MBE Contracts Flashcards
(19 cards)
When has a party substantially performed?
When the nonbreaching party has received the substantial benefit of its bargain. Aka minor breach.
No substantial performance if the incomplete performance was a material breach of contract.
Can a party who has substantially performed recover on the contract?
Yes
What happens if there was a material breach?
Under the common law, a material breach of contract (i.e., when the nonbreaching party fails to receive the substantial benefit of its bargain) allows the nonbreaching party to withhold any promised performance and to pursue remedies for the breach, including damages.
UCC perfect tender rule
A seller must strictly perform all contractual obligations or be in breach.
- Substantial performance will not suffice. Seller can cure breach if time remains to perform under the contract.
- Buyer can accept or reject nonconforming goods and sue for breach if seller doesn’t or cannot cure.
- Seller, as the breaching party, cannot recover damages under the contract for any rejected goods. Restitution available
What damages is a buyer in a real estate transaction entitled to if the date of possession is delayed?
In a real-estate contract that requires delivery of possession, late delivery is a breach that entitles the nonbreaching party to compensatory damages for actual economic losses.
What do compensatory damages consist of?
Compensatory damages recover actual economic loss and consist of:
- expectation damages – the difference between the value of performance without the breach (i.e., what was promised) and with the breach (i.e., what was received)
- consequential damages – damages that do not flow directly and immediately from the other party’s breach but are the foreseeable consequence of the breach (i.e., not too speculative) and
- incidental damages – commercially reasonable expenses incurred due to the other party’s breach
Does an accord require consideration?
Yes, consideration is required for an accord to be valid
What kind of consideration is required for an accord?
Consideration for an accord can be worth less than what was agreed to in the original contract only if (1) there is a good-faith dispute as to the amount owed or (2) the new consideration is of a different type than what was owed under the original contract.
Does a third-party beneficiary have the right to enforce the contract?
Only intended beneficiaries
Can contracting parties modify the contract if there’s an intended beneficiary?
Yes, until the intended beneficiary’s rights are vested. Vesting occurs when the beneficiary: (1) materially changes position in justifiable reliance on the rights created (2) manifests assent to the contract at a party’s request or (3) files a lawsuit to enforce the contract.
Once the intended beneficiary’s rights have vested, the contracting parties are bound to perform the contract.
Any efforts by the promisor or promisee to modify or rescind the contract after vesting without the beneficiary’s consent are void.
When are an intended beneficiary’s rights vested?
When the beneficiary (1) materially changes position in justifiable reliance on the rights created (2) manifests assent to the contract at a party’s request or (3) files a lawsuit to enforce the contract.
After this point any modification or rescission by the contracting parties without the beneficiary’s consent are void.
What are the requirements for an irrevocable offer under the UCC firm-offer rule?
Under the UCC firm-offer rule, an offer to buy or sell goods will remain open and cannot be modified if:
- the offeror is a merchant
- there is an assurance that the offer is to remain open, and
- the assurance is contained in a signed writing from the offeror
How long does a UCC firm offer last?
A firm offer is irrevocable for the time stated in the offer or, if no time is stated, for a reasonable time. However, the period of irrevocability cannot exceed three months—even if a longer time period is stated or implied—unless the offeree gives consideration to validate it beyond the three-month period.
Can a party recover restitution damages for breach of an illegal contract?
Maybe. A contract to perform an illegal act (e.g., fraud) is generally void and unenforceable. However, restitution damages may be recoverable if the claimant conferred a benefit on the other party and:
- was justifiably ignorant of the facts that made the contract illegal
- was less culpable than the other party, or
- withdrew before the contract’s illegal purpose was achieved and did not engage in serious misconduct (e.g., shockingly immoral, unethical, or unjust behavior).
Exceptions to PER: What is parol evidence admissible to establish, regardless of partial or complete integration?
- Extent of integration
- Defense to formation/enforcement
- Meaning of ambiguous terms
- Grounds for granting/denying remedy
- Collateral agreements
- Subsequent modifications
- Proving condition precedent
When are noncontractual promises enforced through promissory estoppel?
Courts will invoke the doctrine to treat a promise as binding if
(i) the promisor should reasonably expect it to induce action or forbearance on the part of the promisee or a third person,
(ii) the promise does induce such action or forbearance, and
(iii) injustice can be avoided only by enforcement of the promise.
If a contract is divisible and partially performed, can you recover the whole contract price?
No. Recovery on a divisible contract is limited to the portion of the contract that has been performed.
A repudiating party may not retract the repudiation once the other party:
(1) acts in reliance on the repudiation, (2) signifies acceptance of the repudiation, or (3) commences an action for breach of contract.
Recovery available to seller when a buyer breaches or repudiates a contract for the sale of goods, under the UCC?
The seller may resell the goods and sue for the contract price minus the resale price. A seller intending to resell the goods in a private sale must first give the buyer reasonable notice of his intent to resell.
But the resale must (i) be only of goods identified in the contract and (ii) must be commercially reasonable.
In such cases, the seller can recover the difference between the contract price and the resale price. Additionally, the seller is entitled to recover incidental damages, which include storage and shipping costs.
