Adaptibar Contracts Video 4: Performance, Breach, and Discharge

Question 1

Fill in the blank. For a non-carrier case and the seller is a merchant, the risk of loss is on the seller until _____________.

Answer 1

For a non-carrier case and the seller is a merchant, the risk of loss is on the seller until the buyer takes possession.

(i.e. wedding cake maker risk of loss is on cake maker until she brings it to the wedding venue)

Question 2

Fill in the blank. For a non-carrier case and the seller is a non-merchant, the risk is on the seller until ___________________.

Answer 2

For a non-carrier case and the seller is a non-merchant, the risk is on the seller until the goods are tendered to the buyer.

(i.e. Facebook marketplace seller tenders Madam Alexander doll to mom)

Question 3

What are the two types of carrier contracts?

Answer 3

1. Shipment contracts
2. Destination contracts

Question 4

Is the shipment contract the default rule or an exception?

Answer 4

Shipment contracts are the default rule.

Question 5

What is the definition of a shipment contract?

Answer 5

When seller delivers goods to CARRIER, the risk of loss shifts to the BUYER

(i.e. the buyer has the risk of loss until she hands the widgets over to the UPS guy, then the risk of loss shifts to the BUYER)

Question 6

What is the definition of a destination contract?

Answer 6

The risk of loss shifts to the buyer only when the goods are delivered to the destination by the carrier

Question 7

What does FOB stand for?

Answer 7

Free on board or freight on board

Question 8

What does FOB SELLER mean?

Answer 8

This is a shipment contract.

Shipment contract=when seller delivers goods to CARRIER, the risk of loss shifts to the BUYER

Question 9

What does FOB ANYTHING ELSE stand for?

Answer 9

This is a destination contract

Destination contract=The risk of loss shifts to the buyer only when the goods are delivered to the destination by the carrier

Question 10

What is a requirements contract?

Answer 10

A contract to buy all the widgets I have. Something happens; just have to show that you acted in good faith.

Question 11

What is modification?

Answer 11

When you are modifying/changing a material term in the contract.

Question 12

What do you need under common law for a modification?

Answer 12

NEW CONSIDERATION

Question 13

What do you need for modification under the UCC?

Answer 13

No new consideration, just good faith

Question 14

Can modifications be oral or must they be written only?

Answer 14

Modifications can be oral OR written

Question 15

Is a clause prohibiting oral modifications valid under the UCC?

Answer 15

Yes

Question 16

What is mutual modification?

Answer 16

1. Both parties agree to modify the original terms in light of unforeseen circumstances
2. The modification must be “fair and reasonable” under the circumstances

Question 17

What is the definition of a condition precedent?

Answer 17

Contract condition that must happen before the performance of the contract

(ex: must get mortgage 30 days prior to closing)

Question 18

When is the definition of a condition concurrent?

Answer 18

Contract condition that happens AT the time of the performance of the contract

(ex: Jon must give you 10 sets of keys on the day of closing)

Question 19

What is the definition of condition subsequent?

Answer 19

Contract condition that happens after the contract

(ex: Jon must take the jungle gym out of the yard 30 days after closing)

Question 20

When can conditions be excused?

Answer 20

-Waiver of conditions (so don’t need to do condition),

-bad faith (other party can be discharged from performing condition b/c of bad faith i.e. fraud/dishonesty)

-avoiding forfeiture (if party would suffer a great loss by performance of condition)

Question 21

Is time of the essence unless stated?

Answer 21

NO;

time is only of the essence if stated. If stated, then this becomes a condition to the contract.

Question 22

If a seller sends goods that are non-conforming (i.e. not what the seller agreed to sell you), what are the buyer’s rights?

Answer 22

The buyer may reject, accept, or reject in part & accept in part

**but in a reasonable amount of time

Question 23

If the buyer accepts the non-conforming goods, what must the buyer pay the seller?

Answer 23

The amount stated for the goods in the original contract

Question 24

If a seller had reasonable grounds to think that the buyer would accept the non-conforming goods, what is this called?

What elements?

Answer 24

Seller’s right to cure.

