Contract Conditions, Performance & Discharge Flashcards

An insurance policy states that the insurer will pay 'only if written notice of loss is given within 10 days.' The insured gives notice on day 12. Under the traditional rule, what is the effect?

Answer: The insurer does not have to pay because an express condition requires strict compliance

An express condition must be satisfied strictly. Substantial performance satisfies constructive (implied) conditions, not express ones. The court might excuse the condition to avoid a forfeiture, but the starting rule is strict compliance.

A builder agrees to use 'Reading pipe' in a house but mistakenly installs pipe of identical quality from a different maker. Replacing it would mean tearing down walls at huge cost. What can the owner most likely recover?

Answer: The difference in market value between the house as promised and as built, which here is roughly zero

This is the Jacob & Youngs v. Kent scenario. The builder substantially performed, so the breach is immaterial. When the cost of fixing the defect is grossly out of proportion to the benefit, the owner's damages are measured by the diminution in value.

S contracts to sell B a specific, unique antique table. Before delivery, and through no fault of either party, a fire destroys the table. What is the effect on S's duty to deliver?

Answer: S's duty is discharged by impossibility or impracticability

If the specific subject matter that performance depends on is destroyed without fault before risk of loss passes, performance becomes objectively impossible and the duty is discharged.

R rents a room for one day at a premium price, and both parties know the only reason is to watch a royal parade. The parade is cancelled. R can still physically use the room. Which doctrine best excuses R?

Answer: Frustration of purpose

Frustration of purpose applies when an unforeseen event destroys the principal purpose of the contract, both parties understood that purpose, and the risk was not allocated to the party seeking relief. Performance is still possible, so impossibility does not apply. This is Krell v. Henry.

In March, a supplier unequivocally tells a buyer it will not deliver goods due in July. Which of the following can the buyer NOT do?

Answer: Hold the supplier to the contract after the supplier retracts the repudiation, when the buyer has not relied on it or treated it as final

An anticipatory repudiation lets the non-breaching party sue right away, wait a commercially reasonable time, or suspend its own performance. The repudiating party may retract until the other side materially changes position in reliance or indicates it considers the repudiation final. Once the supplier validly retracts, the contract is reinstated and the buyer cannot treat it as breached.

Under UCC § 2-609, a seller has reasonable grounds to doubt that a buyer will pay. The seller sends a written demand for adequate assurance. If the buyer gives no adequate assurance within a reasonable time, what is the outer limit before the buyer's silence counts as a repudiation?

Answer: 30 days

Under UCC § 2-609(4), failing to give adequate assurance within a reasonable time, not exceeding 30 days after receiving a justified demand, is a repudiation of the contract.