Promise
What is a promise?
to do or not to do something
What is a condition?
Occurrence or nonoccurrence to make K enforceable
What is the perfect tender rule?
condition on payment for single delivery of goods
What is available if one party materially breaches a K?
Repudiation
Is a "time is of the essence" provision a condition or a promise?
General Rule = promise UNLESS there is an express provision, then condition
What are the obligations under the K if a promise is breached?
Can get damages but performance is still required
What are the obligations of both parties is a condition is breached?
Continued performance is excused (K obligations go away)
What can the buyer do if the seller's goods fail in ANYWAY to perform the K? (3)
(1) Reject the whole
(2) Accept the whole
(3) Accept any commerical unit + reject the rest
(a) Purpose of K
(b) Desire to be gratified
(c) Excuse for deviation (willfull or intentional?)
(d) Cruelty of enforced compliance
Is a satisfaction clause a condition or a promise?
What are the two types of satisfaction clauses? Describe them.
(1) Objective = reasonable person (commercial quality/operative fitness/mechanical utility)
(2) Subjective = buyer's specific discretion (personal aesthetics with good faith obligation)
What is some common language that indicates a promise? Common language of a condition?
Promise - "shall" "agrees to" "must"
Condition - "until" "upon" "provided that" "subject to" "if"
What are the three types of conditions? Can substantial be used for any of them to grant relief?
(1) Express Condition --> Strict Performance ONLY
(2) Implied Condition --> Substantial Performance allowed
(3) Constructive Condition --> Substantial Performance allowed
What are the seven exceptions to the perfect tender rule?
(1) Installment K Breach
(2) Parties Agree Otherwise
(3) Bad Faith Rejection for Immaterial Defect
(4) Buyer has already accepted
(5) If performance time remains, seller has right to cure
(6) Performance prevented by defendant
(7) Defendant failed to cooperate or act in good faith
What can a party that is anticipating repudiation do?
(a) May suspend performance OR
(b) Sue for breach
Bonus: What if you are unsure whether the other party is about to repudiate?
What is the order of performance if not clear from the K?
Order is construed as concurrent
General Rule: performance must be completed before payment unless stated otherwise
What are the steps to determine whether a provision is a condition or a promise?
(1) Identify the Promise
(2) Identify the Condition
(3) Really a condition?
(4) If a condition was it fulfilled/excused?
What are the seven ways a condition can be excused?
(1) Substantial Performance
(2) Disproportionate Forfeiture
(3) Aleatory + Divisible Ks
(4) Performance Prevented by defendant
(5) Waiver/Estoppel
(6) Election
(7) Impossibility
What constitutes a valid acceptance under 2-206?
1. Acceptance = after reasonable oppotrunity to inspect the goods
(a) Buyer signifies to the seller that the goods are conforming or
(b) He will take or retain them in spite of nonconformity or
(c) Do something against the seller's ownership
What happens if the repudiation is found to be unwarranted by the court?
The party that began the repudiation (repudiator himself) will be guilty of material breach
What is the difference between a mutual/independent K and a condition/dependent K?
Mutual/Independent = where either party may record damages from the other
Condition/Dependent = performance of one depends on the prior performance of another
Owner contracts with Contractor to renovate a restaurant for $200,000. The contract provides:
“Final payment is due upon Contractor’s submission of a certificate of completion issued by Architect.”
Contractor substantially completes the renovation, and the restaurant passes all city inspections. However, Architect—who had a minor dispute with Contractor—refuses to issue the certificate despite acknowledging that the work meets contractual specifications.
Owner refuses to make final payment, arguing that the certificate is a condition precedent that has not been satisfied.
Contractor sues for payment.
Which of the following is the best analysis?
A. The certificate requirement is a promise, so Owner’s duty to pay arose upon substantial performance, and Owner is in breach.
B. The certificate requirement is a condition precedent, and because it was not satisfied, Owner’s duty to pay never arose, regardless of fairness.
C. The certificate requirement is a condition, but it may be excused to avoid disproportionate forfeiture where it is not an essential part of the exchange.
D. The certificate requirement is a condition subsequent, so Owner bears the burden of proving that it was not satisfied.
C
Who has the burden of proving breach for a condition precedent? Condition subsequent?
Condition Precedent = Plaintiff's burden
Condition Subsequent = Defendant's burden
When can an installment K fall under the exceptions for the perfect tender rule?
If the defect impairs SUBSTANTIAL value of installment AND cannot be cured
Builder contracts with Owner to construct a custom home for $500,000, with completion due June 1. The contract emphasizes that the home must be ready for Owner’s daughter’s wedding reception scheduled for June 5.
By May 15, Builder has completed 90% of the work but informs Owner that certain custom interior finishes will not be installed by June 1 due to supply delays. The remaining work would take an additional two weeks, and the house would otherwise be habitable.
Owner immediately declares that Builder has materially breached, refuses to allow Builder to continue work, and hires a new contractor to finish the job at a higher cost. Builder sues Owner for breach of contract.
Which of the following is the most accurate statement?
A. Builder materially breached because any delay in performance automatically constitutes a material breach.
B. Owner properly repudiated because Builder admitted it could not fully perform on time.
C. If the court finds the breach was not material, Owner’s refusal to allow completion constitutes a material breach by Owner.
D. Builder’s delay constitutes anticipatory repudiation, entitling Owner to terminate the contract regardless of materiality.
C
How do you determine whether a provision is a condition or a promise? What happens if the court can't tell?
Intent of the parties!
(a) Language
- If, unless = condition
(b) Necessary Construct
(c) Prior Practices
If the court can't decide --> decide it is a promise because courts HATE forfeiture