Contracts - Performance, Modification & Excuse Flashcards Preview

Contracts - Bar Prep > Contracts - Performance, Modification & Excuse > Flashcards

Flashcards in Contracts - Performance, Modification & Excuse Deck (28)
Loading flashcards...
1
Q

What is the seller’s obligation under the UCC?

A

To transfer and deliver the goods

2
Q

What is the buyer’s obligation under the UCC?

A

To pay for the goods

3
Q

What is the difference between carrier-cases and non-carrier cases?

A

Under the UCCF:
Carrier cases is where the pays to a sales of goods K agree to a common carrier
Non-carrier cases are where the pays to a sale of goods K do not agree to use a common carrier

4
Q

When does the risk of loss transfer in non-carrier cases?

A

UCC - Depends if seller is a merchant:
Seller a merchant - passes to the buyer only when the goods are physically the buyer’s possession
Not a merchant - transfers upon tender of delivery

5
Q

How is the risk of loss determined in a carrier case?

A

It depends on whether the contract is a shipment contract or a destination contract

6
Q

What is a shipment contract?

A

A contract where the seller promises to turn the goods over to the carrier (that is the end for the seller)

7
Q

What is a destination contract

A

A contract where the seller promises to tender delivery at a particular destination point

8
Q

When does the risk of loss transfer in carrier cases?***

A

Shipment Contract
FOB Seller - risk passes to the buyer when the goods are delivered to the carrier
Destination Contract
FOB Buyer - risk passes to the buyer when the goods are tendered @ the destination point specified in the contract

9
Q

What is the default rule in a carrier case if the type of contract is silent?

A

The contract will be deemed a shipment contract

10
Q

What is the rule for a contract modification under the common law?

A

Preexisting Duty Rule
A promise to increase compensation for duties already owed under an existing contract is an unenforceable modification b/c there is no consideration offered for the modification
(cannot modify in this way)

11
Q

What are the exceptions to the pre-existing rule?

A

Mutual Modification

Unforeseen Circumstances

12
Q

What is mutual modification?

A

A promise to increase compensation under an existing K requires (to be enforceable):
both ptys to agree to a performance that is different from the one required by the original K AND
the difference in performance is not a mere pretense of a newly formed bargain

13
Q

What are unforeseen circumstances

A

The preexisting duty does not apply when:
A promise of increase compensation is given in exchange for a promised performance that has been rendered substantially more burdensome than reasonably anticipated by the ptys

14
Q

How is a contract modified under the UCC?

A

An agreement to modify an existing K for the sale of goods need no consideration as long as there is good faith

NOTE - even if consideration is offered, it will be unenforceable if it is just a pretext to hide a bad faith change of terms

15
Q

How can performance be excused?

A
By faulty assumptions of present facts:
Mistake
By faulty assumption regarding future facts:
Impossibility
Impracticability
Frustration of Purpose
By agreement of the ptys:
Rescission
Accord & Satisfaction
Anticipatory Repudiation
16
Q

When is a mistake sufficient to be excused?

A

The mistaken fact must significantly impact the value of the transaction to one or both ptys (materiality)

17
Q

How is performance excused under mistake?

A

Unilateral Mistake (only one pty operating under a faulty assumption of a material fact)
Single pty will not be excused
EXCEPTION
1. Other pty knew or had reason to know of that pity’s mistake
2. Where there has been a serious or unconscionable clerical error
unless the error was caused by extreme negligence & other pty relied on it
(minority rule)

Mutual Mistake
The contract will be voidable by the disadvantage pty if:
1. the mistaken assumption must relate to a material fact
2. mistake must be made by both pays
3. the disadvantaged pty did not bare the risk of mistake under the pays agreement

18
Q

How is performance excused under Impossibility?

A

The doctrine excuses both pays from their obligation if performance has been rendered impossible by events occurring after the K was formed

19
Q

What are the requirements for impossibility?**

A
  1. Impossibility must be objective

2. The contingency that created the impossibility was not known to the pays at the time of making the K

20
Q

What is the difference between objective & subjective impossibility?

A

Objective Impossibility
When the performance under the K becomes literally impossible for anyone b/c of circumstances beyond the control of both ptys
Examples of objective impossibility:
- When the subject matter of the K is destroyed
- in a personal service K where the performing pty has died/incapacitated
- When supervening law has rendered performance legally impossible

Subjective impossibility
When the performance under the K becomes impossible b/c of some failure or fault on the part of the performing pty

21
Q

How is performance excused by the doctrine of impracticability?

A

A promisor may be excused from performance where the following two elements are proven:

  1. the contingency causing the impracticability was unforeseen
  2. the increase cost is far beyond what either pty anticipated
  3. risk neither assumed or allocated by either pty
22
Q

How is the doctrine of impracticability treated under the UCC?

A

Increase in cost alone or a rise/collapse of the market is not considered impracticable
HOWEVER, it is impracticable where shortage is caused by:
1. war or embargo
2. local crop failure or
3. unforeseen shutdown of major sources of supply through natural disaster, etc.

23
Q

How is performance excused under frustration of purpose?

A

It is where a contingency occurs that dramatically reduces the value of performance to the receiving party

NOTE - Unavailable as an excuse if it is contractually allocated risk

24
Q

What is the modern test under frustration of purpose?

A

A pty’s contractual obligation will be discharged when three requirements are met:

  1. The pity’s principle purpose for the K is frustrated
  2. The frustration was substantial in nature
  3. The nonoccurrence of the event (precipitating frustration) must have been a basic assumption of the K (something we could never think or dream could happen)
25
Q

How is performance excused by rescission?

A

There needs to be a mutual agreement of both ptys in mid-performance to discharge the other of their duty

NOTE - SOF __________________

26
Q

How is performance excused under accord & satisfaction?

A

This is where one pty has performed & the other hasn’t
An accord is a K in which the obligee promises to accept substitute performance in satisfaction of the obligor’s existing duty.

It satisfies the obligor’s original duty
Only suspends the original duty

27
Q

Is consideration needed for an accord?

A

Generally yes:

Involves an agreement for partial or substituted performance:
the substituted performance differs significantly from the original performance or its obligation is doubtful

Involves an agreement for partial payment:
there must be good faith or bona fide dispute about amount owed

28
Q

How is performance excused by Anticipatory repudiation?

A

a