Breach

Question 1

When Does a Breach Occur

Answer 1

• if found that:
  1) promisor = under absolute duty to perform AND
  2) absolute duty has not been discharged
• nonbreaching party who sues for breach must show they’re willing + able to peform but for breaching party’s failure

Question 2

Factors for Determining Materiality of Breach

Answer 2

• amount of benefit received by nonbreaching party
• adequacy of comp for damages to injured party
• extent of past performance by breaching party
• hardship to breaching party
• negligent or willful behavior of breaching party
• likelihood that breaching party will perform remainder of K

Question 3

Minor Breach

Answer 3

• minor if obligee gains substantial benefit of their bargain despite obligor’s defective performance

Question 4

Effect of Minor Breach

Answer 4

• does NOT relieve aggrieved party of their duty to perform under the K
• merely gives them right to damages (setoff) for the minor breach

Question 5

Material Breach

Answer 5

• if obligee doesn’t receive the substantial benefit of their bargain

Question 6

Effect of Material Breach

Answer 6

Nonbreaching party:
- may treat the contract as at and end (any duty of counterperformance owed by them is discharged) AND
- will have an immediate right to all remedies for breach of the entire K, including total damages

Question 7

Minor Breach Coupled w/ Anticipatory Repudiation

Answer 7

• nonbreaching party may treat as material breach -> may sue immediately for total damages + are permanently discharged from duty of further performance
• aggrieved party actually must NOT continue on b/c doing so would mean failure to mitigate damages

Question 8

Material Breach of Divisible Contract

Answer 8

• in divisible K, recovery available for substantial performance of a divisible party even where there has been a material breach of the entire K

Question 9

Timeliness of Performance

Answer 9

• failure to perform by time stated in K is generally NOT material breach if performance rendered w/in reasonable time
• BUT if nature of K makes timely performance essential, or if K expressly provides time is of the essence, then it IS a material breach
  -> merely including date doesn’t mean time of essence
  -> traditionally, any delay for K w/ time of essence provision was material, vs. modern cts look at whether vitally important + whether parties truly intended it to be material

Question 10

Article 2 - Perfect Tender Rule

Answer 10

• if goods or their delivery fail to comply w/ K in any way, buyer generally may reject all, accept all, or accept any commercial units + reject the rest

Question 11

Acceptance + Right to Reject

Answer 11

• acceptance generally cuts off buyer’s right to reject under perfect tender doctrine

Question 12

When Does a Buyer Accept Under Article 2

Answer 12

• if after reasonable opp to inspect goods, buyer indicates to seller that the goods conform to reqs or that they’ll keep the goods even though they fail to conform
• buyer fails to reject w/in reasonable time after tender or delivery of goods or fails to seasonably notify seller of rejection OR
• buyer does any act inconsistent w/ seller’s ownership

Question 13

Buyer’s Responsibility for Goods After rejection

Answer 13

• after rejection, buyer can’t treat goods as though they own them
• has ob to hold the goods w/ reasonable care at seller’s disposition for time sufficient to permit seller to remove them
• if seller has no agent/place of business w/in market area where goods rejected, merchant buyer has ob to obey any reasonable instructions re rejected goods
• if seller gives no instructions w/in reasonable time, buyer may:
  1) reship to seller
  2) store for seller’s account
  3) resell them for seller’s account in public sale or private sale after giving seller reasonable notice of intent to resell (if resells, entitled to recover expenses + reasonable commission)

Question 14

What happens if buyer wrongfully exercises ownership over rejected goods?

Answer 14

• seller has action against buyer for conversion

Question 15

Buyer’s Right to Revoke Acceptance

Answer 15

• only available in limited situations
• BUT where proper, has the effect of rejection
• keep in mind this is under Article 2

Question 16

When Acceptance May Be Revoked

Answer 16

If the goods have a defect that substantially impairs their value to the buyer AND:
- buyer accepted the goods on reasonable belief that the defect would be cured and it has not been OR
- buyer accepted the goods b/c of difficulty of discovering the defects or b/c of seller’s assurance that the goods conformed to the contract

Question 17

Temporal Component of Revocation

Answer 17

Must occur:
1) w/in reasonable time after buyer discovers or should’ve discovered the defects AND
2) before any substantial change in the goods occurs that is not caused by a defect present at the time the seller relinquished possession

Question 18

Exceptions to Perfect Tender Rule

Answer 18

• seller’s right to cure
• installment contracts

Question 19

Seller’s Right to Cure - Single Delivery Ks

Answer 19

• if buyer has rejected b/c of defects, seller may w/in the time originally provided for performance “cure” by giving reasonable notice of their intention to do so + making a new tender of conforming goods that the buyer must then accept

Question 20

Seller’s Right to Cure Beyond Original Contract Time

Answer 20

• ordinarily, no right to cure beyond og contract time
• BUT if buyer rejects tender of nonconforming goods that seller reasonably believed would be acceptable “with or without money allowance”, the seller, upon reasonable notification to buyer, has further reasonable time beyond og K time w/in which to make conforming tender

Question 21

Seller’s Right to Cure Beyond Original Contract Time - When Will Seller Probs Have Reasonable Cause to Believe Tender Acceptable

Answer 21

If seller can show that:
1) trade practices or prior dealing with the buyer led the seller to believe that the goods would be acceptable OR
2) seller couldn’t have known of the defect despite proper business contract

Question 22

Exception to Perfect Tender Rule - Installment Ks

Answer 22

• installment can be rejected only if nonconformity substantially impairs the value of that installment and cannot be cured
  -> whole K breached only if the nonconformity substantially impairs value of ENTIRE K
• right to reject much more limited than single delivery K
• follow rule more akin to common law substantial performance

Question 23

Anticipatory Repudiation

Answer 23

• can be treated as an immediate breach of contract