Two kinds of conditions
- Express
2. Implied
Examples of language of express condition
“only if” “provided that” “on the condition that”
How strictly do express conditions need to be satisfied?
VERY STRICTLY! unless the condition is excused
How do we determine if satisfaction contracts (a kind of express condition) have been…satisfied?
Preferred approach is objective - if most reasonable people would be satisfied, then the condition is met
BUT Aesthetic taste (art, tutoring services) will be measured via SUBJECTIVE!
Can a buyer breach a satisfaction contract based on aesthetic taste?
YES, if they claim dissatisfaction in bad faith
Can an express condition be waived?
Yes, two ways:
- The party who the condition protects can waive it via words or conduct
- The condition can be eliminated if the party whom it protects (?) wrongfully interferes with or hinders the occurrence of the condition. (Judged by good faith standard)
Constructive Condition of Exchange (implied condition)
One party’s performance is conditioned on the other sides’ performance (contracts are equal)
Constructive Condition of Exchange in Common Law
Does NOT need to be perfectly satisfied
Doctrine of substantial performance rules - CCE is satisfied as long as there is not a WILLFUL, MATERIAL BREACH
If a breach is not material such that payment still has to be exchanged, can the non-breaching party recover damages?
YES!
Usually cost to complete the performance but sometimes limited to diminution in market value
Can a breaching party (material breach, fails to satisfy CCE) get paid?
Not on the contract
Perhaps via quasi-contract?
Can a breaching party who fails to satisfy an EXPRESS condition get paid
NO - not on the contract OR via quasi-contract
Can a contract be broken down into mini-contracts for the purposes of determining substantial performance?
yes, if clearly divisible
What does the UCC say about the Constructive Condition of Exchange?
Must be PERFECT!! Perfect goods, perfect delivery. No substantial performance here
2 exceptions to the Perfect Tender Rule
- Installment contracts
2. Parties can contractually change the default rules to substantial performance
If tender isn’t perfect, what are the buyer’s options?
Accept some, all, or none!
Can a buyer revoke an acceptance?
Yes, if defect is discovered within a reasonable time
Is there a chance to cure if the seller fails to tender perfect goods?
Yes, IF
- There is time left on the K
- OR seller had reasonable grounds to belive the buyer would accept a replacement
Can a buyer reject something delivered as part of an installment contract? (remember, no perfect tender rule!)
Yes, but only when there is a SUBSTANTIAL IMPAIRMENT in the installment that CANNOT be cured (lower standard)
Shipment Contract
Seller must do 3 things:
- Get the goods to a common carrier
- Make arrangements for delivery
- Notify the buyer
RISK OF LOSS = Buyer
Destination Contract
Seller must actually GET the goods to the buyer’s business
RISK OF LOSS = Seller
4 steps for a risk of loss problem
- Does the contract address risk of loss?
- If no, has either party breached? If yes, breaching party bears the risk of loss (even if completely unrelated to delivery)
- If no breach, then go through shipment/destination rules.
- If there’s no shipping, merchant analysis. If the seller is a merchant, they keep the risk of loss until the buyer RECEIVES the goods. If not a merchant, risk of loss moves to buyer when the goods are tendered.
