Contracts II Final
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(1) Where the seller fails to make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance then with respect to any goods involved, and with respect to the whole if the breach goes to the whole contract (Section 2-612), the buyer may cancel and whether or not he has done so may in addition to recovering so much of the price as has been paid
(a) "cover" and have damages under the next section as to all the goods affected whether or not they have been identified to the contract; or
(b) recover damages for non-delivery as provided in this Article (Section 2-713).
(2) Where the seller fails to deliver or repudiates the buyer may also:
(a) if the goods have been identified recover them as provided in this Article (Section 2-502); or
(b) in a proper case obtain specific performance or replevy the goods as provided in this Article (Section 2-716).
(3) On rightful rejection or justifiable revocation of acceptance a buyer has a security interest in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care and custody and may hold such goods and resell them in like manner as an aggrieved seller (Section 2-706).
UCC UCC §2-712
- (1) After a breach within the preceding section the buyer may "cover" by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those
- due from the seller.
- (2) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined (Section 2-715), but less
- expenses saved in consequence of the seller's breach.
(3) Failure of the buyer to effect cover within this section does not bar him from any other remedy.
- (1) Subject to the provisions of this Article with respect to proof of market price (Section 2-723), the measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the
- time when the buyer learned of the breach and the contract price together with
- any incidental and consequential damages provided in this Article (Section
- 2-715), but less expenses saved in consequence of the seller's breach.
- (2)Market price is to be determined as of the
- place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.
UCC §§2-601, 2-602
○ Buyer can reject goods for any reason, even minor breach, before acceptance, then seller has unconditional right to curt defects before due date and w/in reasonable amount of time after. Id seller does not cure, buyer can rescind/cancel K.
○ After acceptance, buyer can only reject goods (and revoke acceptance) for a material breach (substantial impairment)
○ If made in installments, delivery cannot be refused, unless by one installment being incorrect, the entire purpose is ruined
A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach of contract.
Damages may be LD only in an amount that is reasonable in light of the anticipated or actual loss caused by the breach AND the difficulties of proof of loss
Includes: "inconvenience or non-feasibility of otherwise obtaining an adequate remedy"
supplying terms which are reasonable in the circumstances is Ok as long as it gives effect to the parties bargain (which must be sufficiently definite)
UCC § 2-202
- Parol Evidence and the UCC
- - Terms of the K cannot be contradicted by PE
- - Terms of K may be supplemented or explained by PE through: COP, CD, TU
- - Consistent additional terms (CAT) also allowed, unless agreement = complete
R2K § 205
205 imposes on all parties to a K a duty of good faith and fair dealing when performing or enforcing the K.
202 every contract of duty within this Act imposes an obligation of good faith in its performance or enforcement.
- assignment of rights
- - Contractual rights may be assigned unless the substitution of the right would materially:
- 1. Change the duty of the obligor
- 2. Increase the burden or risk
- 3. Impair his chances of obtaining return performance
Beneficiary's rights will vest if, before receiving notice of the discharge or modification, he materially changes position in justifiable reliance on promise or manifests assent to it a the request of the promisor or promisee.
PD are not recoverable for breach of contact UNLESS the conduct constituting the breach is also a tort for which punitive damages are recoverable
R2K § 224
- Conditions Defined
- A condition is an event, not certain to occur, which must occur, unless its non-occurrence is waived or excused, before performance of a contract becomes due.
