Implied Conditions

Question 1

What is the constructive condition of exchange?

Answer 1

One party’s performance is conditioned on the other side’s performance. If one side of the condition is not carrying their side of the deal then the other side’s condition won’t go through.

Question 2

What is the standard of performance in the common law universe for the CCE

Answer 2

The doctrine of substantial performance states that a party will satisfy the CCE if there is no material breach.
Substantial performance works only if the breach is not willful.

Question 3

Can the nonbreaching party recover damages for the deficiency?
*deficiency being that substantially performed

Answer 3

Yes they can recover damages, limited to one of 2 options:
1) Typically measured as the cost to complete the performance
2) Sometimes limited to the diminution in market value.

Question 4

Can a party that fails to satisfy a CCE due to MATERIAL BREACH get paid anything?

Answer 4

Not entitled to recover anything on the contract but ,maybe under quasi contracts.

Question 5

Can a BREACHING party who fails to satisfy and express condition get paid in quasi-contract?

Answer 5

Usually not, express conditions must be STRICTLY satisfied.

Question 6

Divisibility

Answer 6

—If a contract is clearly divisible, then it will be broken into mini-contracts for the
purposes of determining if there has been substantial performance.

Question 7

What is the difference between UCC and Common law regarding performance?

Answer 7

Under common law and Constructive Condition of Exchange substantial performance is acceptable.

Under UCC perfect tender is required
exception: Installment contracts.

Question 8

What is perfect tender under UCC?

Answer 8

Perfect goods
Perfect delivery

Question 9

What is the effect of not receiving perfect tender?

Answer 9

The buyer can reject all of the goods.
(Remember there might be an exception under installment K)

Question 10

What happens when a buyer accepts the goods and later finds out they were not perfect tender?

Answer 10

Buyer can revoke the acceptance if defect is discovered within a reasonable time.

Question 11

What are the options for the seller when he doesn’t give perfect tender?

Answer 11

If the seller fails to tender perfect goods and time is left on the contract or the seller had
reasonable grounds to believe that the buyer would accept a replacement, then the buyer
must give the seller a chance to cure

Question 12

What is the default method of delivery under the UCC?

Answer 12

The default method of delivery is perfect tender in ONE delivery

Question 13

What is the default method of delivery under the UCC?

Answer 13

The default method of delivery is perfect tender in ONE delivery

Question 14

What is an installment contract?

Answer 14

UCC allows for agreement to deliver goods in separate lots.

Question 15

What are the effects of not perfect tender in an installment contract?

Answer 15

Buyer can reject a specific delivery that is not perfect tender only when there is substantial impairment in the installment and cannot be cured

Question 16

What are the three methods of tender/delivery under UCC?

Answer 16

Tender at SELLER”S place of business
Shipment contract ( also known as FOB Seller’s place of business)
Destination contract (also known as F.O.B BUYER’S place of business)

Question 17

What happens if the tender is done at the seller’s place of business?

Answer 17

The seller just have to give the goods to the buyer.

Question 18

What must the SELLER do if the agreement is a shipment contract?

Answer 18

The seller must take three actions:
1)get the goods to a common carrier
2) make arrangements for delivery
3) Notify the buyer

they need to do all this to be a perfect tender under shipment contract

FOB seller’s place of business

Question 19

What must the seller do if the agreement to tender goods is a destination agreement?

Answer 19

The seller must get the goods to the buyer and notify the buyer.

FOB buyer’s place of business

Question 20

What is the “risk of loss problem”?

Answer 20

Arises when there is a goods contract followed by damage or destruction of the goods before the buyer receives them.

Question 21

How to determine who bears the risk of loss?

Answer 21

1) Check whether the parties have already dealt with the risk problem in the contract. If so, their agreement will control.
2) If not, ask whether either party has breached (typically another part of the contract).
* If so, the breaching party bears the risk of loss.
* Is this true even if the breach is totally unrelated to the delivery damage?Yes
3) If there is no breach, and the goods are being shipped, then ask what type of delivery contract it was:
* If it was a shipment contract, then the risk of loss during delivery rests with the buyer.

• If it was a destination contract, then the risk of loss during delivery rests with the seller.
  4) Ask whether the seller is a merchant in all other cases.
• If so, the risk of loss stays with the seller until the buyer receives
  the goods.
• If not, the risk of loss moves to the buyer when the seller tenders the goods?