Breach of Contract

Breach By Non-Performance

")- A breach of contract may arise where the breaching party does absolutely nothing in performance of the contract.

General Rule (Breach of Contract)

A breach is a party's unjustified failure to preform all or any part of a contract. At common law, every breach of contract gives rise to a claim for damages. However, if the breach is not material, then only a claim for damages lie. In the event of a non-material breach, a party may not suspend it's performance of the contract. A breach can occur in one of three ways: 1.) by anticipatory repudiation by non-performance (by doing nothing), 2.) or 3.). by defective performance (acting but not in accordance with the contract terms)

Material Breach

A material breach is a serious breach that permits the non-breaching party to suspend performance and sue for breach of contract. If the breach is material, then no performance required.

Non-Material Breach

A non-material breach is a minor breach of contract that does not permit suspension of performance but only a suit for damages. If non-material, then performance is required.

Retraction (AR)

A party may retract before the other party has brought suit and is done in a timely manner before the other party has materially changed their position. A party that retracts must notify (through express or indirect notification) to the other party that the contract has been retracted.

Anticipatory Repudiation (AR)

An absolute, unequivocal statement or conduct that a party will not perform the terms of the contract before the day of performance is due. Notification can be in the form of conduct (implied repudiation), oral or written notice. Generally, the non-breaching party can seek remedy's by either 1.) Immediately suing for breach of contract, 2.) walking away from performance of the contract (rescission of the contract), 3.) waiting it out to see if the breaching party will perform or 4.) under the UCC (2-609) or Modern law, demand assurances that the contract will be performed.

Modifications & AR

Attempting to modify the terms of the contract will not satisfy the requirements for Anticipatory Repudiation because the modifying party does not clearly & unequivocally state that they will not perform the terms of the contract.

Substantial Performance Doctrine

If the substantial purpose of the contract is performed but results in a minor breach, then the non-breaching party cannot suspended their performance. In other words, if substantial purpose of the contract is performed but results in a non-material breach, then performance is required.

Breach By Defective Performance

The defendant acted however performance was done in an incomplete manner. Whether the non-breaching party can suspend there performance depends on whether the substantial purpose of the contract is performed.

Demanding Assurances (UCC 2-609)

To demand assurance of performance, there must be 1.) A reasonable grounds for insecurity, 2.) The demand should be made in writing (Some courts require the demand be made in writing. Other courts do not require the demand be made in writing), 3.) If not responded to in 30 days then this contract is repudiated.

TIme Is Of The Essence

Where there is a "time is of the essence clause," this evidences that a party's breach was material if the terms of the contract were not performed in time.

Factors Considered To Determine Material Breach

a.) the extent to which the injured party will be deprived of the benefit expected b.) If the non-breaching party be adequately compensated for his deprivation c.) If the breaching party will suffer a forfeiture, d.) if the breaching party will eventually perform (if so, then breach is non-material) e.) if the breaching party performed in bad faith.