Breach

MBEMax wiki article — paired with the Contracts question set on mbemax.com.

One-line summary

A breach is the failure, without legal excuse, to perform a contractual duty; breaches are material or minor (common law) or governed by the perfect-tender rule (UCC), with corresponding remedies and the non-breaching party's ability to suspend, terminate, or sue.

Mnemonic

M-M-P-A — Material vs. Minor, Perfect tender (UCC), Anticipatory repudiation.

And remedies: E-R-S-I — Expectation, Reliance, Specific performance, Injunction / restitution.

Common-law breach — material vs. minor

Material breach — substantial failure of performance; permits the non-breaching party to suspend performance, terminate the contract, and sue for damages.

Restatement § 241 factors (material breach):

1. Extent to which non-breaching party is deprived of expected benefit.
2. Extent to which non-breaching party can be compensated in damages.
3. Extent to which breaching party will suffer forfeiture.
4. Likelihood of cure.
5. Good faith / fair dealing of breaching party.

Minor breach — substantial performance rendered; non-breaching party must continue to perform and may sue for damages.

UCC — perfect tender

§ 2-601 — buyer may reject if goods "fail in any respect to conform to the contract." Narrowed by:

• Cure (§ 2-508).
• Installment contracts (§ 2-612).
• Acceptance and revocation (§§ 2-607, 2-608).

Anticipatory repudiation

A party's unequivocal statement or voluntary act indicating she will not or cannot perform, before performance is due.

• Common law (Hochster v. De La Tour) — non-breaching party may:
  • Sue immediately for breach,
  • Suspend own performance and await performance date,
  • Urge retraction.
• Retraction — repudiating party may retract before non-breaching party materially changes position or indicates treating contract as ended.
• UCC § 2-610 — comparable options; repudiation must be substantial impairment.
• Demand for assurances (§ 2-609 / Restatement § 251) — party with reasonable grounds for insecurity may demand in writing adequate assurance; failure to provide within reasonable time (max 30 days under UCC) = repudiation.

Excuses for non-performance

• Impossibility — objectively impossible (destruction of subject matter, death of essential party, supervening illegality).
• Impracticability — performance made impracticable without fault by unanticipated event; basic assumption of contract was that event wouldn't occur.
• Frustration of purpose — principal purpose of contract frustrated by supervening event; both parties knew of purpose.
• Failure of condition precedent.
• Discharge by agreement (rescission, novation, accord and satisfaction).
• Statute of limitations.
• Bankruptcy.

Remedies

Expectation damages

Put non-breaching party in position as if contract performed. Measure:

• Loss in value + other losses − costs avoided − loss avoided.
• Mitigation required — damages reduced by what non-breaching party should have avoided.
• Consequential damages — foreseeable at contract formation (Hadley v. Baxendale).
• Incidental damages — reasonable costs of dealing with breach.
• Certainty — damages must be proved with reasonable certainty.

Reliance damages

Used when expectation damages speculative. Put plaintiff in position before contract.

Restitution

Disgorge benefit conferred on breaching party.

Specific performance

• Real estate — presumptively available (land is unique).
• Personal service contracts — specific performance NOT available (13th Amendment + supervision problem). Negative injunctions may be (Lumley v. Wagner).
• Goods — available if unique or other proper circumstances (UCC § 2-716).

Liquidated damages

Enforceable if (1) reasonable in light of anticipated/actual harm and (2) harm difficult to estimate at contract formation. Unreasonable amounts are unenforceable penalties.

NCBE loves to test

• Material vs. minor. Substantial performance rendered = minor breach; non-breaching party must complete and sue for damages.
• Perfect-tender nuances. UCC narrowed by cure + installment rules.
• Anticipatory repudiation options. Sue now, wait, urge retraction, demand assurances.
• Impossibility vs. impracticability. Objective impossibility (death) vs. extreme difficulty.
• Frustration of purpose. Performance possible but purpose gone (e.g., coronation cases).
• Hadley v. Baxendale. Foreseeability limits consequential damages.
• Mitigation. Plaintiff must take reasonable steps; damages reduced by avoidable losses.
• Liquidated damages vs. penalties. Reasonable at formation; genuine pre-estimate of damages.
• Specific performance. Land yes; personal services no; goods if unique.

Fast hypos

Hypo 1. Construction contract requires Reading Brand pipe. Contractor uses identical Cohoes Brand. Owner withholds payment. Substantial performance (Jacob & Youngs v. Kent); minor breach; damages = diminution in value (likely zero).

Hypo 2. Seller emails buyer: "I won't deliver next week." Buyer had planned to pay $100; market now $120. Anticipatory repudiation — buyer may sue now, wait, or urge retraction. Market-based damages.

Hypo 3. Contract to perform concert. Concert hall burns down. Impossibility — both parties discharged.

Hypo 4. Party rented balcony to watch royal parade. Parade cancelled. Frustration of purpose — obligation discharged (Krell v. Henry).

Hypo 5. Contract to sell Picasso. Seller breaches. Specific performance available — unique goods.

Case anchors

• Hadley v. Baxendale, 9 Exch. 341 (1854) — foreseeability of consequential damages.
• Hochster v. De La Tour, 118 Eng. Rep. 922 (1853) — anticipatory repudiation.
• Jacob & Youngs v. Kent, 230 N.Y. 239 (1921) — substantial performance; Cardozo.
• Krell v. Henry, [1903] 2 K.B. 740 — frustration of purpose.
• Taylor v. Caldwell, 3 B. & S. 826 (1863) — impossibility.
• Lumley v. Wagner, 64 Eng. Rep. 1209 (Ch. 1852) — negative injunctions in lieu of specific performance.
• Lake River Corp. v. Carborundum Co., 769 F.2d 1284 (7th Cir. 1985) — liquidated-damages Posner analysis.
• Transatlantic Financing Corp. v. United States, 363 F.2d 312 (D.C. Cir. 1966) — impracticability under modern view.

See also

• Offer and Acceptance
• Consideration
• Modification
• UCC — Sales
• Statute of Frauds

Sources

Restatement (Second) of Contracts §§ 235, 237, 241, 243, 250, 251, 253, 261, 265, 347, 349, 351, 352, 356, 359; UCC §§ 2-508, 2-601, 2-607, 2-608, 2-609, 2-610, 2-612, 2-615, 2-703, 2-706, 2-708, 2-712, 2-713, 2-714, 2-715, 2-716; Hadley v. Baxendale, 9 Exch. 341 (1854); Hochster v. De La Tour, 118 Eng. Rep. 922 (1853); Jacob & Youngs v. Kent, 230 N.Y. 239 (1921); Krell v. Henry, [1903] 2 K.B. 740; Taylor v. Caldwell, 3 B. & S. 826 (1863).