Kingston v. Preston

D business/stock in trade PSilk-mercer Covenant-servant

pay, and give sufficient security P sued for failure of D to give up his business.

D said P did not offer sufficient security.Is giving security a condition to the duty to

deliver the business? Does the K say it is?

Kinds of Covenants Mutual and independent

Non-performance is a breach, but Return performance is still due.

Dependent conditions – Precedent If condition fails, no duty arises.

Dependent conditions – Concurrent Still no duty if fails, but cannot sue

other if not ready, willing & able to perform.

Constructive Conditions Court supplied condition of dependency

here to do justice and fulfill presumed intent of parties.

Condition is implied in law, or constructive, condition.

There is a strong presumption that promises are dependent – that K has conditions.

R/E leases traditionally were considered independent – not generally so now. K, not conveyance.

Shaw v. Mobil Oil D service station, gasoline PMobil Shaw

1.4¢/gal.

K required P to buy at least 200,000 gals/yr (pay at least $470/mo.)

In July 1973, D delivered less than P ordered, and less than minimum required under K, due to Fed Energy office request.

D demanded minimum rental. P sought Dec J.

Shaw v. Mobil Oil Trial Court: P must pay minimum. Supreme Court says not required. Is there a condition on duty to pay

minimum? If so, where do we find it? Is there a condition on Mobil’s duty

to deliver the gasoline? If so, where do we find it?

Shaw and conditions Mobil’s duty to deliver gasoline is subject to

an implied condition of its ability to deliver (no impairment by gov’t reg). Delivery of gasoline (Mobil’s duty to

perform) is excused due to impracticability.

Shaw’s duty to pay the minimum is subject to an implied condition of delivery of gasoline ordered. The condition is not excused due to

impracticability.

Impracticability and conditions Impracticability excuses performance.

Not a breach if the music hall burns. It generally does not excuse conditions.

The “lessee” does not have to pay for a music hall that was not provided.

It may excuse minor/technical conditions. If architect’s approval is required for

payment, and architect dies, may excuse.

Problem 142D houseboat P

Travis Meyer $35,000

Parties to meet at noon, 8/1, to close sale.Meyer to pay by check.

Neither party shows up to complete sale.Meyer sues Travis for breach of K. Result???Is there any condition to Travis’ duty to

deliver?

Concurrent conditions UCC 2-511: Tender of payment is condition

to seller’s duty to deliver (unless otherwise agreed).

UCC 2-507: Tender of delivery is condition to buyer’s duty to accept and (unless otherwise agreed) to pay.

R2K 234(1): Prefer interpretation that concurrent if can be concurrent.

Tender: “Valid and sufficient offer of performance” – ready, willing and able to perform.

Problem 143 D houseboat PTravis Meyer

$35,000Now Travis to deliver 8/1.Meyer to pay by check: $1,000 per month until all

paid. First check due 9/1.Travis fails to deliver boat. Meyer sues 8/10. Can Meyer recover without tendering payment?Is there any condition to Travis’ duty to deliver?Delivery Suit First payment Additional payments . . . 8/1 8/10 9/1 10/1 . . .

Problem 144 12,000 fancy bricks

Caria Mausolus $6,000

Bricks to be delivered by 6/1. Caria delivers half the bricks 5/5, demands $3,000. Must Mausolus pay now?

Can Caria withhold the next delivery if not paid?UCC 2-307: unless otherwise agreed (or indicated

by the circumstances) – single delivery and payment. If deliver in lots, pay by lot.

Problem 145

P write lyrics DBill Gilbert Producer

$

Bill wrote half the lyrics – demanded half the money.

Producer refused to pay. Bill refused to continue. Producer hired someone else.

Bill sued. Result?

Order of performance Prefer concurrent if can be concurrent –

not always possible. R2K 234(2) If only one performance

happens over time, that performance must occur first (it is a condition of the return performance), unless the language or circumstances indicate otherwise.

If want “progress payments” put it in the K – Court won’t infer payment schedule. K can, and often does, address payment

schedule.

Jacob & Youngs v. Kent

P build house DJacob & Youngs Kent

$77,000+

Work stopped in June 1914.D learned in March that some of pipes were

not Reading pipes, as required in K.Architect refuses to certify that final payment

of $3,483.46 due. P sues for unpaid balance.

Jacob & Youngs questions: What is the condition in Jacob &

Youngs? NOTE: The condition of the architect’s

approval is not the focus here. How is the condition to be fulfilled? Do we know how it is to be fulfilled

based on the words of the contract, or through construction of the contract?

The condition to payment The condition to return

performance (final payment) is performance by P.

What kind of performance fulfills the condition? The performance defined in the K, OR Substantial performance.

Which one is required here?

Condition or promise Why does the court use substantial

performance here? Substantial performance is implied in law. Isn’t the K clear regarding Reading pipe?

