Podcast
Questions and Answers
Under what circumstances can a waiver of a contractual condition be retracted?
Under what circumstances can a waiver of a contractual condition be retracted?
- The obligor informs the other party of the intention to retract the waiver before they detrimentally rely on it. (correct)
- The obligor informs the other party of the intention to retract the waiver, as long as the time for the condition to occur hasn't passed.
- The obligor can always retract a waiver, as waivers are not legally binding until the contract is fully executed.
- The obligor informs the other party of the intention to retract the waiver, regardless of whether they have relied on it.
In the context of contract law, what does 'forfeiture' primarily refer to?
In the context of contract law, what does 'forfeiture' primarily refer to?
- The loss of a party's right to the agreed exchange after substantial reliance on the expectation of that exchange. (correct)
- The penalty assessed for breaching a contract, usually involving monetary damages exceeding the actual loss.
- The intentional relinquishment of known rights under a contract due to dissatisfaction with its terms.
- The legal seizure of assets by a governmental authority due to a party's failure to meet contractual obligations.
When might a court excuse the non-occurrence of a condition to avoid disproportionate forfeiture?
When might a court excuse the non-occurrence of a condition to avoid disproportionate forfeiture?
- Only if the contract contains a clause that explicitly allows for the excusal of conditions under certain circumstances.
- When the occurrence of the condition was not a material part of the agreed exchange and non-occurrence would cause significant loss to one party. (correct)
- Only when the party who failed to meet the condition can prove they acted in bad faith.
- Whenever a party claims they will suffer financial loss if the contract is not executed exactly as written.
What factors does a court consider when determining whether a forfeiture is 'disproportionate'?
What factors does a court consider when determining whether a forfeiture is 'disproportionate'?
Party A contracts to sell Party B a custom-built machine for $100,000. After Party A spends $60,000 on specialized parts, Party B cancels the contract. Excusing the condition of Party B's performance is most likely if:
Party A contracts to sell Party B a custom-built machine for $100,000. After Party A spends $60,000 on specialized parts, Party B cancels the contract. Excusing the condition of Party B's performance is most likely if:
A homeowner hires a contractor to remodel their bathroom, with a condition that the work must be completed by December 1st for a holiday party. The homeowner waives this condition on November 15th due to a delay in tile delivery. Under what circumstance can the homeowner reinstate the December 1st deadline?
A homeowner hires a contractor to remodel their bathroom, with a condition that the work must be completed by December 1st for a holiday party. The homeowner waives this condition on November 15th due to a delay in tile delivery. Under what circumstance can the homeowner reinstate the December 1st deadline?
A famous singer contracts with a concert venue to perform, conditional on good weather. The singer performs despite a light drizzle. Can the singer later claim the condition wasn't met and refuse to pay the venue for use of the space?
A famous singer contracts with a concert venue to perform, conditional on good weather. The singer performs despite a light drizzle. Can the singer later claim the condition wasn't met and refuse to pay the venue for use of the space?
A construction company is building a new skyscraper. The contract specifies that the steel used must be from a particular manufacturer, but that manufacturer is no longer in business when the time comes to buy steel. Using steel from a different manufacturer is allowed if:
A construction company is building a new skyscraper. The contract specifies that the steel used must be from a particular manufacturer, but that manufacturer is no longer in business when the time comes to buy steel. Using steel from a different manufacturer is allowed if:
Flashcards
Waiver (in contract law)
Waiver (in contract law)
An obligor performs or promises to perform despite a condition not occurring, excusing the condition.
Retracting a Waiver
Retracting a Waiver
A waiver can be cancelled unless the other party relied on it or the time for the condition has passed.
Avoiding Forfeiture
Avoiding Forfeiture
A court may excuse a non-occurrence of a condition to prevent disproportionate loss.
Forfeiture (Definition)
Forfeiture (Definition)
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Disproportionate Forfeiture
Disproportionate Forfeiture
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Factors in Excusing a Condition
Factors in Excusing a Condition
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Condition Satisfaction/Excusal
Condition Satisfaction/Excusal
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Limits to Excusing Performance
Limits to Excusing Performance
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Study Notes
- There are two ways the court may legally excuse a condition: waiver and avoiding forfeiture.
Waiver
- When an obligor, whose duty is conditional, performs or promises to perform despite the nonoccurrence of the condition or despite a delay in its occurrence, the condition is excused.
- A waiver may be retracted, and the condition reinstated, unless either:
- The other party has relied on the waiver (i.e., changed position in reliance), or
- The time for the condition to occur had already passed at the time of the waiver.
Avoiding Forfeiture
- To the extent 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.
- Where party B is protected by some condition, party B's performance does not arise unless and until such condition has been satisfied or excused.
- If that condition is in the control of party A, and party A does not satisfy that condition, the court may consider the condition to be excused (and thus party B would have a ripe duty to perform) if party A would suffer disproportionate forfeiture if party B does not perform.
- "Forfeiture" means the denial of compensation that results when a party loses their right to the agreed exchange after they have relied substantially, as by preparation or performance on the expectation of that exchange.
- Forfeiture may occur where a party expends substantial funds in preparation for contract performance and such expenditures are essentially worthless as a result of the non-performance of the other party.
- To determine whether a forfeiture is disproportionate, a court must weigh:
- The extent of the forfeiture by one party against
- The importance to the other party of the risk from which they sought to be protected
- The degree to which that protection will be lost if the non-occurrence of the condition is excused to the extent required to prevent forfeiture.
- The extent of the forfeiture by one party against
- Factors to consider are:
- The reason party A did not satisfy the condition
- Whether party A attempted, in good faith, to satisfy the condition
- What would party A lose if party B does not perform
- How much time and money had party A already put into the contract
- It is not enough to simply say the condition should be excused because party A would lose out on party B's performance because that would happen in every case where a condition was not satisfied or excused.
- There must be something, outside of the performance from the other party, that party A would lose.
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