Electrodata Mfg. Corp. v. Domed Stadium Hotel, Inc. - 362 So. 2d 1122 (La. Ct. App. 1978)

Rule:

Ordinarily, when a suspensive condition of an obligation is an event to be accomplished by the obligee, delay in fulfilling the condition does not entitle the obligor to damages (or to rescission) unless the obligee has first been put in default with respect to the fulfillment of the condition. The putting in default may be accomplished by any of the means specified in La. Civ. Code Ann. art. 1911. Putting in default is not necessary when the act to be done is of such a nature that it could only be given or done within a certain time, which has elapsed, or under certain circumstances, which no longer exist. Putting in default may occur by the mere failure to perform, but only where the contract terms so provide; otherwise (with specific exceptions by law) the party must demand performance by suit, written demand, notarial protest, or oral demand in the presence of two witnesses. Moreover, the obligee's delay in fulfilling the condition will excuse the obligor's delay in performing the obligation, and it may justify the obligor's refusal to perform when unreasonable time has increased costs or otherwise occasioned a change in the obligor's position. But it does not discharge the obligation as if it were the equivalent of performance; i.e., it does not both excuse ultimate performance and oblige the obligee to pay for a performance he will not get.

Facts:

Plaintiff contractor and defendant hotel entered into an agreement whereby the plaintiff contracted to manufacture and install the hotel room’s status system. The parties agreed that the system would be installed once defendants had the building ready for delivery and installation. When defendants did not have the building ready by a reasonable time, the plaintiff filed suit for payment of the custom-made hotel room status system. Alternatively, the plaintiff sought relief under the theory of quantum meruit. Nine months after the suit was filed, the plaintiff sold the system as "junk" for a nominal price to another party and refused to deliver to defendants except on payment. The district court ruled in favor of the plaintiff, entering judgment for the bulk of the price of the system. Defendants appealed.

Issue:

Under the circumstances, was the plaintiff entitled to recover its charges for manufacturing the hotel room’s status system?

Answer:

No.

Conclusion:

On appeal, the court concluded that the plaintiff was not automatically entitled to its charge because of defendants' failure to have the building ready for installation. The court reasoned that the plaintiff was first obliged to put defendants in default in respect to readying the building. The court held that the plaintiff was not entitled to recover its charges for manufacturing the system or any other measure of damages.