A material breach entitles the non-breaching party to suspend performance under the contract.
A manufacturer entered into a contract with a coating contractor to provide steel bridge components for protective coatings. The buyer did not approve the contractor's initial coatings and the manufacturer was required to subcontract that work. The manufacturer demanded adequate assurances from the contractor whether it intended to perform the second stage of the contract, while the contractor demanded payment for stage one less the amount paid to the subcontractor.The manufacturer hired another contractor to complete the contract and brought an action against the contractor for breach of contract. The contractor brought a counterclaim for payment. The trial court held that the manufacturer breached the contract by failing to make payment for the first stage and ruled in favor of the contractor.
Did a manufacturer breach its contract with a contractor after it concluded that the contractor had not made adequate preparations for a later stage of production?
The court reversed the order of the trial court and remanded the case with instructions to enter judgment in favor of the manufacturer because the manufacturer had a right to demand adequate assurances from the coating contractor, and when these were not provided, to hire a second contractor to finish the contract. Additional sums paid to the second contractor were the manufacturer's measure of damages for the anticipatory breach.