Law School Case Brief
Penthouse Int'l, Ltd. v. Dominion Fed. Sav. & Loan Asso - 855 F.2d 963 (2d Cir. 1988)
An anticipatory breach is a definite and unconditional declaration by a party to an executory contract, through word or conduct, that he will not or cannot render the agreed upon performance. Likewise, if one party to a contract, either willfully or by mistake, demands of the other a performance to which he has no right under the contract and states definitely that, unless his demand is complied with, he will not render his promised performance, an anticipatory breach has been committed.
Plaintiff Penthouse International, Ltd., a developer, brought suit against defendant Virginia bank, Dominion Federal Savings & Loan Assoc., for anticipatory breach of contract. anPlaintiff had arranged for an Ohio bank to finance a casino project with defendant Dominion as a participating lender. As the deadline to service the loan approached, defendant Dominion and its counsel insisted that its participation was contingent to the fulfillment of numerous conditions. The trial court ruled against the defendant Dominion on the ground that the Ohio bank had already waived the unmet conditions. Defendant Dominion appealed.
Did Dominion commit an anticipatory breach of contract when it refused to finance a project as participating lender based on the failure of the other party to meet certain conditions?
The appellate court reversed, holding that the Ohio bank had no authority to waive the conditions, so defendant Dominion had the right to insist upon their fulfillment. Any alleged new conditions did not constitute an unequivocal declaration that Dominion would not perform its obligations. Further, even if Dominion had breached the contract, plaintiff developer was unable to perform all of its obligations under the agreement, and so was not entitled to damages.
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