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Bomberger v. McKelvey - 35 Cal. 2d 607, 220 P.2d 729 (1950)

Rule:

Either party to an executory contract has the power to stop performance of the contract by giving notice or direction to that effect, subjecting himself to liability for damages, and upon receipt of such notice the other party cannot continue to perform and recover damages based on full performance. This is an application of the principle that a plaintiff must mitigate damages so far as he can without loss to himself.

Facts:

Plaintiffs brought an action against Defendant McKelvey to recover a sum of money promised for the demolition and removal of a building, which stood on real property purchased by McKelvey from plaintiffs.  A commercial building that was leased to the lessees was located on two of the plaintiffs' lots; defendant did not want the building and agreed to pay the plaintiff for the cost of demolition and removal, and to pay the lessees a lease surrender fee. Defendant was unable to complete the building and told the plaintiff that they were not to proceed with the demolition. The court awarded damages in favor of the plaintiff, and defendant appealed.

Issue:

Does the failure of the defendant to complete the building entitle the plaintiff seller to specific performance?

Answer:

Yes.

Conclusion:

The court found that the sellers were entitled to specific performance because damages were inadequate. They needed the salvage materials to complete their building and  defendant was obligated to pay for the demolition and removal of the building.

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