I. Excuses which justify a party’s breach
When a party to a contract:
– Fails to perform
– Refuses to perform
– Incorrectly performs
– Incompletely performs
Such conduct may not be a breach because:
– The law provides excuses in which justifies the party’s nonperformance and therefore that party is not in breach.
– Such excuses are:
o Failure of and Express Condition
o Failure of an Implied Condition
o Material Breach of the Contract
o Anticipatory Repudiation
o Prospective inability to perform
o Assurance of Due Performance
o Mutual Mistake
o Impracticability or Impossibility
o Frustration of purpose
1. Express Conditions
Definition: A condition is an event, not certain to occur, which must occur, unless its nonoccurrence is excused, before performance under a contract becomes due
If an express condition did not occur, it is likely that one or more of the parties is not in breach of the contract
a. The language of the contract – oral or written – MUST:
i. Identify an event; and
ii. Tell us that unless that event occurs, someone does not have to perform
b. Events Can be:
i. Duties
ii. Express Conditions
iii. Both a duty and an express condition; or
iv. Neither a duty or an express condition
If the contract specifies both a condition and a duty to make the condition happen it gives rise to an action for excuse from performance as well as damages for failure to perform
c. Test:
i. Strict Compliance
1. The condition has not occurred until every detail of the conditional event has occurred
a. If an express condition to a party’s duty to perform fails to occur, the parties duty to perform is suspended
a. Once it is known that the condition is not to occur, then the party’s duty to perform is discharged
1. If no time is stated for when condition is to occur, it is deemed to be within a reasonable time, and if nonoccurrence, then duty is discharged
2. Exception:
a. Avoidance of a disproportionate forfeiture
ii. Personal Satisfaction Conditions
1. When the condition is part of a parties personal satisfaction – party could always claim dissatisfaction – thus the test is:
a. Whether the thing to which the person needed to be satisfied is subject to an objective standard
a. Yes à then: What would a reasonable person have thought about the item? Would they have been satisfied
b. No à Subjective standard – which is a one of good faith
1. Gibson v. Cranage – portrait of deceased daughter – subjective standard
iii. Third party Satisfaction Conditions
1. Party A contracts with Party B to do something, but Party A’s performance is conditional upon Party C’s (third party) satisfaction of B’s performance
a. Based on Good faith and fair dealing
a. Purpose: avoid conflict of interests
