Term
| What is another way of asking if there has been a material breach? |
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Definition
| Asking if there has been substantial performance. |
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Term
| What is another way of asking if there has been substantial performance? |
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Definition
| Asking if there has been a material breach. |
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Term
| Whether there has been substantial performance (or lack of a material breach) is based on what? |
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Definition
| Whether the performance meets the contract's essential purpose. |
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Term
| What factors are used to determine whether a nonperformance is material? |
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Definition
| (1) The extent to which the injured party will be deprived of the benefit of the bargain; (2) the extent to which the injured party can be adequately compensated for the breach; (3) the extent to which the party in breach would suffer a forfeiture; (4) whether the nonperformance can be cured and, if so, the likelihood of cure; and (5) whether the breach was willful. |
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Term
| True or false: A willful breach automatically means that the breach was material. |
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Definition
| False. This was the traditional rule but is generally not followed anymore. Willfulness is now just a factor to consider. |
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Term
| True or false: In general, the U.C.C. rejects the material-breach rule. |
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Definition
| True. It adopts the perfect-tender rule. |
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Term
| What is the perfect-tender rule? |
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Definition
| In a contract for the sale of goods (other than an installment contract), a buyer, acting in good faith, has the privilege to reject any goods if the goods or the tender of delivery fail in any respect to conform to the contract and the buyer exercised the privilege to reject the goods within a reasonable time after delivery, and also has the power to cancel the contract if the seller cannot or does not exercise his or her power to cure. |
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Term
| True or false: The non-conformity that gives rise to the privilege to reject goods under the perfect-tender rule can relate to the quality, quantity, or delivery of the goods. |
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Definition
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Term
| True or false: With respect to determining whether goods conform to the contract for purposes of the perfect-tender rule, only the express terms of the contract are considered. |
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Definition
| False. The goods must conform to the express, implied-in-fact, and implied-in-law terms of the contract, including implied warranties. |
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Term
| True or false: A late delivery is a non-conforming tender for purposes of the perfect-tender rule. |
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Definition
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Term
| What are five ways in which the harshness of the perfect-tender rule is mitigated? |
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Definition
| (1) Accepted goods; (2) power to cure; (3) bad-faith rejection; (4) installment contract; and (5) divisible contract. |
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Term
| In general, if a buyer accepts non-conforming goods, what must the buyer do? |
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Definition
| Pay for the goods at the contract price, minus any damages for breach. |
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Term
| If a buyer accepts non-conforming goods, the buyer must do what to retain the privilege to sue for breach? |
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Definition
| Notify the seller within a reasonable time after he discovers the breach or should have discovered the breach. |
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Term
| Once a buyer accepts goods, she only has the power to revoke her acceptance of the goods in what two situations? |
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Definition
| (1) When she accepted the goods on the reasonable assumption that the non-conformity would be cured and it has not been seasonably cured; (2) when she was unaware of the non-conformity at the time of acceptance either because of the difficulty of discovery before acceptance or because of the seller's assurance that they were conforming. |
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Term
| In order for a buyer to exercise her power to revoke her acceptance of goods, the buyer must do what? |
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Definition
| Give notice of the revocation within a reasonable time after the buyer discovers or should have discovered the non-conformity and before any substantial change in the good's condition not caused by the non-conformity. |
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Term
| A seller has a power to cure a non-conforming tender of goods in what two situations? |
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Definition
| (1) The tender was provided prior to the due date for performance; and (2) the seller had reasonable grounds to believe the non-conforming tender would be acceptable to the buyer. |
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Term
| The rule that provides that a seller has the power to cure when the seller had reasonable grounds to believe the non-conforming tender would be acceptable to the buyer is called what? |
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Definition
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Term
| If a buyer rejects a non-conforming tender and the seller's time for performance has not yet expired, how long does the seller have to cure? |
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Definition
| Up to the original time for performance. |
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Term
| If there is a suprise rejection by a buyer, how long does the seller have to cure? |
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Definition
| A reasonable time, even if a reasonable time extends beyond the original time for performance. |
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Term
| If a seller exercises his power to cure a non-conforming tender, what happens? |
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Definition
| The buyer does not have the power to reject the conforming tender. |
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Term
| The perfect-tender rule does not apply to what type of contract? |
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Definition
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Term
| What is an installment contract? |
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Definition
| A contract that requires or authorizes the delivery of goods in separate lots to be separately accepted. |
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Term
| What does the buyer's have power to reject a non-conforming tender under an installment contract? |
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Definition
| When the non-conformity substantially impairs the value of that installment, and it either cannot be cured or the seller does not give assurance of cure. |
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Term
| When does the buyer have the power to cancel an installment contract as a result of non-conforming tenders? |
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Definition
| Whenever the non-conformity or default with respect to one or more installments substantially impairs the value of the whole contract. |
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Term
| True or false: Because the U.C.C. has a specific rule for installment contracts that rejects the perfect-tender rule, the common-law divisible contract rule does not apply to a single-lot delivery of goods. |
