Performance

Question 1

What is Anticipatory Repudiation?

Answer 1

If one party unequivocally communicates to the other party that they will not perform when performance is due.

Question 2

Can Anticipatory Repudiation occur by both words or conduct?

Answer 2

Yes

Question 3

Does Anticipatory Repudiation apply only to Executory Contracts?

Answer 3

Yes

Question 4

What is the most important element of Anticipatory Repudiation?

Answer 4

“Unequivocal” communication of non-performance

Question 5

What are the four remedies for Anticipatory Repudiation?

Answer 5

1) Sue immediately 2) Suspend own performance and wait until repudiating party’s performance is due to sue 3) Treat the repudiation as an offer to rescind the contract and treat the contract as if it never occurred 4) Ignore the repudiation and urge performance

Question 6

Anticipatory Repudiation may be retracted unless:

Answer 6

The non-repudiating party accepts the retraction or detrimentally relies upon it.

Question 7

What is Prospective Inability or Unwillingness to Perform?

Answer 7

When a party has reasonable grounds (as opposed to unequivocal communication) to believe that the other party will not perform when due.

Question 8

What is the difference between “Prospective Inability or Unwillingness to Perform” and “Anticipatory Repudiation”.

Answer 8

Doubts vs. Unequivocal Communication

Question 9

How is conduct judged under a “Prospective Inability or Unwillingness to Perform”?

Answer 9

Reasonable Person Standard

Question 10

Is there a difference in what is allowed under the Common Law and UCC when an innocent party believes another has a “Prospective Inability to Perform”?

Answer 10

Yes. Under Common law, the innocent party cannot act until the date of performance or until unequivocal repudiation is received. The UCC allows greater ability to respond.

Question 11

Under the UCC, what three options are available if an innocent party believes the other party has a “Prospective Inability to Perform”?

Answer 11

Innocent party may 1) demand adequate assurances in writing 2) suspend own performance until assurances are received, and 3) if assurances are not forthcoming (usually 30 days) treat it as an Anticipatory Repudiation.

Question 12

What does the UCC refer to “Prospective Inability to Perform” as?

Answer 12

“Reasonable Grounds for Insecurity”

Question 13

Retraction of a “Prospective Inability to Perform” is possible unless:

Answer 13

There has been detrimental reliance by the innocent party

Question 14

When discharging duties under Impossibility, when is a Subjective vs Objective test applied?

Answer 14

Objective test is applied for Impossibility by “Supervening Illegality” and “Destruction of Subject Matter.” Subjective test is applied when there is a death or physical incapacity of the person necessary to complete the contract.

Question 15

What is Supervening Illegality with regard to Impossibility of performance?

Answer 15

A subsequent law enacted that renders the subject matter of a contract illegal.

Question 16

What is Destruction of Subject Matter with regard to Impossibility of performance?

Answer 16

Subsequent destruction of subject matter through no fault of either party that makes performance impossible.

Question 17

Can Impossibility only arise after formation of the contract?

Answer 17

Yes

Question 18

If one party renders performance prior to Impossibility, and the other party has benefitted from that performance, how may that party recover?

Answer 18

In Quasi-Contract

Question 19

What is Force Majeure?

Answer 19

When a party anticipates one or more events that it cannot prevent and that might impede its performance, it may introduce a term intended to excuse it from performance if the event occurs.

Question 20

Does a Force Majeure clause normally enumerate excusing events, like “Act of God, earthquake, strike, civil commotion, acts of government, and delays in the delivery of material and supplies”?

Answer 20

Yes

Question 21

What is Impracticability?

Answer 21

When a party will not perform because it is not commercially practical due to an excessive and unreasonable cost (or difficulty) and that difficulty was unanticipated.

Question 22

What is Frustration of Purpose?

Answer 22

Contractual duties can be discharged due to a supervening and (reasonably) unforeseeable event at the time of contract that destroys (or almost destroys) the purpose of the contract.

Question 23

Under Frustration of Purpose, must both parties have understood the “purpose” of the contract at formation?

Answer 23

Yes

Question 24

What is a Mutual Rescission?

Answer 24

When both parties mutually and expressley agree to rescission, contractual duties can be discharged.

Question 25

For a valid Mutual Rescission must the contract be executory?

Answer 25

Yes

Question 26

Will a mutual agreement to rescind a bilateral contract (where there is already part performance) be enforceable?

Answer 26

Yes, generally

Question 27

Will a mutual agreement to rescind a unilateral contract (where there is already part performance) be enforceable?

Answer 27

No, unless there is additional consideration paid by the non-performing party.

Question 28

Must a Mutual Rescission be made in writing?

Answer 28

No, it may be made orally unless it must be in writing

Question 29

What is Accord and Satisfaction?

Answer 29

An “Accord” is an agreement to discharge an existing contractual duty based on unliquidated debt. “Satisfaction” is the performance of the Accord.

Question 30

Does the Accord actually “Discharge” a duty?

Answer 30

No, it suspends the other party’s power to enforce the duty.

Question 31

Does a “Satisfaction” of the Accord discharge a duty?

Answer 31

Yes, it discharges both the original debt and the Accord.

Question 32

Is there any discharge of duties until there is both an Accord (and) Satisfaction of the Accord?

Answer 32

No

Question 33

How is an Accord and Satisfaction often accomplished via check?

Answer 33

By a check conspicuously marked ‘Paid in full”

Question 34

Under Discharge of Duties, what is an “Account Stated”?

Answer 34

A discharge of contractual duties when the parties have engaged in multiple transactions and have agreed to a “final balance due”, rendering any further rights under the individual transactions discharged.