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MBE Contract Law > Performance, Breach, & Discharge > Flashcards

Flashcards in Performance, Breach, & Discharge Deck (31)
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1
Define

condition

Action or event that is required to take place before performance is triggered/due

2

What is the difference between a condition vs. a promise?

Condition: dependent on other events to trigger act/performance (ex. "if you clean your room, I will take you out for pizza")

Promise: does not depend on other events/actions to trigger duties (ex. "I promise to take you out for pizza next Thursday")

3
Define

condition precedent 

Condition must take place before performance/another event is triggered

(e.g. Max will take Kathy on a trip to Europe if he passes the bar exam)

 

4
Define

condition subsequent

Performance is not excused until after event occurs

(e.g. Max will continue taking the bar exam until he passes it)

5
Define

concurrent condition

Each party is required to perform at the same time

6
Define

express condition

Expressly included in K as a condition

(e.g. "on the condition that")

 

7

If the satisfaction of one party is listed as an express condition, what standard is used?

Objective, reasonable person standard.

 

8

If an express condition is the aesthetic taste of one party, what standard is used?

Subjective, good faith standard

9

At common law, if one party's performance is subject to an express condition, what is the result if that condition does not occur?

The party who would have benefited from the condition is discharged from their performance obligations, unless there was waiver, bad faith conduct, or one of the parties may suffer forfeiture or great loss.

 

10

At common law, under what 3 circumstances can a failed express condition be excused?

  1. Waiver: The party who would have been discharged by the condition's failure may waive that right and perform anyway, making their obligations absolute.
  2. Bad Faith Conduct: bad faith conduct will excuse a condition if the benefitting party fails to take steps necessary for the condition to be met, or interferes with the fulfillment of the contract.
  3. To Avoid Forfeiture: a court may excuse a condition if fulfillment of that condition would cause one of the parties great loss or forfeiture.

 

11
Define

implied conditions

Conditions deemed to be part of contract because the agreement suggests it was the parties' intent to include them. These are construed by the court when interpreting the contract.

12

At common law, what type of compliance with contractual duties is required for discharging duties flowing from an implied condition?

Substantial performance will satisfy the party's obligations, and the aggrieved party will not be discharged from their performance obligations.

The doctrine of substantial performance applies to contracts for services, often construction contracts.

13

What performance obligations remain when there is a failed condition in a divisible contract?

If the contract is easily apportioned into agreed equivalents, then the failure excuses the performance of the divisible portion, but not the performance of the other portions.

14

What is the duty of good faith and fair dealing?

Implied in all K's:

  1. Duty to not wrongfully interfere with performance; and
  2. Duty to cooperate

15
Define

common law doctrine of substantial performance

As long as a party substantially performs (even if they did not meet every requirement), the other party is still obligated to perform their obligations

⚠️ Note: unless it is an express condition precedent, in which full performance is required, substantial performance will suffice

16

Does the doctrine of substantial performance apply to sale of goods?

No.

The sale of goods is governed by UCC rules, and the doctrine of substantial performance is strictly common law.

17

A party who fails to substantially perform has made a ________ breach

Material

18

What are five factors to determine whether there was a material breach?

  1. Extent to which the aggrieved party will be deprived of the expected benefit ; 
  2.  Likelihood that the breaching party will cure
  3. Extent to which the aggrieved party can be compensated by damages; 
  4. Extent to which the breach was willful or in bad faith; and
  5. Extent to which the breaching party will suffer great loss or forfeiture if a material breach is found

19
Define

anticipatory repudiation

  1. Party's definitive statement indicating it will breach; or
  2. Party's voluntary act that renders the party unable to perform its contractual obligations

20

What 3 options does the aggrieved party have when faced with repudiation?

  1. Treat repudiation as breach & bring action for damages or specific performace;
  2. Ignore the repudiation and continue; or
  3. Cancel contract and discharge all obligations and rights from it

21

When can a repudiation not be retracted?

When the other party has:

  1. Acted in reliance upon the repudiation;
  2. Accepted the repudiation by signaling their acceptance to the breaching party; or 
  3. Commenced a suit for damages or specific performance

22
Define

impracticability

Impracticability occurs when unforeseen circumstances render one party's performance under the contract prohibitively expensive or otherwise unduly burdensome.

If performance of a contract becomes impracticable, the duty to perform is discharged

23

What are the 3 elements of the impracticability defense?

These three elements are required to show performance under the contract is impracticable:

  1. The impracticability arose out of an unforeseen contingency;
  2. The risk was not assumed nor allocated by the parties;
  3. The increased cost of performance is now far greater than either party had reasonably anticipated

 

24

What are examples of impracticability?

  • Purpose of contract is now illegal;
  • Shortages caused by war or embargo;
  • Crop failure;
  • Death or disability of party necessary for performance

25

For a sale of goods between merchants, is the impracticability defense available in a situation where the cost of performance substantially increases, causing the seller to lose money?

No, not generally when the UCC applies, because these are considered assumed business risks

Under the UCC the line is drawn for impracticability where there is a completely unforeseen event that causes a severe price increase, like war or embargo.

26
Define

impossibility defense

A defense available (under both common law and UCC) when performance has been rendered impossible by unexpected events that took place after the contract was formed.  If the defense is successful, both parties are excused from performance.

⚠️ Only objective impossibility will discharge the duty. Subjective impossibility does not suffice.

 

27

What's the doctrine of frustration of purpose?

If unforeseen circumstances make the purpose of the contract essentially impossible, the parties may be discharged from their contractual duties.

Ex. If Joe contracts with Liza to build a house solely out marble, but marble suddenly becomes unavailable, the purpose of the contract has been frustrated, and Joe might be relieved from his duties.

 

 

28

What are the two elements of the doctrine of frustration of purpose?

  1. The party's principal purpose of entering into the contract is substantially frustrated; and
  2. Non-occurrence of the event that caused the frustration of purpose was an implicit assumption of the contract

29
Define

accord and satisfaction

When parties agree to accept substituted performance to satisfy original duties

Accord: agreement to accept different performance obligations. Consideration required.

Satisfaction: completion of accord agreement

 

30

When is satisfaction of an accord complete, and what is the effect of completion?

Satisfaction of an accord is complete when the obligated party has fully performed their duties under the accord, and the effect is that the duties under the original contract are discharged.

31

What happens if an accord is not satisfied?

Parties can be liable for both the original K and the accord (b/c there has been no discharge of either)