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Definition
| False. The common-law divisible contract rule is incorporated into the U.C.C. as a gap filler. Thus, for a single-lot delivery consisting of different goods that are priced separately, there is a chance the court will apply the divisible-contract rule. If so, a non-conforming tender of one set of goods will not affect a conforming tender of the other goods. |
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Term
| What are two other names for a repudiation? |
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Definition
| Anticipatory repudiation and anticipatory breach. |
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Term
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Definition
| A definite and unequivocal manifestation of intention on the part of the repudiator that he or she will not render the promised performance when the time fixed for it in the contract arrives. |
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Term
| To be a repudiation, the party must manifest an intention to commit the equivalent of what kind of breach? |
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Definition
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Term
| True or false: Refusing to perform a minor part of a contract is a repudiation. |
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Definition
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Term
| What is the distinction between a repudiation and a breach? |
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Definition
| A repudiation occurs before the due date for performance arrives. A breach cannot occur until after the due date for performance arrives. |
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Term
| True or false: A repudiation cannot occur solely by conduct. |
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Definition
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Term
| If a party repudiates the contract, what power does the other party obtain? |
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Definition
| The power to terminate the contract. |
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Term
| Is there a repudiation if a party asks for a contract modification? |
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Definition
| Only if the party couples it with a refusal to perform. |
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Term
| If a party exercises the power to terminate a contract in response to a repudiation, when may the party sue for breach of contract? |
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Definition
| In general, (1) immediately, (2) at any time prior to an actual breach, or (3) at any time after the actual breach (assuming the statute of limitations has not expired). |
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Term
| What are two exceptions to the general rule that an injured party may immediately sue for breach of contract upon a repudiation and need not wait for an actual breach. |
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Definition
| (1) The repudiating party has already received all of the other party's performance under the contract; and (2) the repudiation is of a duty to pay money at a future time or in future installments. |
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Term
| When may a party retract a repudiation? |
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Definition
| When notification of the retraction is received by the non-repudiating party before she materially changes position in reliance on the repudiation or indicates to the repudiating party that she considers the repudiation to be final. |
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Term
| A retraction of a repudiation is also called what? |
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Definition
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Term
| True or false: If the non-repudiating party chooses not to terminate the contract and instead urges performance, doing so automatically extinguishes the power to cancel the contract. |
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Definition
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Term
| If a party has reasonable grounds to believe that the other party will commit a material breach, but the party is unsure if there has been a repudiation, the party may do what instead of immediately terminating the contract and risk being found to have itself repudiated? |
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Definition
| Demand adequate assurance of performance. |
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Term
| If a party is permitted to demand adequate assurance of performance, and does so, a repudiation occurs if what? |
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Definition
| The other party does not provide adequate assurance within a reasonable time (not to exceed 30 days under the U.C.C.). |
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Term
| What are two differences between the common law's and U.C.C.'s adequate-assurance doctrines? |
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Definition
| (1) Under the common law, the other party has a reasonble time to provide adequate assurance, whereas under the U.C.C. the other party has a reasonably time not to exceed 30 days. (2) Under the U.C.C., the demand for adequate assurance must be in writing, but can be oral under the common law. |
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Term
| If a party exercises the privilege to demand adequate assurance of performance from the other party, the party may suspend performance if what? |
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Definition
| If reasonable (if "commercially reasonable" under the U.C.C.) |
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Term
| Can a party's insolvency give the other party the power to demand adequate assurance of performance? |
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Definition
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Term
| Where a promisor's insolvency gives the promisee reasonable grounds to believe the promisor will commit a material breach, the promisee may suspend any performance for which he has not already received return performance until what time? |
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Definition
| Until he receives (1) assurance in the form of performance itself, (2) an offer of performance, or (3) adequate security. |
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Term
| When is a party considered insolvent for purposes of the adequate-assurance rule? |
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Definition
| When the party has either ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due or is insolvent within the meaning of the federal bankruptcy law. |
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Term
| Under the traditional rule, can a party who has repudiated or materially breached a contract, resulting in the other party terminating the contract, obtain a recovery in quasi-contract for part performance? |
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Definition
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Term
| Under the modern rule, can a party who has repudiated or materially breached a contract, resulting in the other party terminating the contract, obtain a recovery in quasi-contract for part performance? |
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Definition
| Yes, minus any damages caused by the breach. |
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Term
| Does the U.C.C. permit a defaulting buyer to recover any payments under a quasi-contract theory? |
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Definition
| Yes, minus any damages caused by the breach (or minus $500 or 20% of the contract price, whichever is smaller, if there are no damages or none can be proven). |
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Term
| If a party who has repudiated or materially breached a contract is entitled to recover in quasi-contract for part performance, can the amount recovered exceed the contract rate? |
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Definition
| No. The recovery is a reasonable amount for the benefit provided, but not to exceed the contract rate. |
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