K Performance - MBE
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In general the S obligations under the UCC are what?
to transfer and deliver the goods
What is the B obligation generally under the UCC?
to accept and pay for the goods
What are carrier cases?
where the parties to a sales of goods K agree to use a common carrier
What is non-carrier case?
where the parties to a sale of goods K don't agree to use a common carrier
In non-carrier cases, when does the RoL transfer if the S isn't a merchant?
to the B upon tender of delivery
In non-carrier cases, when does the RoL transfer if the S is a merchant?
to the B only when the goods are physically in the B possession
What is a shipment K?
K where the S promises to turn the goods over to a carrier
What is a destination K?
K where the S promises to tender delivery at a particular destination point
What is the default rule if a K is silent on whether it is a shipment or destination K?
it is deemed a shipment K
When does RoL pass to the B under a shipment K?
when the goods are delivered to the carrier
When does RoL pass to the B in a destination K?
when the goods are tendered at the destination specified in the K
What is the preexisting duty rule?
a promise to increase compensation for duties already owed under an existing K is an unenforceable modification b/c there is no consideration
What are the exceptions to the preexisting duty rule?
- (1) mutual modification
- (2) unforeseen circumstances
A promise to increase compensation under an existing K is enforceable as a mutual modification if what 2 requirements are met?
- (1) both parties agree to a performance that is different from the one required by the original K
- (2) the difference in performance isn't a mere pretense of a newly formed bargain
What is the unforeseen circumstances exception to the preexisting duty rule?
the rule won't apply if a promise of increased compensation is given in exchange for a promised performance that has been rendered substantially more burdensome then reasonably anticipated at formation
Under the UCC does an agreement modifying an existing K for the sale of goods need consideration?
no provided there is GF
Even if the modification is supported by consideration, the UCC provides that the modification is unenforceable if what?
the appearance of the mutual bargain is merely a pretext of a bad faith change of terms
What are the 5 ways in which perfomance may be excused under a K?
- (1) mistake
- (2) impossibility
- (3) impracticability
- (4) frustration of purpose
- (5) parties agree to excuse performance
Regarding mistake, what is the requirement of materiality?
the mistake in fact must significantly affect the value of the X to both parties
What is a unilateral mistake?
one party is operating under a faulty assumption about one or more material facts
What is the general rule about unilateral mistake?
a single party mistaken about present material facts isn't excused
What are the 2 exceptions to the general rule regarding unilateral mistake?
- (1) the other party knew or had reason to know of the party's mistake
- (2) when there has been a serious clerical error
The serious clerical error exception to the general rule regarding unilateral mistake won't apply if what?
- (1) the error was caused by extreme negligence on the part of the party making the error; and
- (2) the other party relied on the clerical error
What is the definition of mutual mistake?
both parties have made a mistaken assumption regarding the present facts
Under the rules of mutual mistake, the K will be voidable by the disadvantaged party where 3 requirements are met:
- (1) mistaken assumption must relate to material facts
- (2) mistake must be made by both parties
- (3) the disadvantaged party didn't bear the risk of mistake under the parties' agreement
What is the doctrine of impossibility?
excuses both parties from their obligations under a K if the performance has been rendered impossible by events occurring after the K was formed
What are the requirements for the application of the doctrine of impossibility?
- (1) impossiblity must be objective
- (2) the contingency that creates the impossibility wasn't known to the parties at the time of making the K
When does objective impossibility occur?
when the performance under the K is literally impossible for anyone b/c of circumstances beyond the control of the parties
When does subjective impossibility occur?
when the performance under the K becomes impossible b/c of some failure of fault on the part of the performing party
In what 3 circumstances are we most likely to find objective impossibility?
- (1) when the subject matter of the K is destroyed
- (2) when there is a personal services K and the performing party has died or become incapacitated
- (3) when supervening law has rendered performance legally impermissible
Is impossibility available under both CL and UCC?
Under the doctrine of impracticability, a POR may be excused from performance where the following 2 elements are met:
- (1) contingency causing the impracticability was unforeseen
- (2) increase in cost or burden of performance would be far beyond what either party would have anticipated
UCC cases where impracticability has been found typically involve what?
- (1) shortages caused by war or embargo
- (2) local crop failure
- (3) unforeseen shutdown of major sources of supply
When may the doctrine of frustration of purpose be available?
where a contingency occurs that dramatically reduces the value of the performance to the receiving party
Under the modern view of frustration of purpose, what are the requirements?
- (1) the party's principle purpose in entering the K is frustrated
- (2) the frustration was substantial in nature
- (3) the non-occurrence of the event precipitating frustration must have been a basic assumption of the K
Is it possible for parties to allocate risk so as to contract around the doctrine of frustration of purpose?
When is rescission permissible?
where both parties to the K are mid-performance
What is an accord?
a K under which the OBE promises to accept substituted performance in satisfaction for the OBR's existing duty
What are the legal effects of an accord and satisfaction?
satisfies the OBR's original obligation
What is the legal effect of an accord alone?
doesn't discharge the OBR's duty but only suspends it
Is consideration required for an accord?
There may be sufficient consideration for an accord in what 2 circumstances?
