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Contracts & Sales - July 2025 (Themis) > Ch 7: Conditions and Performance > Flashcards

Ch 7: Conditions and Performance Flashcards

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1
Q

What relieves a party of the obligation to perform?

A

The failure of a condition.

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2
Q

What constitutes a breach?

A

The failure of a party to perform a promise.

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3
Q

Define a condition in contract law.

A

A future event that must take place before a party’s contractual rights or obligations are created, destroyed, or enlarged.

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4
Q

What is a promise in the context of contracts?

A

A party’s obligation to act or refrain from acting.

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5
Q

How is ambiguity resolved regarding promises and conditions?

A

In favor of a promise over a condition.

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6
Q

What are express conditions?

A

Conditions established in the contract, clearly stated using phrases like ‘on the condition that’ or ‘provided that’.

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7
Q

What is required for express conditions?

A

They must be complied with fully unless excused; substantial performance will not suffice.

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8
Q

What are implied conditions?

A

Conditions deemed to be part of the contract, either implied-in-fact or implied-in-law.

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9
Q

Define implied-in-fact conditions.

A

Conditions that are deemed because the nature of the agreement suggests that the parties intended them but failed to express them.

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10
Q

What are constructive conditions?

A

Implied-in-law conditions supplied by a court if reasonable under the circumstances.

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11
Q

What is a condition precedent?

A

A condition that must occur before a party’s obligation to perform arises.

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12
Q

What is a condition subsequent?

A

A condition that excuses the duty to perform after a particular event occurs.

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13
Q

What is a concurrent condition?

A

A condition requiring both parties to perform simultaneously.

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14
Q

Who bears the burden of proof for a condition precedent?

A

The plaintiff.

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15
Q

Who bears the burden of proof for a condition subsequent?

A

The defendant.

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16
Q

What standard is used to determine if a condition is satisfied?

A

An objective standard based on whether a reasonable person would be satisfied.

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17
Q

What is substantial performance?

A

The completion of all but the nonmaterial terms of a contract.

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18
Q

What effect does substantial performance have on recovery?

A

A party who substantially performs in good faith can recover on the contract even without full performance.

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19
Q

What is a material breach?

A

A failure to substantially perform, depriving the other party of the benefit they reasonably expected.

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20
Q

List the five-pronged test for determining a material breach.

A
  • The degree to which the breach deprives the other party of the benefit expected
  • The extent to which that party can be compensated
  • The extent to which the breaching party will suffer forfeiture
  • The likelihood that the breaching party will cure the breach
  • The extent to which the breaching party has acted in good faith.
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21
Q

What is a time-is-of-the-essence clause?

A

A clause indicating that timely performance is crucial, but slight delays may not give the right to refuse performance.

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22
Q

What is required under the UCC regarding seller obligations?

A

To transfer ownership of the goods and tender goods conforming to warranty obligations.

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23
Q

What does perfect tender mean under the UCC?

A

The seller must deliver goods that conform exactly to the contract terms.

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24
Q

What happens if the buyer rejects nonconforming goods?

A

The seller has the right to cure and tender conforming goods if time remains under the contract.