The use of Reading pipe is a promise, not a condition. K is clear that will use, not that not using

will result in forfeiture of the return. What about language in n. 4, p. 695?

Substantial Performance What is substantial performance?

Perfect performance? A stab at performance?

Why is substantial performance the standard? Need to protect the performing party. Need to protect the bargain. Presume reasonable intent of parties.

Effect of Substantial Performance If no substantial performance, no

return performance is due under the K. The party that did not substantially

perform may still be entitled to restitution for the benefit conferred.

If have substantial performance, the K return performance is due. Subtract any damages from the breach.

Substantial performance in Jacob & Youngs?

P substantially performed. The breach was trivial compared to the

entire K. The breach was innocent.

Does the dissent agree? Do you? Was the use of Reading pipe a promise

or a condition? NOTE: Conditions fail – promises are

breached.

Damage options Cost to replace

D (owner) wants this as offset against payment owed to P (or positive recovery).

Replacement would require tearing out a lot of good work – wasteful.

Difference in value P wants this. Virtually nothing. Cohoes pipe is as

good as Reading.

Result Court awards difference in value.

Cost to replace involves economic waste.

Unlikely to actually replace. Does this adequately protect the

owner’s expectations? Could the owner have changed the

result by a clearer K? Are there other factors at work?

Problem 146 Specs call for Reading pipe Contractor intentionally orders Cohoes

It’s cheaper and basically the same. Does his willfulness change the result?

According to Cardozo? According to current law? If not, does the contractor have a remedy? What is willfulness?

O.W. Grun v. Cope D “russet glow” roof P

O.W. Grun Roofing Mrs. Cope $648

Roof had yellow streaks. D unable to remedy.Roof was substantial, provided protection.P sued for breach of K. J/P for $122.60. Set aside lien. Did D substantially perform?

Substantial performance and Material breach.

Two sides of same coin. Substantial performance is “good

enough” to merit return performance. Material breach is significant breach.

One precludes the other. If have substantially performed, have not

materially breached, and vice versa. Cannot have both (but can have neither).

Application in Grun Isn’t it good enough if it will last 15

years? Keep out rain? Appearance of roof is very

important. “Russet glow” Home is castle.

What if had been roof on warehouse?

Condition or promise Is the color a condition or a promise?

Condition – so return performance ($648) is not due when it fails.

Promise – so damages are due for breach (extra $122 need to replace).

If it is a condition, and accept, what happens to the condition? Did P give up right by accepting roof?

Restitution?? Is D entitled to restitution for

benefit of roof installed? No. No value. Need new roof. Structural work did not add value. P did not accept roof.

Compare Jacob & Youngs What if the roof in Jacob & Youngs

had been the wrong color? Would that change the result? As to substantial performance? As to damages?

What if, in either case, would not replace roof?

When is a breach material? R2K 241 – Circumstances to consider:

Extent injured party is deprived of reasonably expected benefit

Extent injured party can be adequately compensated

Extent breaching party will suffer forfeiture

Likelihood of cure Extent of good faith and fair dealing.

Material breach

If material breach, other party can suspend performance (R2K 241).

Remaining duties discharged (R2K 242) if Indicated by 241 factors Delay may prevent/hinder substitute K indicates time is of the essence.

(Stated time for performance does not mean time is of the essence.)

Carter v. Sherburne Corp.

P road work DCarter Sherburne Corp.

$P sues for payment due under K and

quantum meruit (restitution).D says performance defective.

Counterclaim for damages due for P’s breach.

J/P. D appeals.

Carter appeal – affirmed What were D’s arguments on appeal?

No substantial performance. Why? Why didn’t this work?

What about the “penalty” clause? What is the effect of the delay?

Why does P recover for work done after D says will make no more progress payments?

Time for performance Timely performance is a condition to

return performance if K makes it one. “Time is of the essence.” Not likely condition in construction Ks, R/E

sale. Always condition in option K. Liquidated damages for late performance

may indicate not a condition. (Carter) If not condition by K, factor as to

materiality of breach, right to cancel. If not condition, still promise. Right to

damages.

Problem 148(a) 10 identical houses

Tracthouses, Inc. NewTown $25,000/each

TI built 3 houses. NewTown could not pay.Should Tracthouses stop building? Keep

building? Sue for 3 houses, or for all?Is nonpayment a material breach?Is building a condition of payment?

Conditions and material breach

It is a condition of each party’s remaining duties is that there be no uncured material breach. (R2K 237)

Non payment after 3 houses is a material breach here.

Tracthouses can suspend performance and sue for total breach now.

Problem 148(b) 10 identical houses

Tracthouses, Inc. NewTown

$25,000/eachNewTown agreed to pay when all 10 finished.Tracthouses built 9 houses perfectly.Did not finish 10th house (half finished).Is Tracthouses in material breach of K?If so, can it recover for the work completed?

