Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
51 Cards in this Set
- Front
- Back
|
BREACH OF CONTRACT
|
If a party is under an absolute duty to perform AND
this absolute duty of performance has not been discharged, the failure to perform in accordance with the contract terms is a breach of contract The nonbreaching party must be willing and able to perform |
|
|
Material Or Minor Breach Common law Contracts
|
Material breach permits other party to
Decline performance Terminate the contract Sue for breach of contract |
|
|
Material Or Minor Breach Common law Contracts
|
Party in “Partial breach”
Has rendered “substantial performance” Is entitled to contract price less offset to address deficient performance |
|
|
Minor Breach
|
Promisee gains the substantial benefit of the bargain despite the promisor’s defective performance
e.g.- insignificant delays in completing performance |
|
|
Minor Breach
|
-small deficiencies in the quantity or quality of performance when precision is not critical
Promisee is not relieved of the duty to perform |
|
|
Material Breach
|
Promisee does not receive the substantial benefit of the bargain as a result of the promisor’s failure to perform or defective performance
|
|
|
Material Breach
|
The nonbreaching party :
(1) may treat contract as at an end; (2) has an immediate right to all remedies for breach of contract, including damages |
|
|
Key Factors in Determining Material Breach Restatement 2d 241
|
Reasonable expectation of parties regarding benefits of contract
Adequacy of compensation for loss |
|
|
Key Factors in Determining Material Breach Restatement 2d 241
|
Partial performance
Extent of possible forfeiture Possible cure of breach |
|
|
Key Factors in Determining Material Breach Restatement 2d 241
|
Comportment with standards of good faith and fair dealing
Delays of performance |
|
|
Consequences of Substantial Performance: Limitations on Remedies
|
Usual(majority): damages for substantial performance are costs to rectify deficiency
|
|
|
Consequences of Substantial Performance: Limitations on Remedies
|
Some courts: award difference in market value where
Cost of remedying defect is disproportionately high Breach is not material nor willful Depending on reasonable expectations |
|
|
Consequences of Substantial Performance in Common Law: Recovery for Breaching Party
|
MATERIAL BREACH:
UNJUST ENRICHMENT & RESTITUTION, LIMITED TO CONTRACT VALUE OFFSET BY DAMAGES TO VICTIM BREACHER CANNOT ENFORCE CONTRACT |
|
|
Consequences of Substantial Performance in Common Law: Recovery for Breaching Party
|
NON-MATERIAL BREACH:
SUBSTANTIAL PERFORMANCE BREACHER CAN ENFORCE CONTRACT FULL CONTRACT PRICE LESS COST OF RECTIFYING DEFECT |
|
|
Divisible Contract
|
Three Tests for Divisible Contracts:
(1) Performance of each party is divided into two or more parts |
|
|
Divisible Contract
|
(2) Number of parts due from each party is the same
(3) Performance of each part by one party is agreed on as the equivalent of the corresponding part from the other party |
|
|
DIVISIBILITY
|
Depends on parties’ intent, language, structure of contract, surrounding circumstances
Parties divide up performance into individual units or installments with consideration allocated to each part |
|
|
DIVISIBILITY
|
Contract is treated as a series of independent contracts
Parts of performance are “agreed equivalents Not all contracts with periodic payments are divisible |
|
|
Substantial Performance Under UCC THE PERFECT TENDER RULE
|
If goods or tender of delivery fail in any respect to conform to the contract, BUYER may
|
|
|
Substantial Performance Under UCC THE PERFECT TENDER RULE
|
Reject the whole
Accept the whole OR Accept any commercial unit(s) and reject the rest |
|
|
Commercial Unit
|
One that by commercial usage, is treated as a single whole for the purpose of sale
AND division of which materially impairs its value |
|
|
Commercial Unit
|
One that by commercial usage, is treated as a single whole for the purpose of sale
AND Can be a single article, a set of articles, a quantity, or any other unit treated in the market as a single whole |
|
|
Limitations on Perfect Tender Rule-UCC §508
NON CONFORMING GOODS- |
Seller’s rights:
Seller may cure by substituting conforming tender after the seller delivers BUT before delivery date EVEN AFTER THE DELIVERY DATE BUYER DOES NOT HAVE AGREE |
|
|
Limitations on Perfect Tender Rule-UCC §508
NON CONFORMING GOODS- |
Seller must give buyer timely notice and pay expenses of cure and compensate buyer for any loss caused by breach
BUYER DOES NOT HAVE AGREE- BUT MUST RESPOND |
|
|
Limitations on Perfect Tender Rule-UCC §508
|
Seller’s rights:
Seller may cure by substituting conforming tender after delivery date if timely and appropriate under the circumstances BUYER DOES NOT HAVE AGREE BUT MUST RESPOND |
|
|
Limitations on Perfect Tender Rule-UCC §508
|
Seller’s rights
Seller must give buyer timely notice and pay expenses of cure and compensate buyer for any loss caused by breach BUYER DOES NOT HAVE AGREE BUT MUST RESPOND |
|
|
Limitations on Perfect Tender Rule-UCC §606
|
Buyer’s right to reject goods
cuts off by acceptance when: Buyer indicates to seller that the goods conform to requirements or |
|
|
Limitations on Perfect Tender Rule-UCC §606
|
Buyer indicates to seller that buyer will keep goods even though they fail to conform or
