Brief Fact Summary. Walker & Co. (Plaintiff) leased a sign to Herbert Harrison (Defendant) under a written contract, with payment to be made monthly. Plaintiff did not maintain the sign to Defendant’s satisfaction, and Defendant ceased payments on the lease. The trial court awarded Plaintiff the value of the entire lease, and the Supreme Court of Michigan affirmed.
Synopsis of Rule of Law. A party who wrongfully repudiates an agreement will be found to be in material breach of the contract.
Other considerations include the extent to which the injured party may be adequately compensated for damages for lack of complete performance, the extent to which the breaching party has partly performed, the comparative hardship on the breaching party in terminating the contract, the wilfulness of the breaching party's conduct, and the greater or lesser uncertainty that the party failing to perform will perform the remainder of the contract.View Full Point of Law
Issue. Whether a party may repudiate an agreement for any breach of that agreement by the other party?
Held. No. A party may only repudiate an agreement when there has been a material breach of the contract by the other party.
In general, an injured party is entitled to repudiate an agreement if there has been a material breach of the contract by the other party. Whether there has been a material breach that justifies repudiation is a determination for the courts.
In the event that the breach is not material, the party who repudiated the agreement will be found to have materially breached the agreement, and will be required to pay damages for that breach.
Discussion. A party who believes that his contract has been breached by the other party sufficient to justify repudiation of the agreement must proceed with caution, as courts are reluctant to find a material breach sufficient to warrant repudiation. Compare with the different approach in the Uniform Commercial Code, which provides for cure, suspension of performance, and damages for partial breach.