Performance

Question 1

2 steps for determining whether a breach of contract has occurred

Answer 1

(1) was a traditional, enforceable contract formed? (M.C.D.S.)
(2) [if yes] Did either party fail to perform their contractual duties without a valid excuse for nonperformance? (S.P.W.C.E.A.)

Question 2

What is the requirement for performance under common law?

Answer 2

Substantial performance is required.

(performance will be satisfied so long as there is NOT a material breach of the contract)

Question 3

What occurs if there is a material breach of the contract (@CL)?

Answer 3

The non-breaching party’s performance is discharged.

Question 4

What happens if the breach is NOT material?

Answer 4

The non-breaching party’s performance is NOT discharged.

Question 5

What is the performance requirement under Article 2 of the Uniform Commercial Code?

Answer 5

Perfect tender is required.

Question 6

What does perfect tender mean?

Answer 6

A seller must deliver conforming goods in accordance with the terms of the contract.

Question 7

What constitutes a breach under the UCC?

Answer 7

The smallest nonconformity allows the buyer to reject all or a portion of the goods (seller must deliver conforming goods in accordance with the terms of the contract (i.e., “perfect goods” + “perfect delivery”))

Question 8

3 exceptions to the perfect tender rule?

Answer 8

1. The parties can contractually change the default rules to include discussion of substantial performance instead of perfect tender;
2. Installment contracts (agreement for delivery in separate lots) do NOT have to satisfy perfect tender – the buyer can reject a specific installment delivery when there is a substantial impairment in the installment that cannot be cured;
3. If the seller fails to tender perfect goods, the buyer MUST give the seller a chance to cure the nonconformity if:
   * The time for performance under the contract has NOT yet expired; OR
   * The seller has reasonable grounds to believe that the buyer would accept a replacement for the nonconformity.

Question 9

Under what condition can a buyer reject a specific installment delivery?

Answer 9

When there is a substantial impairment in the installment that cannot be cured.

Question 10

What must a buyer do (under UCC art. II) if the seller fails to tender perfect goods?

Answer 10

The buyer MUST give the seller a chance to cure the nonconformity.

Question 11

[under perfect tender rule] If the seller fails to tender perfect goods, the buyer MUST give the seller a chance to cure the nonconformity if:

Answer 11

• The time for performance under the contract has NOT yet expired; OR
• The seller has reasonable grounds to believe that the buyer would accept a replacement for the nonconformity.

Question 12

What happens if a buyer fails to reject nonconforming goods after inspection?

Answer 12

The buyer is deemed to have accepted the goods.

Acceptance occurs if the buyer does not reject the goods after a reasonable opportunity to inspect them.

Question 13

Under what conditions can a buyer revoke acceptance of nonconforming goods?

Answer 13

1. Nonconformity substantially impairs the value of the goods.
2. Revocation occurs within a reasonable time after discovering the nonconformity and before any substantial change in condition of the goods; AND
3. Buyer accepted the goods on the assumption that nonconformity would be cured OR without discovering the nonconformity due to difficulty or seller’s assurances.

Each condition is critical for valid revocation of acceptance.

Question 14

What is the Parol Evidence Rule?

Answer 14

It prevents the introduction of oral or written statements made prior to or contemporaneously with a written contract that is intended to be a complete integration of the agreement.

The rule applies only if the writing is intended to embody the final expression of the parties’ agreement.

Question 15

What constitutes a complete integration?

Answer 15

A writing that completely expresses all terms of the parties’ agreement.

Absent an exception, all other expressions or statements made prior to or contemporaneously with the writing are inadmissible.

Question 16

What is a merger clause?

Answer 16

A clause stating that the agreement is the complete agreement between the parties.

It serves as strong evidence that the writing is a complete integration.

Question 17

What characterizes a partial integration?

Answer 17

A writing that expresses some, but not all, terms of the parties’ agreement.

Other expressions or statements may supplement the writing as long as they do not contradict the terms.

Question 18

What are some exceptions to the Parol Evidence Rule?

