14. Breach

Question 1

What is required for non-breaching party to sue for breach?

Answer 1

1) Breaching party had absolute duty to perform
- Not discharged

2) Breaching party made breach
3) Non-breaching party was ‘willing and able’ to perform but for breach

Question 2

What are examples of minor breach?

Answer 2

Non-breaching party obtains substantial benefit of bargain

• Insignificant delay
• Small deficiency in quality/quantity of performance

Timeliness of performance

• Breaching party performs within reasonable time
• Breaching party performs by date included in contract

Question 3

What remedies are available for minor breach?

Answer 3

Sue for damages
- Setoff

NO discharge

Question 4

What are examples of material breach?

Answer 4

(Fact question)

Non-breaching party NOT obtain substantial benefit of bargain

Factors

• Compensation adequacy
• Part performance extent
• Hardship suffered
• Negligent/Wilful behaviour
• Likelihood of remainder performance

Minor breach + anticipatory repudiation

Timeliness of performance

• Time is of essence (contract’s nature/provision) (NOT just specified date) (traditional view)
• Time is of essence (parties’ true intention/significance of specified date) (modern view)

Divisible contract

Question 5

What remedies are available for material breach?

Answer 5

Most breaches

1) Discharge duty => Treat contract as ended
2) ‘Immediately’ sue for breach (total contract damages)

Minor breach + anticipatory repudiation

1) Discharge duty => Treat contract as ended
2) Either;
- Stop manufacturing => Sell unfinished goods (some courts)
- Continue manufacturing => Sell finished goods (UCC) (avoid selling at lower value)

Divisibility contract
- Recovery limited to performed divisible portion only

Question 6

What is required for anticipatory repudation?

Answer 6

1) Bilateral contract
- Neither party yet performed
- Otherwise non-repudiating party (who performed) must wait to sue until repudiating party’s performance was originally due

2) Unequivocal statement (repudiation) before performance due
- Words/Conduct

Question 7

What remedies are available for anticipatory repudiation?

Answer 7

Treat contract as ended => ‘Immediately’ sue for breach (total contract damages)

Suspend own performance + wait until repudiating party’s performance due => Sue

Treat contract as rescinded + discharge duty

Urge repudiating party to perform

• Suspend own performance (otherwise lose damages)
• If repudiating party fails to perform => Sue for breach (no waiver of repudiation)
• UNLESS repudiation retracted

Question 8

Can a repudiating party retract his anticipatory repudiation?

Answer 8

Before performance due

UNLESS

• Non-repudiating party cancelled/naturally damaged position in reliance on repudiation
• Non-repudiating party considers repudiation final