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What could go wrong? (Performance and Breach: (Substantial performance:…
What could go wrong?
Performance and Breach:
Conditions: A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due. Conditions are strictly construed and if they don't occur then the reciprocal duty is not triggered.
If you elect path A, then you waive path B.
Constructive conditions of exchange: Where all or part of the performance to be exchanged under the exchange of promises are due simultaneously, it is a condition of each party's duties to render such performance that the other party either render or, with manifested present ability to do so, offer performance of his part of the simultaneous exchange.
Breach of a covenant: Breach of a covenant by one party to a contract relieves the other party's obligation to perform another covenant which is dependent thereon, the performance of the first covenant being an implied condition precedent to the duty to perform the second covenant.
Substantial performance: It's enough to trigger A's duty that B performs substantially meaning that no major breach has occurred. A minor breach can trigger the other party's performance.
Minor Breach: If the breach is minor, then the injured party is to continue performance but collect money damages.
Major breach: If the breach is a major breach, then the injured party can (1) treat the breach as a total breach and cancel the contract and sue for damages (2) treat the breach as a partial breach and continue performance and collect money damages; (3) suspend performance and await cure.
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Perfect Tender Rule: If the goods or tender of delivery fail in any respect to conform to the contract, the buyer man (a) reject the whole; or (b) accept the whole; or (c) accept any commercial units or units and reject the rest.
Divisibility: When consideration for work done is apportionable or apportioned on the contract, that contract will be interpreted as divisible in case of part performance. Exception: Construction K's are not divisible.
Restitution: If a party has conferred a benefit unto someone even if breach is major, you don't just walk away with nothing.
Anticipatory repudiation: An announcement by word or deed before performance is due that you're not going to perform.
Injured party can: The injured party from a repudiation is allowed to take repudiation is allowed to take repudiation at face value and sue now, or you can wait until the date of performance is due. Injured party can also give the repudiatee a period to retract or nullify.
Damages for anticipatory repudiation: Damages for a seller's anticipatory repudiation are measured at a commercially reasonable time after the repudiation.
Assurances: Where a party has a reasonable belief that the other party will commit a breach by non-performance, the obligee may demand adequate assurances of due performance and may, if reasonable, suspend any performance for which he has not already received the agreed exchange until he receives such assurances.
Insecurity: When the circumstances are less than anticipatory repudiation but you are reasonably insecure, you can demand adequate assurances, if they don't give you adequate assurances you can treat that as an anticipatory repudiation and therefore breach.
Interpreting a K
The Parol Evidence Rule: The parol evidence rule renders unenforceable oral agreements entered into prior to the adoption of a written K. A written agreement that is completely integrated effectively discharges evidence of prior or contemporaneous negotiations, agreements, or concessions.
Complete integration: If the document is a complete integration intended to be final no evidence is admitted.
Partial integration: If the document is a partial integration not intended to be final evidence can potentially supplement the writing.
Extrinsic Evidence: Most courts allow parties to introduce extrinsic evidence to aid in the interpretation of a K, even if the writing is a complete integration, but they vary on the details of how and when extrinsic evidence is allowed.
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Remedies
Specific Relief: An injunction will not be ordered if damages would be adequate to protect the expectation interest of the injured party. Specific relief can be granted in the UCC where the goods are unique. Specific relief can be granted for a long-term K.
Expectancy Damages: Goal is to put the promisee in the position he would have been had the promise been performed. Non-breaching party gets the benefit of the bargain.
Damages can include (1) P's loss in value caused by the defendant's nonperformance (contractual value of what the plaintiff received from what was promised) (2) Any other loss (3) less the cost that plaintiff avoided by not having to perform. Generally, loss of expected value-restitution costs.
Measuring seller's expectation remedies: (1) Resale goods (2) Difference between the market price at the time and place for tender and the unpaid K price together with any incidental damages, but less expenses saved.
Buyer's expectation damages: (1) buyer may recover difference between cost of cover and the K price together with any incidental damages, less expenses saved (2) the measure of damages for non-delivery by the seller is the difference between the market price at the time when the buyer learned of the breach and the K price together with any incidental damages (3) Specific performance if goods are unique.
Reliance damages: Damages needed to put the plaintiff in the position he would have been in had the contract never been made. Usually award damages equal to the amount the plaintiff has spent in performing or preparing to perform. Can also award where expectation damages cannot be computed because lost profits are too speculative or uncertain.
Limitations on damages: Generally damages are not recoverable for loss that the injured party could have avoided without undue risk, burden or humiliation. However the party is not precluded from recovery where he makes reasonable but unsuccessful efforts to avoid loss.
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Foreseeability: Breaching party is only responsible for damages that they should have been able to foresee at the time they entered into the contract.
Certainty: Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty.
New businesses can get lost profits, if you can prove that you would have gotten profit but for breach. Franchises have an easier time doing this.
Liquidated Damages: Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of an anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonable large liquidated damages is unenforceable on grounds of public policy. Terms intended as penalties are unenforceable. Test: liquidated damages can't be so high and it can't be so low as to be unconscionable.
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