Contracts II - enforcement or failure of agreement

Question 1

implied good faith

Answer 1

honesty in fact and observance of reasonable commercial standards
1 imposes limits on selfishness in performance
2 prohibits predatory or opportunistic acts shocking to the conscience
3 prohibits conduct rendering contract illusory
4 does not make parties fiduciaries to each other

Question 2

does contract make parties fiduciaries to each other?

Answer 2

no, but they must act in good faith.

Question 3

when does manufacturer have duty to disclose

Answer 3

when manufacturer is aware products are defecting and other party is depending on them.

Question 4

duty to cooperate

Answer 4

parties must perform duties that are conditions to contract formation or conditions required in the contract

Question 5

duty not to interfere

Answer 5

parties have a duty to cooperate and not interfere or interrupt the contract by buying in the same market, coming out against other party’s permit application, assist in meeting conditions if possible, etc.

Question 6

promise of result

Answer 6

promise to achieve something, easier to monitor because there is an end result to evaluate

Question 7

promise of effort

Answer 7

promise to make best effort, harder to monitor because effort is difficult to measure, exclusivity creates implied best effort

Question 8

failure of condition

Answer 8

• gives the person the condition is designed to protect a choice of whether to terminate or continue with contract
• it is not a breach but may call for restitution
• close does not count especially if there are specific thresholds - the condition is met or not met

Question 9

failure of promise

Answer 9

party’s failure to perform, it is a breach of contract that may call for damages

Question 10

failure of scheduling

Answer 10

failure to meet deadline or delivery date, not a breach but will cause delays

Question 11

condition

Answer 11

• an event, not certain to occur, which must occur before performance under a contract becomes due
• a condition may require action by both parties
• action by one party may require action by the other party

Question 12

effects of non occurrence of condition

Answer 12

duty may be discharged

is a breach if the party had duty that condition occur

Question 13

forfeiture

Answer 13

when a promise does not get what is promised to him

Question 14

waiver

Answer 14

• a promise to ignore condition
• parties move forward with contract in spite of failed condition
• not a modification allowing for additional failures of the condition

Question 15

two part test for waive

Answer 15

1 was it a promise
2 is condition non-material
(must have consideration if condition is material)

Question 16

election

Answer 16

arises only after condition of a duty has failed, obligor may move forward with or walk away from contract, must decide in a reasonable time

Question 17

satisfaction as a condition

Answer 17

• contract appears to be illusory but is not
• good faith required
• court may appoint neutral party to determine satisfaction

Question 18

mistake

Answer 18

belief that is not in accord with the facts

Question 19

effect of mutual mistake on contract

Answer 19

may be voidable by adversely affected party if mistake is material

Question 20

when does a party bear risk of mistake?

Answer 20

1 when allocated to him by agreement
2 he is aware, at the time of contracting, that he has limited knowledge about facts but treats his limited knowledge as sufficient
3 risk is allocated to him by court

Question 21

what makes performance under a contract impracticable?

Answer 21

1 death or incapacity of particular person required for performance
2 destruction, deterioration or failure to come into existence of a thing necessary for performance
3 governmental regulation prohibiting performance

Question 22

what is the effect of impracticability, impossibility, and frustration?

Answer 22

discharges performance required under the contract

Question 23

effect of temporary impracticability

Answer 23

party excused from performance temporarily but is obligated to perform when able to

Question 24

effect of partial impracticability

Answer 24

party only required to perform that he is reasonably able to perform

Question 25

event terminating duty

Answer 25

if contract stipulates an event will terminate duty, duty is discharge when events occur

Question 26

when is performance due

Answer 26

1 generally at one time unless stipulated in contract 2 performance shall occur simultaneously 3 if one party's performance takes a long time and the other a short time, the one that takes a long time will perform first

Question 27

repudiation

Answer 27

when a person cancels or walks away from a contract, it occurs when there is: 1 a statement by party indicating they will breach 2 an affirmative act that is a breach it discharges the other party's duty to perform

Question 28

anticipatory repudiation

Answer 28

when a party notifies the other party that they intend to breach before their performance is due.

Question 29

demand for assurance

Answer 29

* when reasonable grounds for insecurity arise a party may demand assurance of due performance * failure to provide assurance is a breach and may be treated as repudiation

Question 30

factors for determining if failure is material

Answer 30

1 extent to which injured party is deprived of benefit 2 extent to which injured party can be compensated 3 extent to which injured party will suffer from forfeiture 4 likelihood that party failing to perform will cure his failure, taking into account reasonable assurances 5 extent to which behavior of failing party comports with standards of good faith and fair dealing

Question 31

buyer's rights on improper delivery

Answer 31

reject the whole accept the whole accept any commercial units and reject the rest

Question 32

manner of rejection

Answer 32

goods must be rejected within reasonable time and buyer must notify seller in a reasonable time

Question 33

effect of rejection

Answer 33

1 after rejection buyer can't exercise ownership of products 2 if buyer has taken possession he must use reasonable care in holding them until seller removes them 3 buyer has no further obligations

Question 34

buyer's tender of payment

Answer 34

1 tender of payment is condition for delivery of goods 2 payment can be made by any means used in ordinary course of business unless seller demands cash and grants time to obtain it 3 check is acceptable but conditioned on it not bouncing

Question 35

seller's remedies

Answer 35

1 withhold delivery 2 stop delivery by any bailee 3 resell and recover damages 4 recover damages for no-acceptance or the price

Question 36

frustration of purpose

Answer 36

when a party's principal purpose is frustrated without hi fault by a fact of which he has no reason to know and the non-existence of chi the contract was made. No duty to re render performance arises.

Question 37

force majeure

Answer 37

clause that excuses performance in the case of catastrophic events - usually acts of nature but also acts beyond parties' control

Question 38

hardship

Answer 38

event fundamentally altering equilibrium of a contract

Question 39

constructive condition

Answer 39

condition implied by law and setting order of performance in absence of express contract terms

Question 40

mutually dependent promises

Answer 40

each promise is dependent on the other

Question 41

tender

Answer 41

a present willingness and ability to perform

Question 42

simultaneous performance

Answer 42

parties each perform instantaneous

Question 43

progressive performance

Answer 43

contracts performed over time in paired units - unit of work followed by unit of payment - draws

Question 44

duty under progressive performance

Answer 44

each party's remaining duties are conditioned on no uncured material failure to perform a duty owed by the other party at an earlier time. * duty to continue to perform condition on no material breach by the other

Question 45

responding to failure of constructive condition

Answer 45

1 continue to perform - reserving right to sue, mitigate damages 2 suspend performance - resume when failure cured 3 terminate performance - fire other party, reject offer to cure, substitute and sue