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Question 1

What is prospective inability?

Answer 1

Death or illness of someone whose performance is necessary. The aggrieved party can change position and his obligations are discharged, but the other party is not guilty of breach (unless the inability is the party’s own fault, then that is an anticipatory breach).

Question 2

If a seller of real property doesn’t have title when the contract is made, what happens?

Answer 2

It can cause prospective inability to perform, unless:

• he has the right to get title
• a justified expectation of becoming the owner by the time of performance, or
• the other party knew about the lack of title when the contract was signed

Question 3

If one party discovers that the other party is insolvent, what can he do?

Answer 3

Refuse delivery unless cash is paid upfront

Question 4

What is prospective unwillingness?

Answer 4

When someone chooses not to fulfill their obligation which is a failure of the condition and repudiation. Ie: actress contracted to be in a play, but got a part in a movie, so she chooses not to do the play

Question 5

What is a retraction?

Answer 5

When repudiating party retracts the repudiation before the date set for performance if there hasn’t been any detrimental reliance. It reinstates the repudiating party’s rights and allows for resulting delays. Can be written, oral, or by an act, but it must come to the attention of the other party.

Question 6

What are the three possible responses to an anticipatory repudiation?

Answer 6

• BREACH: bring an action for total breach if the other party was ready, willing, and able to perform.
• INSIST: on the other party’s performance
• IGNORE: the repudiation and proceed with performance
• modernly: duty to mitigate damages so can’t continue to perform if it would enhance damages
• UCC: can wait for performance for a commercially reasonable time, but not beyond that because of duty to mitigate

Question 7

What are damages for anticipatory breach?

Answer 7

UCC:

• repudiation by BUYER: difference between contract price and market price at time of tender
• breach by SELLER: buyer can cover or get damages for the difference between market price at time buyer learned of the breach and the contract price.

Common Law: duty to mitigate damages

Question 8

What does cover mean?

Answer 8

Make a good-faith purchase of the replacement of goods within a reasonable time

Question 9

What is a reasonable time when it comes to cover?

Answer 9

Time necessary for buyer to find alternative source of supply in the market

Question 10

If an innocent party is in the middle of giving performance when a repudiation happens, what must he do?

Answer 10

Stop unless it would cause greater damages