Excuses to Nonperformance Flashcards
lim
conditions
agreed-upon limitations on performance in a K
- performance is contingent on the occurrence of some event
Can be express or implied
eg, A agrees to buy B’s car if B gets new tires; B getting new tires is a condition of A’s performance (buying the car)
words indicating a condition
- if
- provided that
- subject to
- as long as
- until
- unless
- when
- on the condition that
conditions v. promise
- failure of promise: breach
- failure of condition: relieves a party’s performance obligation
Conditions are NOT promises –> no breach
express condition
NOT met: can grant excuse to innocent party
- must be perfectly satisfied
NO substantial performance rule for express condition (strict compliance)
types of conditions
- condition precedent
- condition subsequent
condition precedent
condition must occur before performance due
- non-occurrence excuses performance
condition subsequent
condition that occurs after performance has begun and excuses duty to perform/pay
satisfaction condition
measured by reasonable person standard UNLESS k deals w/ art or personal taste
eg, A will paint B’s fence to B’s satisfaction
condition’s purpose controls interpretation
substantial performance of a condition may suffice if it fulfills the condition’s purpose
- parties’ intent control
- a party protected or benefitted by a condition may waive or estop the condition from being enforced (aka conditions may be excused by action or inaction of person protected by condition)
ET: look for fail to cooperate or waiver + who’s protected
eg, if a condition is clearly designed to protect one party, it will be interpreted consistently w/ that intent
excuse
conditions may be legally excused by breach, repudiation, etc.
- a party whose performance is subject to a condition CANNOT prevent or hinder the condition’s occurrence; will result in excuse of condition
waiver of condition
voluntary giving up condition’s protect
- can be retracted before reliance
insecurity
arises when a party to a K has reasonable grounds to believe other party will be unwilling or unable to perform under K
- insecure party may demand adequate assurances the other party will perform and suspend performance in the meantime
Arises out of UCC, but many states apply to non-UCC ks
demand for adequate assurances
must be made in writing based on reasonable + justified grounds for insecurity
- NO response required: if demand is unjustified or unreasonable (ie, if party seeking adequate assurances is unreasonably insecure)
Only entitled to adequate assurance NOT rewrite k or demand certain assurance
suspension of performance
a justifiably insecure party may suspend performance until adequate assurances are provided
adequate assurances
commercially reasonable commitment from a party that it will perform under K
- Not provided: anticipatory repudiation = insecure party may treat K as repudiated
- Provided: formerly insecure party must perform (otherwise in breach)
NOTE: failure to respond to unreasonable demand is NOT repudiation
insecurity v. anticipatory repudiation
- Insecurity: mere uncertainty regarding other party’s performance
- anticipatory repudiation: clear indication the other party will NOT perform
anticipatory repudiation
early statement of non-performance
- arises when one party to a k makes it clear that he will NOT perform under k
Effect: excuses innocent party’s performance + gives rise for immediate claim for damages for breach unless retracted
anticipatory repudiation requirements
arises when one party to K:
1. unambiguous act: makes an unambiguous statement or conduct;
2. prior to full performance: prior to time performance is due;
3. indicating non-performance: which indicates he will not perform
eg, A hires B to remodel A’s kitchen, B is almost finished when A tells B to remodel A’s kitchen. B is almost finished when A tells B she does not want the remodel and will not pay. B can treat K as breached, which excuses B’s obligation to continue working
withdrawal of anticipatory repudiation
can be withdrawn unless other party has:
1. materially changed position in reliance on repudiation,
2. cancelled the k in response to repudiation, or
3. indicated they consider the repudiation to be final
If successfully retracted, reimposes k obligations on innocent party
non-repudiating party’s options
she may either:
1. treat the anticipatory repudiation as a total repudiation and sue,
2. suspend performance until performance date is dues and wait to sue,
3. treat repudiation as an offer to rescind and treat k as discharged, or
4. ignore repudiation and urge promisor to perform
impossibility/impracticability
later unforeseen event makes party’s performance impossible/impractical
NOTE: unforeseen event occurs after k formation but before full performance
ET: MBE uses term “impractiability” to encompass both impossibility and impracticability
impossibility/impracticability requirements
an unforeseen event, which neither party assumed would occur, must make completing performance either:
1. impossible: performance is objectively impossible, or
2. impracticable: performance is only possible w/ extreme and unreasonable difficulty or expense
common unforeseen events
- substantial damage/destruction of K’s subject matter: damage or destruction must not have been either party’s fault
- subsequent law or regulation (eg, supervening illegality): if performance becomes illegal, excuse by impossibility
- death
death (impossibility/impracticability)
K obligations generally survive the death of a party (estate is liable)
- UNLESS deceased party’s k obligations are non-delegable (death or incapacity of essential person) –> then performance is excused
ET: usually only unique personal services are non-delegable (unique skill)
