1) Performance and Breach (Circumstances were the law excuses some one from performing a K)
a) Breach. In a K between X and Y, unless X’s obligation to perform has been suspended or terminated (1) X’s failure to perform is a breach; and (2) X’s reputation of X’s contractual promises(s) may be treated by Y as a breach.
(a) Failure to perform includes non-perf., incomplete perf., and incorrect perform.
(b) Repudiation includes; straight refusal, performance rendered only if Y consents to something not in K, and X’s disabling himself from performing.
Possible reasons why X’s obligation will be suspended or terminated (9 of them)
1) An Express Condition from the K own terms, must occur prior to X’s obligation becomes due.
1. Test for occurrence of a express condition: Strict Compliance (a EC has not occurred unless it has happened in every detail as express in the K: Special cases
a. Condition of Satisfaction of a party: (Mattei) standard reasonable satisfaction(Only NY) or good faith satisfaction (49/50 states). OR
b. Condition of Satisfaction of a Non Party: Good Faith standard (architect)
c. Exceptions: (X still in breach even though nonoccurrence of E.C.
i. X wrongfully caused the condition not to occur
ii. Avoidance f Forfeiture requires the condition to be ignored on public policy grounds. ( Res 2 229)
Notes on Express Condition:
If language of an EC is not clear the court can find an EC when one parties performance is wholly dependant on performance of the other party (Rotterdam)
How long to perform? Time express in K OR Implied (Rotterdam) OR a reasonable time.
Rule of Peacock: When language is not clear or Ambiguous avoidance of a forfeiture is basis for a finding that a EC did NOT exist (Would have BK’d the Sub if they were not paid) Use Restatements 2-229
IF the satisfaction of a condition is subjective (Mattei-painting) better to leave in hands of 3rd party)
No duty on Y to help X meet a express condition (Curtis- write a book)
Note 3 676 “commission to broker at time of closing” not a EC because language could be better (by trade and custom) AND the broker drafted language. Courts will construe against drafter and against party with greater bargaining power. May see K as Adhesion or find that it is not a K because of Uncounsciousability.
Parol Evidence can be used to prove a EC, but only to the entire contract (Hicks)
Duty Associated with EC is suspended until the condition has occurred. If it does not occur in a RT then duty ie terminated.
(2.) Y previously committed a Material Breach of the same contract which Y has not yet cured (Explained two ways, Constructive Condition or D.C.)
Breach
Material Non Material
| | | |
/ \ Treat as “partial breach”
Treat as a “partial breach” Suspend performance
rst Material Breach
Notes on Constructive Conditions:
C.C.’s come from promises one party made in the K
2 Factors courts consider when determining if a promise in a K is a constructive condition: Timing of the promise AND Importance (to the overall bargain) of the promise
Kingston: don’t have to give business if Preston did not provide promised security.
Timing case Stewart Newbury; pay upon substantial completion. It is a reasonable time.
Examples of a Constructive Condition:
(1) Complete promise (where it is full performance) before other party has to perform their duty seen in construction hypo’s
(2) Where there are two promises and both are significant to entire K ( not pick up dry cleaning)
(3) Where performance is Simultaneous and only one promise for each.
(4) Court will gap fills (concert hall will not burn down) items that can be performed instantly and calls them simultaneous P’s
(5) Cannot perform simultaneous or instantly, and one promise takes time (build house) the court will find that the promise to build house is a CC of other party paying instantly.
(6) First Material Breach, must be ‘material” (Walker v. Harrison) can’t withhold payments because sign was not cleaned. Clean then sue for damages or deduct $ costs from payment
(3) Y committed an Unretracted Anticipatory Reprudation of the Contract
(a) Y w/o justification indicates unequivocally by words or acts that he cannot perform, X can treat his obligations as terminated