If so, on what basis?

Divisibility Breaching party can be paid for the

part of the work done if Promises can be seen as “corresponding

pairs of part performances” That are “agreed equivalents”

This is a recovery on the contract. It must be for performance in a “pair” Damages are recoverable for any breach.

Tracthouse K House #1 House #2

. . . House #9 House #10 9 houses

complete

$25,000 $25,000

. . . $25,000 $25,000 Recover $225,000

on the K.

Divisible or . . . Entire K provides for

way to divide. The divisions

represent agreed equivalents.

If parties had thought about need, would likely divide.

Part performance is not useful, or defeats K purpose.

No way to divide performances, or divisions do not match return.

Intent that entire

The 10th house: Is Tracthouses entitled to payment

for the 10th house? If so, on what basis? Are construction Ks generally

divisible? Assume NewTown must pay

another contractor $30,000 to finish the last house. How will this affect Tracthouse’s recovery?

Printing Center v. Supermind

D print books PPrinting Center/Tx Supermind

$

P rejected books – said did not conform to K.Sought return of $2900 deposit.

T Ct: J/P for deposit + attorney fees. Appeal.Did evidence support jury finding that books

did not conform to K? What happens on appeal?

Performance and the UCC Does the UCC control here?

Is this a sale of goods case? What law does the court use and why?

Does the UCC use the substantial performance standard?

What is the UCC standard? Why?

Perfect Tender Rule UCC 2-601 Unless otherwise agreed If goods OR tender of delivery Fail to conform to the K in any

respect Buyer may

Reject the whole Accept the whole Accept any commercial unit – reject the

rest.

Tender in Printing Center Was the delivery a perfect tender?

Pages were crooked, wrinkled, color off. . .

Does K say no crooked or wrinkled pages? Implied warranty of merchantability,

express warranty of sample, trade usage What if one page had been crooked?

Need perfect tender Was the rejection in bad faith? What would the result be under R2K?

Problem 150

500 split rails X 12 dels/mos.

Douglas Lincoln

$

First shipment is delivered on time.Only 497 rails in shipment.May Lincoln refuse to accept?Is the delivery a perfect tender?Is that the rule here?

Installment Ks – UCC 2-612 K requiring or authorizing separate lots

Even if K says each is separate K. Buyer may reject installment if

Value of installment is substantially impaired and

Cannot be cured. Buyer may cancel K if

Value of whole K substantially impaired. Reinstate if accept installment, sue for past

installments only, demand future performance.

Installment K questions What constitutes substantial

impairment of one delivery? Of the whole K? What if first delivery only 400 rails? What if first delivery 500 rails, but

arrived late? What if several deliveries are late? What if the first delivery is of extremely

poor quality?

Capitol Dodge Sales v. Northern Concrete Pipe

P truck DCapitol Dodge Northern

Concrete $

D picks up the truck – gives P a check.Truck overheats.D calls P and tells it to pick up the truck.

Stops payment on the check.P sues for payment for the truck.

Capitol Dodge questions What law applies? Did D accept the truck? Didn’t D know about the

overheating problem? Didn’t D have an opportunity to

inspect the truck?

Acceptance and rejection UCC 2-607 Must reject before

accept. If accept unit, must pay at K rate.

UCC 2-606 Accept when buyer After time to inspect, says goods are

conforming, or will take them anyway. Fails to reject after time to inspect. Does any act inconsistent w/ seller’s

ownership.

Colonial Dodge v. Miller

P station wagon DColonial Dodge Miller

$Buyer picked up station wagon. Wife

drove it home.Spare tire was not included. D notified P.

P said not available at that time.D stopped payment on check.

Colonial Dodge questions Did Buyer accept the station

wagon? Did Buyer have the right to return it

and avoid payment? Does the seller have any rights? What UCC provision controls? What happens if it is too late to

return and avoid payment?

Revocation of Acceptance

UCC 2-608 Buyer may revoke acceptance if

nonconformity substantially impairs the value to him and accepted Assuming non-conformity would be cured,

and it has not. Without discovering nonconformity if either

Difficult to discover or Accepted due to seller’s assurances.

Must revoke within a reasonable time.

Right to Cure UCC 2-508 Buyer rejects when K time not expired

Seller may notify buyer and Cure w/in K time

Buyer rejects when K time has expired If seller reasonably believed goods

acceptable w/ or w/o $ allowance and Notifies buyer – Further time to get conforming tender.

Non-conforming goods Reject before accept – no $ due.

Perfect tender rule or Installment K rule Subject to right to cure where applies

May still revoke acceptance if meet 2-608 requirements Substantial impairment standard Probably subject to right to cure.

If accept, must pay at K rate May subtract damages for non-conformity Must notify seller of non-conformity