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25
What does CIF stand for in contract terms?
Cost, Insurance, and Freight.
26
What does C&F stand for in contract terms?
Cost and Freight.
27
What is the seller's obligation regarding the place of tender?
Unless otherwise agreed, the place of tender is the seller’s place of business.
28
What does the acronym FOB stand for?
Free On Board.
29
What are the four methods of tender?
* Seller’s place of business * Shipment contract * Destination contract * Goods in the hands of a bailee.
30
What is the buyer's obligation when a conforming tender is made?
To accept and pay for the goods.
31
What is a bill of lading?
A document of title that the seller transfers to the buyer in lieu of the goods.
32
What is shipment under reservation?
A seller ships goods but retains ownership until payment is received.
33
What is the significance of tender of payment?
It is a condition to the seller’s duty to tender and complete any delivery.
34
What does sending goods under reservation mean?
The carrier will hold the goods until the buyer pays ## Footnote The buyer has the right to inspect the goods before paying unless otherwise stated in the contract.
35
What is a condition to the seller’s duty to deliver?
Tender of payment is a condition to the seller’s duty to tender and complete any delivery ## Footnote Unless otherwise agreed.
36
When is tender of payment sufficient?
When made by any means or in any manner consistent with the ordinary course of business ## Footnote Unless the seller demands payment in legal tender and provides time to procure it.
37
What happens when payment is made by check?
Payment is conditional until the check is paid or dishonored.
38
What is the buyer's right to inspect goods?
A buyer has the right to inspect goods that are tendered, delivered, or identified to the contract for sale ## Footnote Unless the contract provides otherwise.
39
Under what conditions is a buyer not entitled to inspect goods before payment?
If the contract provides for COD or other terms that preclude inspection before payment ## Footnote Also applies to contracts providing for payment against documents of title.
40
Who pays for the expenses of inspection?
The buyer pays for the expenses of inspection but may recover from the seller if goods are rejected.
41
What does the UCC imply regarding contract specifications left to one party?
An agreement will not be invalid due to omitted details if one party specifies performance ## Footnote The UCC implies an obligation of good faith within the parameter of 'commercial reasonableness.'
42
What is a divisible or installment contract?
A contract where obligations can be separated into pairs of part performances ## Footnote Recovery is limited to the performance promised for the corresponding portion of the contract.
43
What distinguishes installment contracts under the UCC?
Perfect-tender rule does not apply; rejection is determined by a substantial conformity standard.
44
What is the buyer's right regarding nonconforming goods in an installment contract?
The buyer can reject if the nonconformity substantially impairs the value of that shipment and cannot be cured.
45
What is the implied duty of good faith?
Good faith means honesty in fact and observance of reasonable commercial standards of fair dealing.
46
What happens if a party waives a condition?
The condition can be reinstated by the party if it is material to the primary purpose.
47
What is wrongful interference in contract law?
The duty not to hinder the other party’s performance and to cooperate when necessary.
48
What does election mean in the context of contract conditions?
A party who continues with a contract after a condition is not met effectively waives that condition.
49
What is estoppel in contract conditions?
A party may be estopped from using a condition as a defense if the other party reasonably relied on the indication that the condition was waived.
50
What is forfeiture in contract law?
The harm suffered by a party who has failed to perform according to a condition ## Footnote A court may excuse the condition if its non-occurrence causes disproportionate forfeiture.
51
What is a condition in a contract?
A future event that must take place before contractual rights or obligations are created, destroyed, or enlarged.
52
What are the types of contract conditions?
* Express * Implied-in-law * Implied-in-fact
53
What is an express condition?
Set forth in a contract and must be complied with fully—not merely substantially.
54
What is an implied-in-law condition?
Supplied by the court if reasonable under the circumstances (i.e., constructive condition). Substantial performance is sufficient.
55
What is an implied-in-fact condition?
The nature of the agreement suggests that the parties intended the condition but failed to expressly include it.
56
What is a condition precedent?
A condition that precedes the obligation to perform.
57
What is a condition subsequent?
A condition that excuses the duty to perform after a particular event happens.
58
What is a concurrent condition?
A condition that requires both parties to perform at the same time.
59
What standard is used to determine whether a condition is satisfied?
The reasonable-person standard is generally used, but a subjective standard applies if aesthetic taste is involved.
60
What is substantial performance in the context of contractual duty?
Substantial compliance can trigger the other party’s obligation to perform, but generally does not apply to contracts for the sale of goods.
61
What can a party who has substantially performed recover?
The contract price minus any amount that it will cost the other party to obtain complete performance as promised.
62
What are the two main obligations of a seller under the UCC?
* Transferring ownership to the buyer * Tendering goods conforming to warranty obligations
63
What does the UCC require regarding tendering goods?
Perfect tender, except for installment agreements or when the parties agree otherwise.
64
What are the methods of tender recognized by the UCC?
* Seller’s place of business – Make goods available * Shipment contract (FOB seller’s place of business) – Deliver to carrier * Destination contract (FOB buyer’s place of business) – Deliver to buyer
65
What rights does a buyer have regarding goods that are tendered?
The right to inspect goods that are tendered, delivered, or identified in the contract for sale.
66
What constitutes a breach regarding goods under the UCC?
Rejection of goods after a conforming tender.
67
What is a divisible contract?
A contract in which the various units of performance are divisible into distinct parts.
68
How does recovery work in a divisible contract?
Recovery is limited to the amount promised for the part performed.
69
What is an installment contract under the UCC?
A contract in which the goods are delivered in multiple shipments, each to be separately accepted.
70
What standard applies to the right to reject in an installment contract?
A substantial conformity standard.
71
What is the implied duty of good faith and fair dealing?
A duty imposed on each party to any contract meaning honesty in fact and the observance of reasonable commercial standards of fair dealing.
72
How can a party waive a condition?
By words or conduct, such as continuing with a contract after a condition fails.
73
What must happen for a nonmaterial condition to be reinstated?
* The waiving party communicates a retraction of the waiver before the condition is due * The other party has not detrimentally relied
74
What happens if a party wrongfully prevents a condition?
The condition is excused and the interfering party has an absolute duty to perform.
75
What can happen if a party waives a condition?
They may be estopped from using that condition as a defense if the other party reasonably relied on that waiver.

Contracts & Sales - July 2025 (Themis) (9 decks)

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