conditions and performance

Question 1

condition

Answer 1

future event that must take place before rights or obligations are created, destroyed, or enlarged

Question 2

condition - failure of a condition

Answer 2

relieves a party of the obligation to perform

Question 3

condition - express condition

Answer 3

• K includes words like “on the condition that” or “provided that”
• Condition must be complied with fully unless excused; substantial performance will not
  suffice
• Enforceable even when the failure to meet the condition results in the denial of
  compensation

Question 4

condition - implied condition

Answer 4

those deemed to be part of K because agreement suggests that parties truly
intended the condition but failed to expressly include it, or because fairness requires its
inclusion
* Only substantial performance required to satisfy condition
* UCC—implies duty of cooperation when performance of one party depends on the
cooperation of the other party

Question 5

timing of conditions - condition precedent

Answer 5

condition precedes the obligation to perform

Question 6

timing of conditions - condition subsequent

Answer 6

condition excuses the duty to perform after a particular event occurs

Question 7

timing of conditions - concurrent conditions

Answer 7

each party’s duty to perform is conditioned on the other party’s duty to perform (each party must perform simultaneously)

Question 8

satisfaction of conditions

Answer 8

examined against objective, reasonable person standard unless aesthetic taste is involved (then subjective standard; the party must use good faith when assessing satisfaction; dissatisfaction must be honest, but may be unreasonable)

Question 9

performance of contractual duty - order of performance

Answer 9

Order of performance—unless the language or circumstances indicate otherwise,
performance is due:
* When one party’s performance requires a period of time—that party must complete his performance before the other party is required to perform
* When both parties’ performance can be rendered at the same time—both parties must perform at the same time; one party’s failure to perform excuses the other party’s performance

Question 10

performance of contractual duty - substantial performance: Ks for sale of goods

Answer 10

substantial generally does not apply to Ks for sale of goods

Question 11

performance of contractual duty - substantial performance: express condition precedent

Answer 11

parties are generally held strictly to the condition; full compliance is required before other party’s performance is due

Question 12

performance of contractual duty - substantial performance: implied or constructive condition precedent

Answer 12

a party who substantially complies with the condition can trigger the other party’s obligation to perform

Question 13

performance of contractual duty - substantial performance: damages

Answer 13

K price minus any amount it will cost other party to obtain complete performance as promised:
o Even if no substantial performance, potential recovery through restitution
o Failure to substantially perform is a material breach

Question 14

performance of contractual duty - substantial performance: willful breach

Answer 14

more likely to be treated as a material breach (i.e., substantial performance is less likely to be found when the breach is willful)

Question 15

perfect tender under the UCC - in general

Answer 15

the UCC requires perfect tender
- perfect goods
- perfect delivery
Seller must transfer ownership and tender goods conforming to warranty obligations

Question 16

perfect tender under the UCC - inspection of goods

Answer 16

Buyer may inspect goods and, upon acceptance, has an obligation to pay for them

Question 17

perfect tender under the UCC - substantial performance

Answer 17

substantial performance insufficient (except for installment Ks and when parties agree)

Question 18

perfect tender under the UCC - transferring ownership

Answer 18

o Automatic warranty of good title, rightful transfer, and goods free of security
interest of which buyer is unaware
o Actual knowledge of security interest nullifies warranty of title

Question 19

perfect tender under the UCC - seller’s obligation to tender the goods

Answer 19

must be in accordance with K provisions or
with UCC if K is silent on tender

Question 20

perfect tender under the UCC - method of tender: seller’s place of business

Answer 20

seller must place goods at the disposition of the buyer and give the buyer notice, if necessary

Question 21

perfect tender under the UCC - shipment contract (e.g., “F.O.B. seller’s place of business”)

Answer 21

seller must deliver goods to a carrier and make a contract for their shipment; when the K is silent, a shipment K is presumed when the K requires shipment by third-party carrier

Question 22

perfect tender under the UCC - destination contract (e.g., “F.O.B. buyer’s place of business”)

Answer 22

seller must deliver goods to the place specified in contract and tender them there by holding them at the buyer’s disposition

Question 23

perfect tender under the UCC - buyer’s obligations

Answer 23

once conforming tender is made, buyer generally obligated to accept and pay K price; rejection amounts to breach of K

Question 24

perfect tender under the UCC - buyer’s right to inspect before payment

Answer 24

generally, a right to inspect goods that
are tendered, delivered, or identified to the K for sale, unless K provides otherwise

Question 25

perfect tender under the UCC - contract specifications left to one party

Answer 25

otherwise valid K not invalid merely by omitting details to be specified by one of the parties; specifications must be commercially reasonable and made in good faith

Question 26

divisible or installment Ks - common law

Answer 26

various units of performance divisible into distinct parts o Recovery limited to amount promised for the segment of K performed o Damages recoverable for breach of other segments

Question 27

divisible or installment Ks - UCC

Answer 27

goods delivered in multiple shipments, each to be separately accepted o Perfect tender rule does not apply o Right to reject determined by “substantial conformity” standard—buyer can only reject if nonconformity substantially impairs the value to buyer and cannot be cured o Buyer may cancel K only if nonconforming tender substantially impairs the value of the entire K

Question 28

implied duty of good faith and fair dealing

Answer 28

* Imposed on each party in any contract (common law or UCC) * “Good faith”—“honesty in fact and the observance of reasonable commercial standards of fair dealing”

Question 29

suspension or excuse of conditions - waiver

Answer 29

party whose duty is subject to a condition can waive a nonmaterial condition by words or conduct; conditions material to party’s primary purpose may be reinstated by the party; nonmaterial condition may be reinstated if: * The waiving party communicates the retraction of the waiver before the condition is due; and * The other party has not suffered detrimental reliance.

Question 30

suspension or excuse of conditions - wrongful interference

Answer 30

if party whose duty is subject to a condition wrongfully prevents or interferes with occurrence of that condition, then the condition is excused and interfering party has absolute duty to perform (per implied duty of good faith and fair dealing)

Question 31

suspension or excuse of conditions - election

Answer 31

a party who chooses to continue with a K after a condition is broken effectively waives that condition

Question 32

suspension or excuse of conditions - estoppel

Answer 32

once a party waives condition, he can be estopped from using that condition as a defense if other party reasonably relied on waiver

Question 33

suspension or excuse of conditions - forfeiture

Answer 33

court may excuse nonmaterial condition if non-occurrence would cause disproportionate forfeiture