- (1) the accord involves an agreement for partial or substituted performance
- (2) the accord involves an agreement for partial payment
How may anticipatory repudiation be established?
- (1) a party's definitive statement indicating that it will commit a breach of K
- (2) a party's voluntary act that renders the party unable to perform its K obligations
When may a party make a demand for adequate assurances of performance?
if anticipatory repudiation can't be established but there are reasonable grounds for insecurity
Upon making a demand for assurances, may a party with reasonable grounds for insecurity may suspend his own performance?
yes as long as it is commercially reasonable to do so
What is the consequence of failing to respond with reasonable assurances?
constitutes a repudiation by the non-responding party
How does failure to respond with reasonable assurances occur?
- (1) not responding to the demand in a reasonable time (30 days under the UCC)
- (2) not responding in a way that provides reasonable assurances
What are the rights of the aggrieved party upon an anticipatory breach that results in a repudiation?
- (1) cancel the K and terminate all rights/obligations under it
- (2) bring an action for damages or SP
- (3) ignore the repudiation and continue under the K
A party who has made an anticipatory repudiation to the other party may retract the repudiation unless and until the other party what?
- (1) acts in reliance on the repudiation
- (2) accepts the repudiation by signaling this to the breaching party
- (3) commencing a suit for damages or SP
What are promissory conditions?
where the K performance are conditioned on the occurrence of the promised performance by the other party
What are pure conditions?
where hte K performance is conditioned on the occurrence of events beyond the control of either party
What are express conditions?
those that the parties expressly include in the provisions of the K
What are implied conditions?
a fiction employed by the courts to deal with the potential effect of breaches of K
What is the rule for a failure of an express condition?
this will discharge the party's obligation to perform
In what 3 situations will the failure of a condition be excused such that the performance obligation of the party who stood to benefit from the condition isn't discharged?
- (1) waiver
- (2) bad faith conduct
- (3) gross forfeiture
What is the effect of a material breach of an implied condition?
the aggrieved party is generally discharged from his own performance obligations
If the breach of an implied condition is less serious the court will treat the party's performance as what?
close enough meaning that the party has rendered substantial performance and the aggrieved party isn't discharged of his own performance obligations
What are the 5 restatement factors for distinguishing b/t a material breach and substantial performance?
- (1) extent to which the aggrieved party will be deprived of the benefit that she reasonably expected to receive under the K
- (2) extent to which the aggrieved party can adequately be compensated via damages for the defective performance
- (3) extent to which the breaching party will suffer forfeiture if a material breach is found
- (4) the likelihood that the breaching party will cure his failure
- (5) extent to which the breach was willful or in bad faith rather than merely negligent or innocent
What is the legal test for divisibility of the K?
where it is easily apportioned into agreed equivalents
What a party has failed to fulfill an express condition or is in material breach, the breaching party may still be able to recover what in quantum merit?
- (1) the reasonable value of the benefit conferred
- (2) reduced by his breach of K
A S is in breach of the perfect tender rule under the UCC if what?
the goods fail in any respect to conform to the K
What 3 courses of action are available to the B if the S fails to make perfect tender?
- (1) reject the goods
- (2) accept the goods
- (3) accept part and reject part
For a B to reject goods, what must the B do?
exercise the right of rejection w/in a reasonable time after delivery and notify the S
Once the B has rejected the goods what may he do?
bring an action for damages on account of the imperfect tender unless cure applies
What is the result if the B makes a failed rejection?
will be deemed as an acceptance of the goods by the B
Acceptance of goods under the UCC occurs when the B has had a reasonable opportunity to inspect the goods and signifies acceptance thru one of the following ways:
- (1) stating to the S that the goods conform to the K
- (2) taking the goods despite their nonconformance
- (3) fialing to make an effective rejection
- (4) taking any action inconsistent with the S ownership of the goods
What are the legal consequences of B acceptance?
- (1) B must pay the K price for the goods
- (2) B may seek damages for any nonconformity so long as the S has been seasonably notified
When can a B revoke acceptance?
- (1) nonconformity substantially impairs the value of the goods
- (2) the reason for the acceptance was that the B was unaware of the nonconformity
- (3) S assured the B that a known nonconformity would be cured but the S failed to do so
What is the critical rule when accepting part and rejecting part of goods?
B can only do so in terms of commercial units of that good
What is the right to cure before time of performance has passed?
if a S makes a NC tender and time for performance remains under the K then S may substitute conforming goods if (1) seasonably notifies the B of his intention to cure and (2) makes conforming delivery w/in the time for delivery
What are the 2 requirements for S curing after the time for performance has passed?
- (1) seasonably notify the B of his intention to cure
- (2) make conforming delivery w/in a reasonable time
- (3) S reasonably believed that the goods would be accepted
What are installment K?
K that contemplate delivery of goods in separate lots to be separately accepted by the B
What is the legal effect if the NC tender of an installment substantially impairs the value of the whole K?
there is a breach of the whole K and it can be canceled
What is the legal effect if the NC tender of an installment substantially impairs the value only of this particular installment?
B can reject the installment but can't cancel the entire K
What is the legal effect if the NC tender of an installment doesn't even substantially impair the value of that particular installment?
the B must allow the S the opportunity to cure the NC w/in a reasonable time
What would you like to do?
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