Glossary of Contracts Final 2

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An event not certain to occur that must occur before performance is due; Condition is not a duty, you are not in breach if it does not happen rather you are excused from performance; Look for magic words 1. Unless 2. Until; if these are used it is a condition and must be complied with
condition will operate to excuse a duty where opposing party has performed and discharging the reciprocal duty will result in forfeiture (a total loss in value of the contract to one party); no forfeiture defense if the condition was a material part of the agreed exchange; look to whether what appears to be a condition is actually a condition; rule about conditions only comes up with forfeiture
Excuse arguments in response to a claim of failure to perform
1. Condition- performance conditional and condition did not occur
2. Modification/ Waiver- We agreed to change terms
3. Unforeseen circumstances- something unexpected that makes performance impossible or illogical; acts of God; change in circumstances not enough (subject to tough noogies rule), circumstances must change so much that it is not longer the same deal (must be something no one thought would happen and not just a change in value
4. Conduct by side claiming breach
Excuse arguments available where
1. Events occur after K is entered into
2. Performance made impracticable
3. by an event occurring that both assumed would not occur
4. Which is central to the K
5. Unless language or circumstances indicate otherwise
Frustration of purpose
1. After a K is made
2. A party's principal purpose is substantially frustrated
3. Without her fault
4. By an event occuring which both parties assumed would not occur
5. Which goes to the principal purpose of the K
6. Language or the circumstances don't indicate the contrary
Anticipatory Repudiation
A repudiation is a statement indicating that the obligor WILL commit a material breach OR an act which rendersthe obligor unable to perform without such a breach; an expression of doubt as to ability to perform or a request to modify does not constitue an anticipatory repudiation; AR requires clear and unequivocal statement of anticipated non-performance
Retraction of AR
Repudiating party may retract unless there has been reliance by non-breaching party, OR an election to treat K as breached; acceptance of retraction may also include reasonable requests for adequate assurances
Demands for assurances
Non-breaching party may demand adequate assurance of due performance and may suspend her performance until she receives such assurance; The obligee may treat as a repudiation the obligor's failure to provide within a reasonable time such adequate assurances (reasonable time not exceeding 30 days)
Material breach
Only a material breach gives you the right to walk away from your obligations; when is it material
1. The extent to which the injured party will be deprived of the benefit which he reasonably expected
2. the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived
3. the extent to which the party failing to perform or to offer to perform will suffer forfeiture
4. the likelihood that the party failing to perform or to offer to cure his failure, taking into account of all the circumstances including any reasonable assurances
5. Is the breacher comporting with standards of food faith and fair dealing?; Don't have to comply with all of these, one could be all you need, needs to be fact specific to the material breach
Ways to respond to a breach besides walking away from a K
1. Renegotiate
2. Demand assurances
3. Waive it
4. Self help
Right to cure
To make right; when UCC applies, instead of material breach, have the perfect right to cure doctrine; If the goods or the tender of delivery fail in ANY respect to conform to the contract, the buyer may
1. Reject as a whole
2. accept the whole
3. accept any commercial unit or units and reject the rest- commerial unit if they come in six packs must accept atleast 6 (cannot break up commercial units);
Seller has unconditional right to cure within time allotted for performance under the K; even if the time for performance is past, seller has reasonable time to cure; have to have thought what you tendered would be acceptable (how you aren't able to work the system)
Election for remedies with material breach
NBP must choose between 2 remedies
1. can declare material breach, terminate K and recover for whole K OR
2. can continue with K and seek damages; once NBP makes election can't later change mind
Remedies for damages
1. Generally provide through awarding money, not through compelling performance
2. In rewarding money, we focus on remedying the breach, not punishing the breacher (no punitive)
3. the monetary remedy is generally crafted to compensate the injured party for her lost expectation; Put the party where she would have been had the K been performed
Specific performance
Hard to get; Sometimes it is impossible (goods destroyed); sometimes not impossible, impractical
Liquidated damages
Parties may specify what damages should be; don't just enforce what they say as a matter of course (no punitive damages if clause goes beyond actual loss, liquidated damages clauses will not be enforced)
Surplus based method
Measured by the party's lost surplus (profit); method will work for every case whether RST or UCC, total default, partial performance, or whether breach occurs by seller or buyer
3 limitations of surplus based method
1. Damages assume an injured party MITIGATES by avoiding extent of loss using reasonable methods (will not be compensated for loss that they could have avoided by making reasonable efforts appropriate to the circumstances; Party is not obligated to arrange a substitute transaction (when a party fails to arrange a substitute transaction, the market price at which a substitute transaction could have been arranged may be used to estimate lost surplus)
2. Damages must be reasonably foreseeable OR as a result of special circumstances KNOWN to and ACCEPTED by breacher
3. Amounts must be provable with reasonable certainty. Perfect accuracy is not required but courts will not speculate
Formula for Damages
Anticipated damages- anticipated costs- actual benefits + actual costs = damages
Expectation interest damages
Specific performance not appropriate, no liquidated damages (or unreasonable) this is what you get; Put party in the place where they would have been in absent breach (Not absent where she would be if no K had taken place); The monetary equivalent of performance (expectation) but nothing more (no penalty); this is not only a question of suing, it is one of planning (need to know what court would give in order to have a reasonable liquidated damages clause or if SP is appropriate; also need to know to be able to calculate expectation damages to advise client of what will happen if breach occurs)
Calculating K value
How to value goods/ services depending on who breaches, use either 1. K price (in case of breach by buyer)
2. FMV (in case of breach by seller)
Limitations on damages
1. Incidental/ Consequential loss- Things that flow naturally from the breach as opposed to what you would have received if performance occurred; (typical things you get 1. Transportation costs 2. Advertisement expenses 3. Storage costs 4. Insurance 5. Interest)
2. Must be reaonably certain to be recoverable- problem with certainty is distinct from foreseeability (foreseeability refers to how likely it is that these types of damages will naturally flow as a consequence of breach); (certainty refers to how clear we can be about how much damages are)
When losses are too attentuated
Seem to flow naturally from the K but Depends on
1. How foreseeable under the circumstances of the K
2. How certain/ quantifiable is the loss
Defense based on false or misleading info provided by a party during bargaining process; defense available wherever party reasonably induced to enter into K as a result of false info provided by opposing party during bargaining process. Justifies rescission if proven; Just like intentional deception in torts; If defense is proven it results in rescission (put parties in place they would have been in had they NOT contracted
When misrepresentation makes a K voidable
Non-breaching party can void contract but doesn't have to (if they void you are then in rescission); Answer depends on who is responsible to check
1. Assent (agreement)
2. Induced by fraudulent or material misrepresentation
3. Other party justified in relying

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