Contracts Bar Flashcards
(13 cards)
Time is of the essence
To determine whether time is of the essence, the trier of fact looks to the instrument itself for a “time is of the essence” clause, as well as the surrounding circumstances
Substantial performance
The rules for determining whether performance is substantial is the same as those for determining whether a breach is material or minor
Minor breach
A breach is minor is performance is substantial
Major breach
A breach is material if if performance is not substantial
How to determine the materiality of a breach?
Determining materiality of a breach: the amount of benefit received, the adequacy of damages, extent of performance, hardship to the breaching party, and whether the breach was negligent or willful
When is a contract divisible?
Divisible contracts: (i) the performance of each party must be divided into two or more parts under K, (ii) the number of parts due from each party must be the same, and (iii) the performance of each part by one party is agreed on as the equivalent of the corresponding part from the other party.
→ Divisibility questions turn on contract interpretation and generally turn on fairness.
→ If a contract is divisible, a party who has performed one or more parts is entitled to collect the KP for those parts even if it breaches other parts.
What is the damages amount for restitution and when does it arise?
Recovery in quasi-contract for value of services performed minus any damages incurred as a result of the breach.
→ Unjust enrichment/equity recovery
Adequate assurance
A party has a right to demand adequate assurances when the other party has made a statement or otherwise indicated their potential inability to perform. This makes the other party “insecure” and thus can demand adequate assurances. The party who demands adequate assurances may suspend performance until those assurances are received. If the adequate assurance is not received within 30 days then the insecure party may treat the contract as repudiated.
Anticipatory repudiation
This is a definite invocation by one party of their inability to perform under the contract before performance arises. The non-breaching party may immediately sue for breach of contract and damages arising under the contract. Alternatively, the non-breaching party may wait and sue until performance is due to see if the other party actually performs.
Recovery for destroyed new home versus repair of home
New home: Nothing
Repair: Cost of materials and reasonable labor costs
Can cashing a check render an accord and satisfaction complete?
Yes. Satisfaction is the performance of the accord agreement. Satisfaction discharges not only the original contract but also the accord contract. If a monetary claim is uncertain or is subject to a bona fide dispute, an accord and satisfaction may be accomplished by a good faith tender and acceptance of a check when that check (or an accompanying document) conspicuously states that the check is tendered in full satisfaction of the debt.
Frustration of purpose requirement
discharge by frustration of contractual purpose requires that, at the time of entering into the contract, the parties did not reasonably foresee the occurrence of the act or event leading to the frustration
When must the warranty of merchantability be made?
The warranty will not be disclaimed because, to be effective, a disclaimer must be part of the offer and acceptance process or must be agreed to by the buyer as a modification.
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