Round 2 Lecture 5

Question 1

purpose of analysis

Answer 1

to determine whether a reach has occurred

Question 2

effect of a condition

Answer 2

creates, extinguishes or limits a contractual duty- you are in favor of conditions if they create for you opportunities to escape contractual responsibility

Question 3

types of conditions

Answer 3

express, implied-in-fact, or implied-in-law

Question 4

express

Answer 4

using words - you contractually agree to do something “provided that “ or “subject to”

Question 5

implied-n-fact

Answer 5

a condition that can be implied from the circumstances or the parties’ conduct

Question 6

implied-in-law

Answer 6

constructive conditions- a condition to your obligation to pay rent to your landlord is the availability for occupancy of the apartment you rented

Question 7

after a contract is entered into, what happens to the contractual duties of the parties if the duty was not made conditional or it is conditional but the condition has not been satisfied

Answer 7

• must be discharged by performance
• the parties by agreement agree to discharge each other from performance (mutual rescission)
• the obligor is excused from performing the duty

Question 8

mutual rescission

Answer 8

the parties agree to end their contract

Question 9

substituted contract

Answer 9

the parties agree to substitute for one contract a new contract

Question 10

accord and satisfaction

Answer 10

the parties agree to substitute one type of performance of a duty for another that was in the original contract

Question 11

if the duty is not discharged by performance

Answer 11

then the obligor is in breach of contract for failure to perform the duty

Question 12

if the breach is material

Answer 12

the aggrieved party is excused from performing the contract

Question 13

if the breach is nonmaterial

Answer 13

the aggrieved party is not excused from performing the contract but is entitled to damages from the breaching party for breach of contract

Question 14

when are contractual duties discharged?

Answer 14

if they are performed

Question 15

total performance

Answer 15

under certain circumstances it is reasonable to expect that the performance by a party under a contract will be strictly in accordance with the contract-other times, expecting such strict compliance is unreasonable and probably not achievable

Question 16

2-601 perfect tender rule under UCC

Answer 16

perfection is the standard for seller’s performance under a sale of goods contract (but the seller has a right to cure imperfect performance)

Question 17

doctrine of substantial performance

Answer 17

when does less than 100% performance not constitute a material breach which would discharge the non-defaulting party?

• applicable to certain contracts
• perfection or substantial performance
• breach must be unintentional and not in bad faith

Question 18

if perfection is not the appropriate standard

Answer 18

performance must be substantial

Question 19

measure of recovery

Answer 19

what damages can the parties recover

Question 20

substantial but not perfect performance-recovery:

Answer 20

the aggrieved party will receive the cost of replacement or repair or in some jurisdictions the amount of diminished (reduced) value

Question 21

not substantial performance - recovery:

Answer 21

• breach is material
• the aggrieved party has the right to not perform the contract, but the breaching party may be entitled to equitable recovery for value of work actually performed

Question 22

time for performance

Answer 22

generally performance by the stated time or within a reasonable time thereafter is acceptable - a minor delay in performing is not a breach

Question 23

“time is of the essence”

Answer 23

failure to perform by this time is an automatic material breach - newspaper ads specifically for 4th of July aren’t run till after the holiday

Question 24

considerations for time of the performance

Answer 24

1. is it of the essence?
2. is that essence express or implied?
3. effect-if it is of the essence failure to comply is material breach

Question 25

perfect tender rule

Answer 25

time is of the essence as to sale of goods

Question 26

why is timing important?

Answer 26

tells us if the breach was material or immaterial

Question 27

factors of a material breach

Answer 27

1. was performance substantial 2. was time of the essence 3. was breach serious 4. was breach intentional 5. does contract specify what breaches are material

Question 28

excuses for non performance

Answer 28

the law provides you with an excuse for whatever would otherwise be your breach of the contract - legal impossibility - frustration of purpose - commercial impracticability

Question 29

legal impossibility

Answer 29

- death or incapacity of the promisor prior to the performance of a personal service contract - the destruction of the subject matter of a contract prior to performance - supervening illegality which makes performance of the contract illegal

Question 30

frustration of purpose

Answer 30

some unanticipated event has occurred and as a result the contract now has no value to one party-one party's principal purpose in making the contract is frustrated w/p the party's fault by the occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made

Question 31

commercial impracticability

Answer 31

mechanism for shifting risk in accordance with the parties' presumed intentions-some unanticipated even has occurred and performing the contract would be extraordinarily difficult and unfair to one party (ex: weather related event, outbreak of war, earthquake)

Question 32

elements of commercial impracticability

Answer 32

1. did an unexpected event occur? 2. did the event render performance impossible or impracticable 3. did the non-performing party assume the risk that the event would occur 4. was the nonperforming party at fault in causing the unexpected event

Question 33

impracticable

Answer 33

forcing contract is no longer financially sensible- easier to show than impossibility

Question 34

examples to which doctrine may apply to excuse a party from performance

Answer 34

- death or incapacity of a person necessary for performance - destruction of subject matter necessary for performance - failure of anticipated source of supply - supervening illegality, gov. regulation, or order - extraordinary weather event or other act of God

Question 35

examples of non-examples

Answer 35

- increased costs - labor disputes - change of market conditions

Question 36

purpose of remedies

Answer 36

to compensate the aggrieved party

Question 37

common law remedies

Answer 37

legal remedies and equitable remedies

Question 38

compensatory damages

Answer 38

to place aggrieved party in as good a position as if the other party had performed

Question 39

reliance damages

Answer 39

to place party in as good a position as if the contract had not been made (used when compensatory, incidental, and consequential damages cannot be reasonably ascertained)

Question 40

damages for misrepresentation

Answer 40

- rescission available as alternative remedy - out of pocket damages - benefit of bargain damages

Question 41

out of pocket damages

Answer 41

difference between value of what is received and what is given

Question 42

benefit of bargain damages

Answer 42

difference between value of what is received and what it would have been worth in absence of the misrepresentation.

Question 43

remedies available to fraudulent misrepresentation.

Answer 43

allows benefit of bargain damages in majority of jurisdicitons

Question 44

remedies to non-fraudulent misrepresentation

Answer 44

typically limited to out of pocket damages

Question 45

foreseeability limitation on monetary damages

Answer 45

should breaching party have known that breach would result in aggrieved party's losses? foreseeable if losses resulted from the breach: - in the ordinary course of events or - as a result of special circumstances about which the party in breach had reason to know

Question 46

unforeseeable damages

Answer 46

not recoverable for loss if the party in breach did not have reason to foresee as probable result of the breach when the contract was made

Question 47

mitigation of damages

Answer 47

the aggrieved party must take reasonable steps to lessen or mitigate damages that result from breach of contract-the injury party may not recover for damages for loss that he could have avoided with reasonable effort and without undue risk, burden, or humiliation

Question 48

equitable remedies

Answer 48

-equitable remedies are generally not available if there is an adequate remedy at law available (money damages)

Question 49

specific performance equitable remedy

Answer 49

if money damages are wholly inadequate as a remedy-compels actual performance ex: sale of one of a kind painting

Question 50

injunctions

Answer 50

a court order enjoining (requiring) a person from doing a specific act or engaging in specific conduct

Question 51

reformation

Answer 51

permits the court to rewrite a contract to express the parties' true intentions (ex: clerical error)