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Contracts & Sales (UCC Art. 2) > Excuse for Nonperformance > Flashcards

Excuse for Nonperformance Flashcards

1
Q

(UCC) Seller’s rejection of check

A

If a seller rejects a buyer’s check, seller must allow buyer additional reasonable time to return with cash.

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2
Q

Common law damages rule

A

Injured party can recover damages for any breach of contract, whether the breach is material or not.

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3
Q

Restitution

A

Breaching party can still get this remedy if the injured party did not compensate them for their already provided services.

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4
Q

Divisible contract

A

Contract that is divided between duties, where performing party is paid per duty fulfilled.

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5
Q

Immaterial Breach in a Divisible Contract

A

If a party doesn’t fulfill all duties in his divisible contract he is still liable for breach, but entitled to be paid for duties performed.

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6
Q

Material breach (CL)

A

only this provides an excuse to suspend an innocent party’s performance.

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7
Q

Anticipatory repudiation (CL)

A

Treated as a material breach and excuses performance unless retracted and not yet relied upon.

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8
Q

Injured party’s option under anticipatory repudiation

A

If a party anticipatorily repudiates, the injured party may immediately stop performance and immediately sue for breach.

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9
Q

Repudiation retraction rule

A

Repudiations can be retracted so long as they are not yet relied upon.

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10
Q

Effect of repudiation retraction

A

Reimposes injured party’s duty to perform

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11
Q

UCC failure to give adequate assurance

A

A party with reasonable grounds for being insecure about the other party’s performance may, in writing, request adequate assurance that the other party will perform in accordance with the contract.

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12
Q

Failure to give adequate assurance

A

if the other party doesn’t give adequate assurance after a reasonable request to do so, the injured party’s performance is excused.

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13
Q

What adequate assurance cannot be used for

A

Cannot use adequate assurance to re-write the contract or demand a particular kind of adequate assurance

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14
Q

Rescission

A

A mutual agreement to cancel the contract

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15
Q

Modification

A

An agreement to replace an existing contract with a new one.

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16
Q

Breach under a modified contract

A

If a party breaches after a contract has been modified, the injured party can sue to enforce only the modified contract, not the original one

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17
Q

When a proper modification takes effect

A

A proper modification takes effect immediately

(i.e. excuses original obligations immediately)

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18
Q

Accord

A

an agreement to accept a different performance in future satisfaction of an existing duty.

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19
Q

Accord rule

A

The pre-existing duty is suspended by the accord, but is not excused until the accord is satisfied (new term performed).

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20
Q

Language typical of an accord/satisfaction contract

A

If, then…

21
Q

Plaintiff’s options if the defendant breaches an accord

A

Plaintiff may sue on either the accord or the original contract.

22
Q

Accord/modification distinction

A
  • Whether you have a modification or an accord and satisfaction depends on timing.
  • Ask: Is the underlying obligation excused right now (modification) or only later on (accord/satisfaction)?
23
Q

Novation

A

an agreement to substitute a new party for an existing one.

All parties are in on the deal.

24
Q

Delegation

A

Party finds another person to perform his contract obligations without the other party’s consent.

25
Q

This party is liable if the new party breaches after a delegation

A

The original party who delegated the work

26
Q

This party is liable if the new party breaches after a novation

A
  • Only the new party is liable.
  • Old party cannot be held liable for new party’s breach.
27
Q

Impossiblity Rule

A

A later unforeseen event that makes performance impossible may provide the seller with an excuse.

28
Q

Impracticability

A

UCC verion of impossibility

29
Q

Destruction of the contract’s subject matter under impossibility (CL)

A

Provides an excuse for nonperformance

30
Q

Destruction of the contract’s subject matter under impracticability (UCC)

A
  • Destruction of the contract’s subject matter provides an excuse if the seller bore the risk of loss and the goods damaged/destroyed had been identified to the contract
    • (e.g. already set for sale to the buyer)
  • No remedy is available to the buyer if the risk of loss already passed to the buyer before an event triggering impracticability occurred
31
Q

Death of someone as basis for excuse rule

A
  • Must be someone special/essential for performance of the contract.
    • e.g. Van Gogh is essential and excused if he’s painting a portrait, but not if he’s just painting a barn.
32
Q

Effect of a party’s duty after he has died

A

The estate is still liable for performance if the party dies after the other party has performed.

33
Q

Subsequent supervening governmental regulation rule

A

If performance becomes illegal due to a subsequent supervening governmental regulation, performance is excused due to impossibility/impracticability

34
Q

Impracticability and increase in the cost of the seller’s performance

A

cost increase is not an excuse for impracticability

35
Q

Frustration of purpose rule

A

Even though performance is possible, if the central purpose of the contract is undermined, and both parties understood that essential purpose, contract is excused.

36
Q

Express condition

A

Language in the contract that limits obligations created by other contract language, but does not create an independent obligation.

37
Q

How to spot an express condition

A

Look for words like “if” “as long as” “when” “provided that” etc…

38
Q

Effect of noncompliance of condition

A

If an express condition is not strictly complied with, the party is excused from performance, but cannot sue for breach.

e.g. I promise to buy a house if it is valued at $2mil. If house worth less, I can’t sue seller, but I don’t have to buy.

39
Q

Express conditions waiver

A

Even if not complied with, express conditions can subsequently be waived.

40
Q

How satisfaction imposed by a satisfaction clause is measured

A

measured by a reasonable person standard unless the contract deals with art of matters of personal taste.

41
Q

Types of express conditions

A

condition precedent and condition subsequent

42
Q

Condition precedent

A

An event that must occur before performance is due (e.g. I will lease the gym space from you for $1000 IF I first sell 2000 memberships) [usually tested].

43
Q

Condition subsequent

A

An event that cuts off an existing duty (e.g. I will lease the gym space for $1000 until the zoning changes from commercial to residential only).

44
Q

Excusing a condition

A

occurrence of a condition may be excused by the later action or inaction of the person protected by the condition.

45
Q

How to tell if a condition is excused

A

Ask who is protected by the condition, then see if she did anything to lose the protection.

46
Q

Failure to cooperate

A
  • A party protected by a condition does something/fails to do something to forfeit the protection.
    • e.g. buying a house on the condition of a mortgage, then never seeking a mortgage.
47
Q

Consequences of failure to cooperate

A

The party is no longer protected by the condition and must fulfill the duties of the contract.

48
Q

Waiver

A

The voluntary giving up of a condition’s protection

49
Q

Consequences of waiver

A

Party is no longer protected by the condition and must fulfill the duties of the contract.

Waiver can be retracted.

Contracts & Sales (UCC Art. 2) (7 decks)

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