Mod 10 - performance, breach, and discharge

two types of conditions

-implied in fact

-implied in law

implied in fact conditions

if a contractor is hired to build a house, but can't start until they get a permit, it's implied that homeowner obtain a permit

implied in law

landlord has to make/give you space for you to pay rent

-"duh"

what happens if the condition fails

the duty never arises

-there is no performance owed and no breach

what happens if a breach is material

the aggrieved party is excused from performing

what happens if a breach is non material

aggrieved party is entitled to damages but still have to perform

what does the substantial performance doctrine do

tells you whether or not a breach is material

where does the substantial performance doctrine apply

-not everywhere

-construction contracts are its classic setting

-ask whether perfect performance is reasonable to demand

what does the substantial performance doctrine require

-that the owner received what they bargained for, with minor and unimportant deviations

-breach was unintentional and not in bad faith

the remedy offered under the substantial performance doctrine

non defaulting party recovers damages

time is of the essence

-if it IS, then failure to perform within time is a material breach

-under the UCC. 2-601 it's assumed that time is of the essence

when is non performance excused

1. legal impossibility

2. frustration of purpose

3. impracticability

legal impossibility

-cannot be performed

-death or incapacity of a party performing

-destruction of subject

frustration of purpose

-leasing along parade route and parade is cancelled

-something happened and now contract has no value to a party

impracticability

-becomes really detrimental to a party

-a lot more expensive/difficult

elements of impracticability

1. did an unexpected event occur

2. did event create extreme and unreasonable difficulty

3. did non performing party assume risk that this event could occur

4. was the nonperforming party at fault of causing the event

when does impracticability NOT apply

-increased production costs

-labor disputes

-change in market conditions

force majeure

parties negotiated what would happen if there was an act of god - then, that party is excused from performance

the perfect tender rule

UCC 2-601

-perfection is the standard

UCC 2-508, the seller's right to cure

if the seller sends the wrong products and the deadline has not yet passed they can: notify, then deliver

surprise exception to the UCC 2-508 rule

when the deadline has passed, except the buyer accepted nonconforming goods in the past

-they can still notify to fix

why does title matter

when it passes, the buyer owns the goods, and ownership has consequences

3 consequences of ownership

1. insurance interest

2. creditors and lenders

3. resale and value

insurable interest

the buyer can insure what it owns

-and owes property tax on it

creditors and lenders

creditors can reach the goods, the bank may take a security interest

resale and value

the buyer can resell the goods, and they sit on its balance sheet as an asset

UCC shipment contracts

when the goods are shipped - passed over to a common carrier

-buyer owns goods before they have possession

good faith purchaser for value

defense for a buyer when a prior owner wants the goods back

3 elements to good faith purchaser of value - ALL 3 REQUIRED

1. honesty in fact, no knowledge of fraud

2. voluntary transaction

3. paid value

what are the elements of passage of title

1. parties agree on when

2. identification of the goods

passage of title when goods are shipped

title passes when seller delivers to a common carrier

-parties can contract around with destination clauses

passage of title when there's no movement of goods

-seller may be required to ship a document of title

-if there's no doc of title, title passes at the later of: time contract is entered, or id of the goods