Buyer fails to reject within a reasonable period of time after delivery or |
|
|
Limitations on Perfect Tender Rule-UCC §606
|
Buyer fails to notify seller of rejection
Buyer does an act inconsistent with seller’s ownership |
|
|
Limitations on Perfect Tender Rule-UCC §606
|
ONCE YOU TELL SELLER THAT YOU WILL ACCEPT THEM OR FAIL TO REJECT THE NCG WITHIN A REASONABLE TIME ABOUT 10 DAYS –YOU LOSE THE ABILITY TO REJECT THEM LATER- BUYER HAS WAIVED HIS RIGHTS
OR BUYER HAS PERFORMED AN ACT THAT IS NOT CONSISTENT WITH THE SELLER OWNING THE GOODS- BUYER HAS MODIFIED THE GOODS IN SOME MANNER |
|
|
Limitations on Perfect Tender Rule-UCC §608
|
Buyer’s rights to revoke acceptance
of goods: If goods have a defect that substantially impairs their value to buyer AND |
|
|
Limitations on Perfect Tender Rule-UCC §608
|
Buyer accepted goods on reasonable belief that the defect would be cured and it has not been or
Buyer accepted goods because of difficulty of discovering defects or because of seller’s assurances that the goods conformed to the contract |
|
|
Limitations on Perfect Tender Rule-UCC §608
|
1ST ELEMENT MUST BE PRESENT- DEFECT MUST SUBSTANTIALLY IMPAIR THE VALUE OF THE GOODS TO THE BUYER- THEN
BUYER BELIEVED SELLER WOULD CURE THE DEFECT BC IN THE PAST THE SELLER HAS ALWAYS DONE SO – COURSE OF DEALING |
|
|
Exception to Perfect Tender Rule: Installment Contracts –UCC 2-612
|
INSTALLMENT CONTRACT= requires delivery of goods in separate lots to be separately accepted
Buyer may reject nonconforming installment only if nonconformity “substantially impairs” the value of the installment AND nonconformity cannot be cured |
|
|
Exception to Perfect Tender Rule: Installment Contracts –UCC 2-612
|
*Buyer cannot cancel contract unless problems within installment defeat reasonable expectations of entire contract
|
|
|
Exception to Perfect Tender Rule: Installment Contracts –UCC 2-612
|
ALWAYS TESTED- ALWAYS- COMES UP IN OUTPUT AND REQUIREMENT CONTRACTS – PERFORMANCE AND PAYMENT BROKEN UP INTO SEPARATE DELIVERIES AND PAYMENTS- THIS IS AN EXCEPTION TO THE PERFECT TENDER RULE- BUYER CANNOT SIMPLY REJECT THEM OR ACCEPT THE COMMERCIAL UNIT ONLY – IF IT DOES NOT SUBSTANTIALLY IMPAIR THE VALUE OF THE CONTRACT CANNOT CANCEL CONTRACT OR REJECT GOODS ALSO THE DEFECT MUST BE ABLE TO NOT BE CURED OR REPAIRED
REMEDY- ;LOOK AT THE TRIPLETS- FRUSTRATION IMPRACTICBILITY AND IMPOSSIBILITY- EVEN IF |
|
|
Exception to Perfect Tender Rule: Installment Contracts –UCC 2-612
|
BUYER DOES NOT HAVE TO ACCEPT THE ENTIRE LOT OF GOODS MAY REJECT SOME OF THE GOODS AND PAY FOR THE REST OIF THE GOODS
|
|
|
Remedies
|
If not material nonconformity or cured, buyer may get compensation for non-compliant tender
If material nonconformity or not cured, buyer can reject |
|
|
Remedies
|
If not material nonconformity or cured, buyer may get compensation for non-compliant tender
If non-material and uncured, buyer gets price reduction |
|
|
Remedies
|
If not material nonconformity or cured, buyer may get compensation for non-compliant tender
Buyer can treat as breach of whole contract if nonconformity of installment substantially impairs value of whole contract |
|
|
Anticipatory Repudiation
|
Before the date of performance, the promisor makes clear, through words or conduct, that she will not perform material term of contract when time for performance comes due
|
|
|
Anticipatory Repudiation
|
UCC- loss of which will substantially impair value of contract
|
|
|
Anticipatory Repudiation
Retraction of Repudiation |
A repudiating party may at any time before the next performance is due, withdraw his repudiation unless
the party has A)cancelled B)materially changed her position in reliance on the repudiation or |
|
|
Retraction of Repudiation
|
C)other wise, indicates that she considers the repudiation final
|
|
|
Effect of Anticipatory Repudiation
|
Nonrepudiating party may:
1. sue immediately; 2. suspend his own performance and wait to sue until performance is due |
|
|
Effect of Anticipatory Repudiation
|
3. treat the repudiation as an offer to rescind and treat the contract as discharged
4. ignore the repudiation and urge the promisor to perform |
|
|
Prospective Inability to Perform Rest2d 251, UCC 2-609
|
Prospective inability or unwillingness to perform occurs when a party has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance is due
|
|
|
Prospective Inability to Perform Rest2d 251, UCC 2-609
|
**Differs from anticipatory repudiation where repudiation must be unequivocal
|
|
|
CASES-Raymond Weil v. Theron (2008
|
Theron had two breaches
Montblanc necklace a the salon show - larger photo taken down inside a room, limited exposure - breach not material and cured within 5- 7 days Dior- watch worn at a event photos taken and then competitor gets it and uses it- court finds this a major breach finds partial summary judgment for the plaintiff RW |
|
|
CASES- Lyon vs Belosky
|
Construction company builds he house wrong with the roof being centered over the wrong part of the house
judge finds that the breach is material - new roof to remedy the problem |
|
|
CASES- Menorah Chapels v Needle
|
essential part of a orthodox Jewish burial not performed- family sues Chapel tries to sever the contract into parts -court finds that contract is not severable and that chapple can go to court or try to recover under the principle of quantum merit
|
