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Author Topic: Material breach, total breach, and discharge of duties  (Read 5052 times)

Jumboshrimps

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Material breach, total breach, and discharge of duties
« on: April 23, 2006, 04:22:19 PM »
These three factors in analyzing the effects of a breach are making my head spin. Here's what I've got:

A material breach suspends a the nonbreaching party's duties of performance (Restatement 241). The time after which the breach leads to a discharge of the nonbreaching party's duties depends on all those factors which define a breach, plus the extent to which the delay will prevent the nonbreaching party from getting replacement performance, and any applicable time provisions in the agreement. (Rest. 242).

Now, if all of the party's duties are discharged by the breach, then the breach is total, and the nonbreaching party can sue on the entire contract. But if only part of the party's duties are discharge, the breach is partial, and the nonbreaching party still owes performance.

I'm having trouble seeing why the total/ partial breach distinction has any relevance. If a party has materially breached the contract, and time is important enough to discharge all his duties, then he can sue for breach.
If, on the other hand, the breach is immaterial, or time is of little importance, the nonbreaching party still has to perform.

So, my beef boils down to answering these questions:

1) What is the difference between an immaterial breach and a material partial breach?

and

2)What is the difference between a material breach which has not been cured sufficiently quickly, and a total breach?

Jumboshrimps

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Re: Material breach, total breach, and discharge of duties
« Reply #1 on: April 24, 2006, 11:15:32 AM »
Don't make me find a live person to answer this question...

It's still vexing me. If we say a breach is material, then why do we care whether it's total?

ucsblaw8

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Re: Material breach, total breach, and discharge of duties
« Reply #2 on: April 24, 2006, 02:54:19 PM »
Here is my understanding...

In the Restatement, a Total breach presupposes a Material breach but not vice versa. If you have a material breach then you can suspend your performance until the breaching party performs its obligations. But, if the breaching party never performs, then you have a Total breach which completely discharges your (the non-breaching party's) performance obligations and you can now sue for both actual and future damages.

A total breach is a material breach that has not been cured within a reasonable time (to a maximum of 30 days)

A partial breach is a little different...if the breaching party has substanitally performed but not fully it constitutes a partial breach. Think of it this way...if you have a breach and it is not Material then it is Partial. A partial breach does not discharge your (the non-breaching party's) performance obligations which means that you must still perform (or else you will be in breach yourself) but you may sue for actual damages (but unlike total breach you cannot sue for future damages).

Another thing to keep in mind is what jurisdiction you fall under. The above explanation is for the restatement. If you are in a jurisdiction that follows the case law from Sackett v. Spindler there is a slight distinction to the above analysis. In a Sackett jurisdiction, a material breach is automatically a total breach, hence, there is no reasonable time to cure by the breaching party. So, once you identify a material breach in a Sackett jurisdiction you automatically discharge your performance obligations and can sue for actual and future damages. You do not need to "suspend" performance and give the breaching party reasonable time to cure.

Note: Partial breach works the same way in the Restatement as it does in Sackett

I hope this helps
shine on

Jumboshrimps

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Re: Material breach, total breach, and discharge of duties
« Reply #3 on: April 24, 2006, 04:51:42 PM »
I appreciate the response.

I suspect my confusion can be cleared up with the following sentence: A material breach that remains uncured BECOMES a total breach.

The Restatement confuses matters because the term "total breach" only appears in a different section (236) concerning damages. In effect, the only importance of whether or not a breach is total is whether you're suing for all of the breacher's performance or just part of it. Whereas a breach's materiality determines not the extent of damages, but rather the extent to which the duty to perform remains.

Am I barking up the right tree?

dft

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Re: Material breach, total breach, and discharge of duties
« Reply #4 on: April 30, 2006, 02:14:06 PM »
This is what the E&E says:

If the breach is total and material, the non-breaching party may:
(1)   withhold performance;
(2)   terminate; and
(3)   claim full damages for breach.

However, if the breach is material but not total, the non-breaching party may:
(1)   suspend performance;
(2)   await cure; and
(3)   claim compensation for any loss suffered.

Because most promise exchanged in a contract are dependent, each party’s performance is an express, implied, or constructive condition of the other party’s duty to perform.

Therefore, if one party materially breaches his performance obligation, this is not only a breach of the promise, but also the non-fulfillment of the condition to any performance may not yet have been rendered by the other party.

This is why a total and material breach permits the victim to withhold any performance that he has not rendered.

If the breach is not material (i.e. there is substantial performance), the nonbreaching party may only claim compensation for any loss suffered.