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Breach of contract leads to remedies to fit the circumstances

| Apr 11, 2014 | Business Contracts & Disputes |

When one party to a contract decides to pull out and stop performing its promises this usually constitutes what is called an anticipatory breach. This is also called a repudiation of the contract. North Carolina recognizes the general rule that once one party to a contract indicates that it will not perform any further on the agreement, the other party can immediately claim a breach of contract and seek remedies such as payment.

A business dispute, possibly representing an anticipatory breach of contract, has been recently reported in a northeastern state. A town board has decided to unilaterally end a lease and concessionaire agreement with a restaurateur for running a restaurant and two bars in a state beach-side park. The concessionaire has filed an action in state court asking for an injunction to bar the town from contracting with any other entities while the case is litigated.

He also claims that the town of Hamburg, New York is preventing him from having access to more than $100,000 in equipment that he left behind. He claims that he has options to renew the contract for up to 12 years, unless he commits a material breach, which he has not done. Apparently the town board voted just recently to terminate the contract and seek other bidders. Under the current arrangement they were getting $4,000 per month plus two percent of sales.

A lawsuit asking for a court to compel one party to perform is generally called an action for specific performance. One party to an agreement asks the court to order the other party to “specifically perform” its obligations. This case appears to be a novel application of specific performance because it’s generally a remedy available only when monetary damages will not suffice.

In the above case, however, it appears that monetary damages can be calculated, and that the concessionaire’s claim may be on shaky legal grounds. On the other hand, by having the parties brought together in the litigation context, it may present an environment that’s conducive to negotiations and a settlement. The laws regarding breach of contract discussed above would generally also apply here in North Carolina.

Source: The Buffalo News, “Hamburg sued over beach restaurant contract“, Stephen T. Watson, April 6, 2014

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