1. Seller had reasonable grounds to believe the goods would be acceptable (seller thought the buyer could use these goods)
2. Seller gives reasonable notice + new tender within time by performance (can send the correct goods in time)

ex: Didn’t you tell me that if I ever had a good deal on peaches to send them? (this is seller’s belief the buyer could use them)

Question 25

Jon is supposed to deliver you number two pencils on June 1. On May 29, you open a box, and there are number 1 pencils in it. Can the seller cure?

Answer 25

Yes, because the number two pencils are due on June 1. They were delivered before the due date, the seller must be given time to cure before June 1. (also the notice was the nonconforming goods themselves)

Question 26

What is an installment contract?

Answer 26

Delivering goods in several different shipment installments

Question 27

What if one of the installments is non-conforming?

Answer 27

If only ONE shipment of non-conforming goods within the installment contract, then it will NOT be a breach of the entire contract.

Question 28

If the seller cannot fix/cure that installment, can the buyer reject that installment?

Answer 28

Yes.

Question 29

If the seller CAN fix/cure that installment, what must the buyer do?

Answer 29

Let the seller cure/fix the installment

Question 30

What happens if the one non-conforming installment would materially impair the value of the contract as a whole?

Answer 30

Then buyer can hold seller in breach of contract

Question 31

You can do what with an accommodation?

Answer 31

Buyer can choose to either accept or reject

Question 32

What is impracticability?

Answer 32

An unforeseen event makes performance of the contract so difficult/expensive that now doing the contract has become too hard or expensive **but some increase in price doesn't mean that contract is impractical

Question 33

What is the definition of impossibility?

Answer 33

NOBODY can perform Ex: UCC: goods are destroyed, can't sell Can't sell my house b/c it's destroyed *or if performance became illegal, now impossible

Question 34

Will impossibility apply if there is a temporary issue?

Answer 34

NO (i.e. crazy blizzard but roads will be open in 48 hours. This would be temporary impossibility but impossibility by itself will not apply)

Question 35

Will impossibility apply if the event was foreseeable and the parties were prepared?

Answer 35

NO (i.e. there was a blizzard and the parties put snow tires on the car, can't raise impossibility defense)

Question 36

What is the definition of frustration of purpose?

Answer 36

When the core reason you entered the contract no longer exists (i.e. you entered into a contract to have Jon tutor you, but you no longer are taking the bar exam, then discharged from performance)

Question 37

What is anticipatory repudiation?

Answer 37

1. Before the contract is performed, 2. One party UNEQUIVOCALLY refuses to perform **The refusal must be absolute; can sue IMMEDIATELY But could you choose to wait and see if you come back to do the thing after you did the anticipatory repudiation? Yes You can also start to look for new people/buyer to do the work too

Question 38

When a seller is doubtful about a buyer following through on contract, what can the seller do?

Answer 38

Demand assurances from the buyer

Question 39

What is the demand for assurances?

Answer 39

1. The seller demands assurance from the buyer when doubtful about performance 2. Party must respond in a reasonable amount of time

Question 40

If the buyer responds in a reasonable time and gives assurances, what must the seller do now?

Answer 40

Wait and give the buyer a fair shot to do the thing

Question 41

If the seller DOES NOT hear from the buyer in a reasonable amount of time after demanding assurances, what can the seller do?

Answer 41

The seller can do whatever they want

Question 42

For a UCC contract, the demand for assurances must be __________.

Answer 42

in writing

Question 43

The reasonable amount of time for a demand of assurances under the UCC is _________days.

Answer 43

30 days

Question 44

Can the repudiating party (party says they can't do something) retract their repudiation? What does this mean? Exceptions?

Answer 44

Yes. This means, sorry, I didn't mean it, I can go ahead and perform. Unless: -The other party wanting assurances already sued -The other party wanting assurances already accepted the repudiation -The other party wanting assurances relied on the repudiation

Question 45

When is reformation proper?

Answer 45

When the parties' original agreement is improperly documented in a way that does not reflect their SHARED understanding. (a clerical error about an agreed upon boundary line falls within this category)