Answer 18

• Formation Defects
• Condition Precedents
• Ambiguity and Interpretation
• Separate Deals

Each exception allows for extrinsic evidence to be introduced under specific circumstances.

Question 19

What is the effect of formation defects on the Parol Evidence Rule?

Answer 19

Extrinsic evidence may be offered to establish a defense to the formation or enforcement of a contract.

Examples include incapacity, mistake, duress, or lack of consideration.

Question 20

What is the effect of condition precedents on the parol evidence rule?

Answer 20

Extrinsic evidence may be offered if a party asserts that there was an oral agreement that the written contract would not become effective until a condition occurred.

This allows for clarification of the conditions under which the contract operates.

Question 21

How does ambiguity affect the application of the Parol Evidence Rule?

Answer 21

Extrinsic evidence may be offered for interpreting or clarifying an ambiguity in the agreement.

This ensures that unclear terms can be effectively understood.

Question 22

What happens to agreements made after the execution of a writing?

Answer 22

They are analyzed as contract modifications and do not trigger the Parol Evidence Rule.

This allows for flexibility in modifying agreements post-execution.

Question 23

How does the parol evidence rule apply in a situation with two or more separate deals

Answer 23

Extrinsic evidence may be offered if it represents a distinct and separate contract.

Question 24

What creates an express warranty under UCC § 2-313(1)?

Answer 24

An express warranty is created by:
* Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain
* Any description of the goods which is made part of the basis of the bargain
* Any sample or model which is made part of the basis of the bargain

Formal words like “warrant” or “guarantee” are not necessary for its creation.

Question 25

Can a seller's opinion create an express warranty?

Answer 25

No, an affirmation merely of the value of the goods or a statement of opinion does not create a warranty. ## Footnote UCC § 2-313(2) clarifies this point.

Question 26

“Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but . . . negation or limitation is inoperative to the extent that such construction is unreasonable.” — wtf does this mean?

Answer 26

It is very difficult to disclaim an express warranty as per UCC § 2-316(1). ## Footnote Words or conduct that create an express warranty and those that limit it must be construed consistently.

Question 27

What is the implied warranty of merchantability under UCC § 2-314(1)?

Answer 27

A warranty that goods shall be merchantable is implied if the seller is a merchant, meaning the goods are fit for ordinary commercial purposes. ## Footnote This warranty applies automatically in contracts for the sale of goods.

Question 28

How can a merchant disclaim the implied warranty of merchantability?

Answer 28

A merchant can disclaim it: * In writing with conspicuous language * Or orally by using the term 'merchantability' ## Footnote Conspicuous language includes capital headings, larger text, or contrasting colors.

Question 29

What constitutes 'conspicuous' language for disclaimers?

Answer 29

Conspicuous language includes: * A heading in capitals or larger size * Language in larger type or contrasting type * Set off by symbols or marks ## Footnote UCC § 1-201(10) defines this.

Question 30

What is the implied warranty of fitness for a particular purpose?

Answer 30

It is an implied warranty that goods shall be fit for a specific purpose if the seller knows the purpose and the buyer relies on the seller's skill or judgment. ## Footnote Under UCC § 2-315, the seller need not be a merchant for this warranty to apply.

Question 31

How can the implied warranty of fitness for a particular purpose be disclaimed?

Answer 31

It can be disclaimed by general language (e.g., 'as is') if the disclaimer is in writing and conspicuous. ## Footnote This requirement ensures that the buyer is aware of the disclaimer.

Question 32

What happens if a buyer inspects goods before the contract?

Answer 32

There are no implied warranties for defects that an examination ought to have revealed. ## Footnote This is outlined in UCC § 2-316(3)(b).

Question 33

What is a promise?

Answer 33

An expression of an intention to act or refrain from acting in a specified way that justifies another person in understanding that a commitment has been made. ## Footnote A promise creates a legal duty. The nonperformance of a promise results in breach of contract.

Question 34

What is the effect of a promise?

Answer 34

Creates a legal duty; nonperformance results in breach of contract.

Question 35

What is a condition?

