Consequences of Non Performance – 4 ways:
i. Is there a Breach
ii. Is there a request for Assurances
iii. Is there anticipatory repudiation
iv. Is there a Condition
Is there a Condition:
i. Common Law:
1. Ask Three Questions
a. Do I have an express condition?
b. Did that express condition occur? If yes, performance is due
c. (3)(a) If not, is it excused? (b) If not, if it is a promissory condition, is there a breach?
2. §224 Condition Defined: A condition is an event, not certain to occur, but which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.
3. §225 Effects of the Non-Occurrence of a Condition
a. Performance of a duty subject to a condition cannot become due unless the condition occurs or it’s non-occurrence is excused
b. Unless it has been excused, the non-occurrence of a condition discharges the duty when the condition can no longer occur
c. Non-occurrence of a condition is not a breach by a party unless he is under a duty that the condition occur
4. § 226 How an Event May be made a Condition: An event may be made a condition either by the agreement of the parties or by a term supplied by the court.
5. § 227 Standard of Preference with regard to conditions
(1) In resolving doubts as to whether an event is a condition of an obligors duty, an interpretation is preferred that will reduce the obligee’s risk of forfeiture, UNLESS the event is within the obligee’s control or circumstances indicate that he has assumed the risk.
(2) UNLESS the contracts is of a type under which only one party has duties, when it is doubtful whether
a. A duty is imposed on oblige that an event occur, OR
b. The event is made a condition of obligor’s duty, OR
c. The event is made a condition of obligor’s duty and duty is imposed on the obligee that the event occurs, the first interpretation is perverted if the event is within the obligee’s control.
(3) In case of doubt, an interpretation under which an event is condition of an obligor’s duty is preferred over an interpretation in which the non-occurrence of the event is a ground for discharge of that duty after it has become a duty to perform.
6. § 228 Satisfaction of the Obligor as a condition: When it is a condition of an obligor’s duty that he be satisfied with respect to the obligee’s performance or respect to something else, and it is practicable to determine whether a reasonable person in the position of the obligor would be satisfied, an interpretation is preferred under which the condition occurs if such a reasonable person in the position of the obligor would be satisfied.
7. § 229 Excuse of a Condition to Avoid Forfeiture: To the extant that the non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange.
8. Doctrine of Constructive Conditions: Conditions which are judicially created to determine the consequences of breach when the parties have failed to specify in their agreement.
9. Express Conditions: NO POSSIBILITY of substantial performance
10. Implied in Fact or Constructive Conditions: Possibility of SUBSTANTIAL PERFORMANCE
11. Innocent Ommission: an omission, both trivial and innocent, will sometimes be atoned for by allowance of the resulting damage, and will not always be the breach of a condition to be followed by a forfeiture.
a. Jacob and Young: Contract to build house using specific brand of pipe. However, they didn’t but they used a completely comparable pipe.
b. The pipes were of a comparable nature; the mistake was made in good faith. The pipes were only a constructive condition, such as a promise for a promise, not an express condition.
c. If it was an express condition than no performance less than complete performance is allowed.
i. Should look to substantial performance
ii. Materiality of the condition is important
12. Excuse of Conditions:
a. § 229 Excuse of a Condition to Avoid Forfeiture: To the extent that the non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non-occurrence Unless its occurrence was a material part of the agreed exchange.
b. § 245 Effect of a Breach by non-performance as excusing the Non-occurrence of a Condition: where a party’s breach by non-performance contributes materially to the non-occurrence of a condition of one of his duties, the non-occurrence is excused.
c. § 247 Effect of Acceptance of part performance as Excusing the subsequent Non-occurrence of a Condition: An obligor’s acceptance of part of the obliges performance, with knowledge or reason to know of the non-occurrence of a condition of obligor’s duty, operates as a promise to perform in spit e of a subsequent non-occurrence.
d. § 248 Effect of insufficient reason for rejection as excusing the non-occurrence of a condition: Where a party rejecting a defective performance or offer of performance gives an insufficient reason for rejection, the non-occurrence of a condition of hi duty is excused ONLY if he know or had reason to know of that non-occurrence and only to the extend that the giving of an insufficient reason substantially contributes to a failure by the other party to cure.
e. Substantial performance: not applicable when its an EXPRESS CONDITION
13. Promissory Condition: If an event is a “promissory condition” failure of the event to occur justifies the obligor in treating her obligatio
he other party’s remaining duties to render performance.
4. § 256 Nullification of Repudiation or Basis for Repudiation: (1) The effect of a statement as constituting a repudiation under §250 or the basis under §251 is nullified by a retraction of the statement IF notification of the retraction comes to the attention of the injured party before he materially changes his position in reliance on the repudiation or indicates to the other party that he considers the repudiation final.
5. Intent not to perform must be “definite and unequivocal” in order to constitution an anticipatory breach mere doubtful and indefinite statements that performance may or may not take place do not count
6. Three ways to lock in an anticipatory repudiation
b. Material Change in position in reliance
c. Starting a court suit
1. § 2-609 Right to adequate Assurance of performance: Same as Above
2. § 2-610: Anticipatory Repudiation: When either party repudiates the contract with respect t o a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieve party may
a. For a commercially reasonable time await performance by the repudiating party, or
b. Resort to any remedy for breach, event though he has notified the repudiating party that he would await the latter’s performance and has urged retraction, and
c. In either case suspend his own performance or proceed in accordance with the provisions of this article on the sellers right to identify goods to the contract not withstanding breach or to salvage unfinished goods.
3. § 2-611 Retraction of Anticipatory Repudiation: (1) Until the repudiating party’s next performance is due he can retract his repudiation UNLESS the aggrieved party has since the repudiation cancelled or materially changed his position or otherwise indicated that he considers the repudiation final.
(2) Retraction may be by any method which clearly indicates to the aggrieved party that the repudiating party intends to perform, but MUST INCLUDE any assurance justifiably demanded.
(3) Retraction reinstates the repudiating party’s rights under the contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation.
e. Is there a Breach:
i. Common Law: