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Contracts
University of Dayton School of Law
Morris, Jeffrey B.

SUBSTANTIAL PERFORMANCE OF NON-UCC CONTRACTS
 
1.      Doctrine of Substantial Performance: it is a constructive condition to a party=s duty of performance that the other party have made a substantial performance of his duties under the K. That is, if one party fails to substantially perform, the other=s part=s remaining duties do not fall due.
2.      Relation to material breach: if a party has AMATERIALLY BREACHED@ her duty under the K, he has not Asubstantially performed her obligation, and the other party is discharged. Either a party has materially breached or substantially performed. Rest 2d 237.
_    If party does not materially breach but substantially performs, the non-breaching party may
4.                  recover damages only resulting from the breach
 
_    If material breach, the non-breaching party may
5.                  recover damages
6.                  may also suspend or be discharged from his own obligations under the K
3.      Factors determing whether a breach is material (rest. 2d 241: the more the breach defeats the entire purpose of the K, and the expectations of the non-breaching party, the more likely it will be considered material.
7.                  extent to which injured party will be deprived of the benefit he reasonably expected
_      look to the essence of the K
_      Delay in performance will be a material breach only if signigcantly deprived the other party of the benefit he reasonably expected
_      Now time is not of the essence unless the contract so states, or other circumstances make the need for promptness apparent.
8.                   extent to which injured party can be compensated for benefit that is deprived
_      Can damages be adequately calculated; if calculation of damages at the time of breach is impossible because the injury is too speculative, a court will be less willing to find that there has been substantial performance and will let the non-breaching party be discharged from his obligations.
9.                   extent to which breaching party will suffer forfeiture
_      the more a a breaching party had done on the K, the greater will be the forfeiture if recovery is denied because she has materially breached.
_      Breach at outset is likely material because breaching party will suffer no forfeiture
10.               likelihood that breaching party will cure his failure
11.               extent to which breaching party complies with standards of good faith and fair dealing.
 
MATERIAL BREACH IN CONTRACTS FOR THE SALE OF GOODS:
4.      PERFECT TENDER RULE: UCC ‘2-601 as long as K does not involve installment K=s(multiple deliveries) Aunless otherwise agreedYif the goods or the tender of delivery fail in any respect to conform to the K, the buyer may (when buyer gives goods back to seller he is discharged from the K)(this has enabled buyers from sipping out of bad bargains by seizing on trivial defects)
12.              reject the whole
13.              accept the whole
14.         

sale of goods UCC 2-601) discharges D duty to perform violates perfect tender rule
Materially Breaching Party: (always has rights)
10. breaching party can recover in Quasi-K (off the K) for benefit conferred.
_    non-breaching D is still under the duty to pay for benefit conferred subject to an offset for whatever damages were caused by P=s breach
11.  
Minor or Apartial@ breach: if breach is not material (substantial performance)
Non-breaching party:
12. gives rise to immediate cause of action for damages caused by the breach, but not a cause of action on the entire contract. (off the contract quasi-K)
_    non-breaching D is still under the duty to pay K price subject to an offset for whatever damages were caused by P=s breach
13. does not discharge or excuse non-breachers duty of counterperformance
_    non-breaching D is still under the duty to pay K price subject to an offset for whatever damages were caused by P=s breach
Minor Breaching Party (substantially performing party):
14. K recovery (on the contract): P can sue for expectation damages
_          non-breaching D is still under the duty to pay K price subject to an offset for whatever damages were caused by P=s breach