Breach

Question 1

When does breach occur?

Answer 1

Found that (1) the promisor is under an absolute duty to perform, and (2) this absolute duty of performance has not been discharged, then this failure to perform in accordance with contractual terms will amount to a breach.

Question 2

What is the next step after determining there is a breach of contract in a common law situation?

Answer 2

Determine whether that breach is material or minor.

Question 3

In determining whether a breach is material or minor, courts look at:

Answer 3

a. the amount of benefit received by the nonbreaching party

b. the adequacy of compensation for damages to the injured party

c. the extent of part performance by the breaching party

d. hardship to the breaching party

e. negligent or willful behavior of the breaching party AND

f. the likelihood that the breaching party will perform the remainder of the contract.

Question 4

when is breach minor?

Answer 4

if the obligee gains the substantial benefit of their bargain despite the obligor’s defective performance. Does not relieve the aggrieved party of their duty of performance under the contract; merely gives a right to damages for the minor breach.

Question 5

what is material breach?

Answer 5

If obligee does not receive the substantial benefit of their bargain. If breach material: nonbreaching (1) may treat contract as at an end and (2) immediate right to all remedies for breach of the entire K, including total damages.

Question 6

minor breach coupled with anticipatory repudiation

Answer 6

the nonbreaching party may treat it as a material breach. UCC modifies this to permit a party to complete the manufacture of goods to avoid having to sell unfinished goods at the lower salvage value.

Question 7

material breach of divisible contract

Answer 7

recovery is available for substantial performance of a divisible party even though there has been a material breach of the entire contract.

Question 8

timeliness of performance

Answer 8

failure to perform by time stated in K is usually not a material breach if it happens within a reasonable time. However, if the nature of the K makes timely performance essential, or if the contract provides that time is of the essence, then failure to perform on time is usually a material breach.

Question 9

Does Article 2 follow the perfect tender rule?

Answer 9

Yes. It generally doesn’t follow the common law substantial performance doctrine.

Question 10

what is the perfect tender rule?

Answer 10

If goods or their delivery fail to conform to the K in any way, the buyer generally may reject all, accept all, or accept any commercial units and reject the rest.

Question 11

when is right to reject under the perfect tender doctrine cut off?

Answer 11

Cut off by acceptance.

Question 12

Under Article 2, buyer accepts when:

Answer 12

a. after a reasonable opportunity to inspect goods, they indicate to seller that the goods conform to requirements or they will keep even though they fail to conform,

b. They fail to reject within a reasonable time after tender or delivery of the goods or fail to seasonably notify the seller of their rejection; OR

c. they do any act inconsistent with the seller’s ownership.

Question 13

Buyer’s responsibility for goods after rejection

Answer 13

If the goods are in physical possession, the buyer must not treat the goods as if they own them.

If the seller gives no instructions within a reasonable time, the buyer may (1) reship the goods to seller, (2) store them for seller’s account, or (3) resell them for the seller’s account in a public sale or a private sale after giving the seller reasonable notice of the intent to resell.

Question 14

When can a buyer revoke their acceptance?

Answer 14

If the goods have a defect that substantially impairs their value to the buyer and:

• they accepted the goods on the reasonable belief that the defect would be cured and it has not been OR
• they accepted the goods because of the difficulty of discovering the defects or because of the seller’s assurance that the goods conformed to the K.

Question 15

revocation of acceptance must occur:

Answer 15

(1) within a reasonable time after buyer discovers or should have discovered the defects; and

(2) before any substantial change in the goods occurs that is not caused by a defect present at the time the seller relinquished possession.

Question 16

exceptions to the perfect tender rule

Answer 16

(a) seller’s right to cure

(b) installment contracts

Question 17

seller can cure by notice and new tender within time for performance

Answer 17

if buyer rejected because defects, seller may within time originally provided “cure” by giving reasonable notice of their intention to do so and making a new tender of conforming goods that they buyer must then accept.

Question 18

seller’s right to cure beyond original K time

Answer 18

usually no. But if buyer rejects a tender of nonconforming goods that seller reasonably believed would be acceptable with or without money allowance, the seller, upon a reasonable notification to the buyer has a further reasonable time beyond original to make conforming tender.

Question 19

installment contracts right of rejection

Answer 19

more limited. An installment can be rejected only if nonconformity substantially impairs the value of that installment and cannot be cured.

Question 20

anticipatory repudiation

Answer 20

AR can be treated as immediate breach of K.

Question 21

breach of warranty

Answer 21

sellers give warranties as to the condition of the goods that apply even after acceptance. failure to live up to these warranties constitutes a breach of warranty, for which a remedy is available.