Answer 35

An event, uncertain to occur, upon which a duty of one of the parties depends. ## Footnote (e.g., “I promise to pay you $200,000 for your house on the condition that I get approved for a loan.”).

Question 36

What is the effect of a condition?

Answer 36

Limits or qualifies a legal duty; nonoccurrence results in performance discharge.

Question 37

Define an express condition.

Answer 37

A condition that is stated in the terms of the agreement.

Question 38

What are examples of conditional language indicating an express condition?

Answer 38

* 'X only if Y' * 'X provided that Y' * 'X on the condition that Y' * 'X in the event that Y' * 'X subject to Y'

Question 39

Define a constructive condition.

Answer 39

A condition not expressly stated in the terms of the agreement but implied by the nature of the agreement. ## Footnote In a sale of an ice cream bar for $5, delivery of the ice cream bar is a constructive condition of the payment (and vice versa)

Question 40

When are reciprocal promises under a contract due simultaneously?

Answer 40

When all or part of the performances can be rendered simultaneously, unless indicated otherwise.

Question 41

When is one party's performance due earlier in reciprocal promises?

Answer 41

When the performance of only one party requires a period of time that party's performance is due first, unless indicated otherwise.

Question 42

What must be satisfied to avoid performance discharge?

Answer 42

A condition must be satisfied unless the condition is excused.

Question 43

What does the traditional approach state about personal satisfaction conditions?

Answer 43

Satisfaction is determined by the party's subjective satisfaction, limited by an obligation of good faith. ## Footnote traditional approach = subjective

Question 44

What does the modern approach state about personal satisfaction conditions?

Answer 44

Satisfaction depends on whether a reasonable person would have been satisfied with the performance. ## Footnote modern approach = objective

Question 45

What is the Doctrine of Impracticability?

Answer 45

A party's duty to perform under a contract is discharged if: 1. An unforeseeable event occurs that makes performance extremely and unreasonably difficult or impossible; 2. The nonoccurence of the event was a basic assumption of the contract; AND 3. The party seeking discharge was NOT at fault.

Question 46

What is the Doctrine of Frustration of Purpose?

Answer 46

A party’s duty to perform under a contract is discharged if: 1. An unforeseeable event occurs that destroys one party’s principal purpose for entering into the contract (even if performance is not rendered impossible); 2. The nonoccurence of the event was a basic assumption of the contract; AND 3. The party seeking discharge was NOT at fault.

Question 47

What is anticipatory repudiation @ CL?

Answer 47

Occurs when a promisor unequivocally repudiates a promise before the time for performance is due.

Question 48

Under the UCC, when does anticipatory repudiation occur?

Answer 48

* When a buyer or seller unequivocally repudiates a promise before the time for performance is due (by words or conduct); OR * Reasonable grounds for insecurity arise regarding either party’s ability or willingness to perform, and the repudiating party fails to provide adequate assurances within a reasonable amount of time (not to exceed 30 days) upon the non-repudiating party’s demand for adequate assurances.

Question 49

What actions can the non-repudiating party take upon anticipatory repudiation?

Answer 49

* Treat the repudiation as a breach of contract and sue immediately for damages; * Suspend their own performance and wait to sue until the repudiating party’s performance is due under the contract; * Treat the repudiation as an offer to rescind the contract and treat performance as discharged; OR * Ignore the repudiation and urge the repudiating party to perform. However, if the repudiation is ignored, then continued performance by the non-repudiating party must be suspended if the performance would increase the amount of damages. ## Footnote A repudiating party may retract their repudiation at any time before the non-repudiating party cancels the contract or materially changes his position.

Question 50

What must the non-repudiating party do if they choose to ignore the repudiation and urge the repudiating party to perform?

Answer 50

Suspend performance if continuing would increase the amount of damages.

Question 51

Can a repudiating party retract their repudiation?

Answer 51

Yes, they may retract at any time before the non-repudiating party cancels the contract or materially changes position.

Question 52

when can performance subject to a condition become due?

Answer 52

only when that condition occurs or its nonoccurence is excused