Contracts

Contracts Essay Three

Homer sues Bilda for breach of contract. What issues are raised by this suit? Discuss. [1]

If the court determines that Bilda breached the Homer/Bilda contract, will Bilda be entitled to any recovery? Discuss.

I. Applicable Law. The contract is for the building of a cabin, not a sale of goods, and is therefore covered by common law rather than the UCC. [2]

[3]

II. Breach. A breach of contract occurs when a party’s duty to perform under a contract is absolute, and that party fails to perform. The duty can be absolute because it was not conditional in the first place; any conditions were either excused or fulfilled; or the duty was not discharged.

Here, according to the facts Bilda had an absolute duty to finish building the cabin by December 1, the agreed upon completion date. This would raise the question whether this was a minor or material breach on Bilda’s part. Because Bilda committed the breach willfully, the court may tend to side with Homer and find that Bilda willfully and materially breached the contract.

Nevertheless, since Bilda did complete half of the construction, he will probably be entitled to damages amounting to the value of his work. [4]

III. Anticipatory repudiation. Anticipatory repudiation occurs when a party unequivocally repudiates his duty to perform, before the performance is due.

Here, performance was due by December 1, and Bilda walked off the job on November 1, telling Homer “the job is not going to be profitable” and “besides the trout are biting at Clear Lake.” The facts show that Bilda has repudiated by walking off the job.

While Bilda has effectively breached his contract, he has partially performed as well. At this point, Homer can sue for breach immediately, without having to wait for the time the performance is due (December 1). However, if Homer does not sue immediately, he must try to mitigate his damages.

The only exception to this would be where one of the...