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Under the COMMON LAW, if a party breaches, what are the non-breaching party's rights (obligations) as to
1) When performance is excused?
2) Damages?
3) Divisible contract?
- EXCUSAL OF NON-PERFORMANCE: only a material breach can excuse non-performance by non-breaching party.
- DAMAGES: non-breaching party can recover damages for any breach, regardless of whether the breach is material.
- DIVISIBLE CONTRACT: where terms provide for payment on a per-unit basis, breaching party can recover K price for any unit substantially performed.
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Anticipatory Repudiation
1) What is it?
2) Can repudiating party change his mind?
- 1) DEFINED: a party refuses to perform an upcoming duty (before performance is set to occur)
- 2) RETRACTION: repudiator can retract (change mind), as long as the non-breaching party has not relied on repudiation (e.g,. changed position)
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Adequate Assurance under UCC Article 2
1) Who can request it, and when?
2) What happens when its not given?
1) ANY PARTY with reasonable grounds for being insecure about the other party's performance may request IN WRITING adequate assurance that the other party will perform under the K
2) ANTICIPATORY REPUDIATION results from the other party's failure to provide adequate assurance
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When can a K be RESCINDED?
When BOTH parties to the K agree to cancel the contract
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MODIFICATION
1) What is it?
2) When is it effective?
- 1) DEFINED: agreement to replace an existing contract with a new one
- 2) IMMEDIATE EFFECT: the modification takes place immediately.
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ACCORD AND SATISFACTION
1) What is accord?
2) What is satisfaction?
3) What is their impact?
1) ACCORD: an agreement to accept performance different from that required under a pre-existing duty as future satisfaction of the existing duty
2) SATISFACTION: performance of the accord
3) IMPACT: the pre-existing duty is extinguished only when the accord is satisfied—i.e., when the new/modified performance is complete
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NOVATION?
1) What is it?
2) Who must agree to it?
3) What is its impact?
DEFINED: An agreement to substitute a new party for an existing one
WHO MUST AGREE: All parties must agree to the novation (i.e., both original parties, and the substituted party), otherwise its a mere delegation
IMPACT: The new party takes over the rights and obligations of the old party (i.e., the old party is excused from performance)
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IMPOSSIBILITY (common law) & IMPRACTICABILITY (Art 2)
1) What is it?
2) When can it occur? (mnemonic: if you want to claim the defense, you'd better have CRED)
- 1) DEFINED: Excuses a seller's non-performance where later, unforeseen events make performance impossible or impracticable.
- 2) OCCURS WHEN
- a) increase in COST of seller's performance (MBE: almost never applies. NYBE: look to absolute and percentage increase)
- b) government REGULATION makes performance impossible (e.g., supervening law)
- c) ESSENTIAL person's death/incapacity
- d) DESTRUCTION of something necessary for performance (for ART 2 Ks, destroyed goods must be "identified to the contract"). A seller who bore ROL when goods were damaged or destroyed is excused by impracticability. BUT, if ROL has passed to buyer before goods were damaged/destroyed, seller is off the hook.
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FRUSTRATION OF PURPOSE
1) Who can claim?
2) What must be shown?
- BUYER can claim frustration of purpose, as a defense to performance
- MUST SHOW that seller knew of buyer's purpose for purchase/lease, and that unforeseen events have frustrated achievement of that purpose
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FAILURE OF AN EXPRESS CONDITION
1) What is it?
2) How closely must be condition be satisfied?
3) How do you know whether the condition has been "satisfied"? (objective or subjective std?)
4) Can performance still be required?
- 1) EXCUSES PERFORMANCE of a party if a condition precedent, concurrent, or subsequent is not completely satisfied
- 2) STRICT COMPLIANCE of the condition is necessary (e.g., almost there isn't good enough)
- 3) REASONABLE PERSON standard applies, unless K deals with art or matters of personal taste
- 4) WAIVER OR FAILURE TO COOPERATE can obligate a party to perform, even if the condition is not satisfied. Every condition protects someone. Party can voluntarily waive that protection. Party may retract the waiver for future payments to the extent the other party has not relied on it.
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Types of Express Conditions
- Condition precedent
- Condition concurrent
- Condition subsequent
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