- o Purpose in using conditions:
- - To allocate risks
- +Role of escape clauses
- - Impose incentives
- +Health Ins K: offering rebate if health benchmarks met
- - Allow proper sequencing of agreement
- + "if you do this, then I'll do that …"
a commitment not to do or to do something
- An event, not certain to occur, that must
- occur (unless waived or excused), before performance of a contractual obligation becomes due - R2K § 224
- Something that can occur Or a non-event
- (not certain to occur, see clause #3 on pg. 312)
refers to a future event
A "promissory condition"
both a promise and a condition of another obligation
An "insignificant term"
a mere suggestion, request, or notation that has no legal significance
- gives rise to a duty
- - Cond has to be satisfied before the performance on which the K is based will be due
- - Must be proved as an element of the claim by part alleging Breach of Contract (BOK)
discharges an existing dutyMust be proved as a basisfor the excused performance by the party denying the BOK
- -Specific language; must also indicate that the parties intend it to be a condition - "this is conditioned upon only Reading pipe being used …"
- -Given great weight by court
- -Triggers EXACT COMPLIANCE
- -Courts give GREAT WEIGHT
Implied condition (aka: Constructive Condition)
- -Not expressly stated as a condition; court must interpret or construct the K
- -Triggers SUBSTANTIAL COMPLIANCE
- - If a party fails to perform the promise, then BOK
- - Non-breaching arty can go after damages
- - If a party fails to perform the condition, no BOK
- - Nonfulfillment of the condition excuses the performance that was contingent on the condition
- Non-breaching party can go after damages
- Other party's performance (contingent on condition) is excused
Three classifications of promises:
- 1. Promises so plainly independent that they can never be conditions of each other
- 2. Promises so plainly dependent that they must always be conditions
- 3. Promises which are dependent in matters of substance but independent with regard to insignificant departures.
Material breach = breach
- Non-breaching party can:
- - Decline performance from breaching party
- - Terminate the k, and
- - Sue for damages
Minor breach = substantial performance
- - Non-breaching p must accept performance from breaching party
- - Damage calculated as cost of completion from breaching party UNLESS circumstances warrant diminution in value as in Jacobs and Young v. Kent
When do you apply Material Breach (breach) and when do you apply Minor Breach substantial performance)?
- Cardozo's Factors:
- -The purpose to be served
- -The desire to be gratified
- -The excuse for deviation from the letter; was the breach willful or negligent?
- -The cruelty of enforced adherence or hardship to the breaching party to insist on full performance
- -How close to full performance is the actual performance
- -Can the injured party be adequately compensated in damages
Define Anticipatory Breach
an unequivocal express or implied repudiation of a contract before the time set for full performance (e.g. "I will not perform our K!")
Define Implied Repudiaton
occurs when a party puts it out of his power to perform the contract. E.g., sells the subject of the contract
PURPOSES OF REMEDIES:
Judicial remedies under the rules stated in this Restatement serve to protect one or more of the following interests of a promisee:
(a) his "expectation interest," which is his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed,
- (b) his "reliance interest," which is his interest in being reimbursed for loss caused by reliance on the contract by
- being put in as good a position as he would have been in had the contract not been made, or
- (c) his "restitution interest," which is his interest in having restored to him any benefit that he has conferred on the
- other party.
Define "expectation damages"
- The difference in value of performance and the value received (if any)
- +other losses
- +Incidental or consequential damages, (Includes pain and suffering, in app cases)
- -any costs or other losses avoided by not having to perform
- -gains made possible by breach
Specific Performance will be ordered if:
- - The acts required of the D were clear (the - K terms are sufficiently certain)
- - Perf will not be unfairly difficult for the D
- - Perf will not have any negative impact on the public
- - Money damages would not adequately compensate the P's loss
- - Diff of proving Damages with reasonable certainty
- - Diff of obtaining suitable substitute performance with a monetary award, &
- - Likelihood that a monetary damage award is uncollectible
- - The subject matter of the K is unique and has no established market value; and
- - Information about the true value of the K is not available or is unreliable
- Fitness for Particular Purpose
- - There is an implied W that the goods will be fit for a particular purpose if,
- ◦ at the time the goods are sold,
- ◦ seller has reason to know any particular purpose for which the goods are required and ◦ that the buyer is relying on seller’s skill or judgment to select suitable goods for that purpose,
- ◦ unless excluded or modified
Disclaiming Implied W’s: can be excluded or modified – see UCC 2-316
- – to disclaim the implied W of merchantability, the disclaimer must mention merchantability and be conspicuous;
- – to disclaim the implied W of fitness for PP, it’s enough to say “there are no W’s which extend beyond the description on the face hereof” as long as it’s in writing and conspicuous.
- – TU, COD, and COP can also exclude implied W’s.
- – AS IS: However, terms “as is” or “with all faults” or the like disclaim all implied W’s.
- the act of giving another person the responsibility of carrying out the performance agreed to in a contract
- - Does not completely substitute delegate for obligor
- - Obligor remains liable for breach, and can be sued if the delegate performs improperly
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