A contract is entire, and not severable, when by its terms, nature, and purpose it contemplates and intends that each and all of its parts, material provisions and the consideration, are common each to the other and interdependent. On the other hand, a severable contract is one in its nature and purpose susceptible of division and apportionment, having two or more parts, in respect to matters and things contemplated and embraced by it, not necessarily dependent upon each other, nor is it intended by the parties that they shall be.
The seller owned several orange groves and entered into an agreement with the buyer providing that the buyer would purchase all the oranges grown on a particular grove. After the contract was partly executed, the buyer refused to accept or pay for any more oranges, and the seller filed suit for damages for breach of contract. The buyer alleged that the contract provided for the sale of all the oranges grown on all of the groves belonging to the buyer and that the seller broke the contract by selling the fruit grown on two other groves to other parties. The trial court found in favor of the buyer and the case was appealed to the Supreme Court of California.
Was there a breach in the contract?
The court held that the refusal by the seller to fully perform his part of the contract constituted a partial failure of consideration, which gave the buyer the right to rescind under California law. The court also held that because the seller brought the action as trustee of an express trust and there was no charge of mismanagement or bad faith on his part, the costs should have been charged only against the trust property pursuant to California law.