Material breach, partial breach, and substantial performance - Next Generation Bar Exam
- What may a party do when the other party commits a material breach?
- Suspend its own performance and, if the breach is not cured, terminate and sue for total breach. A material breach also gives an immediate claim for damages.
- A painter finishes a house but leaves one window frame unpainted, and the owner refuses to pay anything. What may the painter recover?
- The contract price, minus the cost of painting the window frame. The omission is minor, so the painter substantially performed and the owner's remedy is a deduction.
- What may a party recover under a divisible contract after breaching a later installment?
- The agreed price for each part it fully performed. Divisibility lets each pair of part performances be treated as a separate agreed exchange.
- When does a material breach become a total breach that permits termination?
- When the time for cure has passed without cure. The injured party must allow a reasonable opportunity to cure before treating the contract as ended.
- What may a party who has substantially performed recover?
- The contract price, minus damages for the defects. Substantial performance satisfies the constructive condition, so the other party must pay, less compensation for the shortfall.
- A caterer arrives two hours late to a wedding reception, after the guests have left. What may the client do?
- Treat the breach as material, withhold payment, and recover damages. Late performance that defeats the whole purpose of the contract deprives the client of the expected benefit.
- Under the traditional view, how does willfulness affect a claim of substantial performance?
- A willful deviation may prevent the party from relying on the doctrine. Courts are reluctant to protect a party who deliberately departed from the contract.
- What is substantial performance?
- Performance that departs from the contract only in minor respects, giving the other party essentially what it bargained for. The doctrine applies to constructive conditions, not to express conditions.
- Under the Restatement (Second), what is the central factor in deciding whether a breach is material?
- The extent to which the injured party is deprived of the benefit it reasonably expected. Other factors include adequacy of compensation, forfeiture, likelihood of cure, and good faith.
- What is the injured party's remedy for a breach that is not material?
- Damages only, while continuing its own performance. Suspending performance after a minor breach would itself be a breach.