Whether a breach of contract is total or partial depends upon its materiality. In determining the materiality of a failure to fully perform a promise the following factors are to be considered: (1) The extent to which the injured party will obtain the substantial benefit which he could have reasonably anticipated; (2) the extent to which the injured party may be adequately compensated in damages for lack of complete performance; (3) the extent to which the party failing to perform has already partly performed or made preparations for performance; (4) the greater or less hardship on the party failing to perform in terminating the contract; (5) the wilful, negligent, or innocent behavior of the party failing to perform; and (6) the greater or less uncertainty that the party failing to perform will perform the remainder of the contract.
A buyer entered into a written agreement with a seller to purchase shares of stock. An initial installment was paid on time and the buy made an additional payment for the remaining balance, but the check remitted for the balance due never cleared. The seller reclaimed the stock certificates held by the buyer’s attorney. Buyer filed for damages against the seller for breach of contract. The trial court dismissed the case. The case was appealed to the Court of Appeal of California.
Did a breach of contract take place?
The Court affirmed the trial court as to liability and concluded that the letter which seller’s attorney wrote to the buyer's attorney, which stated that there would be no sale as a result of plaintiff's delay in performing the contract did not constitute an unlawful repudiation of the contract and was not a breach of the contract by the seller. Thus, it did not discharge buyer's duty to perform the contract or, alternatively, to respond to seller in damages. As to damages, the court found that the trial court applied the appropriate measure of damages for breach of a contract to accept and pay for the stock: the difference between the contract price and the market price at the time and place of delivery. The court modified the damages award by deleting the award of interest.