Breach Flashcards
(6 cards)
How does breach work in installment contracts for the payment of money?
When only the repaying party has performance remaining, if they fail to perform AND repudiate the contract, this is considered partial breach.
What is anticipatory repudiation? What is the consequence of anticipatory repudiation?
This is when a party to the contract indicates they will not perform at some time prior to when performance is due. Repudiation must be clear and unequivocal. A party may repudiate based on words or actions.
When confronted with an anticipatory repudiation, the other party to the contract has two options.
1) They can demand performance and wait until performance is due to assess breach. If they choose this option, they must typically suspend their performance so as not to increase damages.
2) They can treat the repudiation as a breach and sue.
*Note: a party who has fully completed their performance must abide by option 1.
Can a party retract an anticipatory repudiation?
A party can retract their anticipatory repudiation until:
- The other party indicates that they have accepted the repudiation.
- The other party acts in reliance on the repudiation.
- The other party sues for breach based on the repudiation.
If the non-repudiating party has not yet completed their performance, a retraction by the repudiating party must give the non-repudiating party enough time to perform.
In what context will anticipatory breach not apply?
Anticipatory breach will not apply to a context in which a party has completely performed their end of the agreement, and then the other party repudiates.
In this context, the non-repudiating party must wait until performance is due before they can sue for breach.
What is a demand for assurances? What are the rules surrounding such a demand?
If one party has reasonable insecurity about another party’s ability to perform, they may demand assurances. (Under the UCC, a demand for assurances must be in writing)
A party who sends a demand for assurances may suspend their performance until they hear back from the other party.
The failure of the other party to respond and provide adequate assurance of performance within a reasonable time may be treated as an anticipatory breach. (Under the UCC, 30 days is a reasonable amount of time).
(The rules about rescinding repudiation still apply)
What is a material breach? What is the consequence?
A material breach is one that defeats the purpose of a contract or otherwise prevents a party from receiving the benefit of their bargain.
A party who commits a material breach may not recover from the contract.
If the breaching party is unwilling to cure the breach within a reasonable time, the non-breaching party has no duty to perform and can terminate the contract.
