject a non-conforming installment contract if it substantially impairs the value of that installment. If under this test there is no full performance, there is breach only to the single installment, unless there is substantial impairment to the whole contract. If there is substantial impairment of the entire contract, then the breach is of the entire contract.

Front 5

Third Party Beneficiaries

Back 5

Generally, a third party beneficiary cannot enforce a contract, but when one person makes a promise to another for the benefit of a third person, the third person may maintain action upon it. For a third party to be able to enforce a contract there must be intent to create a third party right and either the performance satisfies an obligation or circumstances indicate the intention of giving the third party the benefit of the promised performance.

Front 6

Assignment and Delegation

Back 6

A party can assign a right under a contract to another party unless the assignment would materially change the duty of the obligor; the assignment would materially increase the burden of the risk imposed on the obligor or materially impair his chances of obtaining return performance; the assignment materially reduces its value to obligor; assignment is forbidden by statute or by public policy; or the assignment is expressly prohibited by contract. A party can delegate a performance of duty unless the performance requires a unique or personal service.

Front 7

UCC 2-210

Back 7

A party may perform his duty through a delegate unless otherwise agreed or the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. Rights can be assigned except where the assignment would materially change the duty of the other party, or affect the chance of obtaining return performance where otherwise agreed. A party can ask for assurance from assignee when there is an assignment which delegates performance because of the reasonable grounds for insecurity.

Front 8

Novation

Back 8

A novation is a three-party agreement in which the delegate agrees to perform the contractual duty to the promisee in consideration for the promisee's agreement to presently discharge the promisor. There are to ways for novation to occur. With express intent, it must be clear from the terms of the agreement that a novation is intended and assented to by all parties involved. With novation implied by circumstances, if there is a change in the obligation, which prejudicially affects the assignor, a new agreement has been formed between the assignee and the original contracting party (i.e., a novation has occurred and assignor's obligation has been discharged.)