When performance of a duty under a contract was due, any nonperformance is a breach. If a breach constitutes a material failure of performance, then the non-breaching party is discharged from all liability under the contract. In determining whether a failure of performance is material, a court considers the following factors: a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; b) the extent to which the injured party can be adequately compensated for that part of that benefit of which he will be deprived; c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; d) the likelihood that the party failing to perform or offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; and e) the extent to which the behavior of the party failing to perform or offer to perform comports with standards of good faith and fair dealing.
When appellee contractor sent appellant new homeowners a bill for excess charges for drilling a deep well in connection with the construction of a new home, appellants sent appellee a letter that questioned the charges and requested arbitration under the terms of their contract. Appellee stopped all work and brought an action alleging anticipatory breach of contract. The trial court found for appellee and awarded damages. Appellants sought review and the court reversed. The court found that appellee had breached the contract by stopping work and remanded for a determination of damages.
Did the trial court err in ruling that appellant breached its contract?
Appellant new homeowners' letter to appellee contractor regarding a dispute over certain charges for drilling a deep well was not a definite and unconditional repudiation of the contract which had amounted to a statement of intention not to perform except on conditions which go beyond the contract. Mere expression of doubt as to willingness or ability to perform is not enough to constitute a repudiation, although such an expression may have given appellee reasonable grounds to believe that the obligor will commit a serious breach and may ultimately result in a repudiation.