Civil Model Jury Charge
One of the
elements that the plaintiff must prove is defendant’s breach of contract. Failure to perform a contract in accordance
with its terms constitutes a breach of contract. It does not matter if the failure was
purposeful or inadvertent.
The plaintiff
claims the defendant breached the contract in the following manner:
[State the facts claimed
to constitute the breach]
The defendant
denies this. The defendant contends [state contention].
A breach may be
material or minor.[1] Plaintiff can sue for any breach, even if
minor providing the breach causes the plaintiff measurable injury or
damage. When there has been a minor
breach that may have caused the plaintiff injury or damage, it is possible for
you to conclude that the defendant has nevertheless substantially performed the
contract.
To find that
the defendant substantially performed the contract, you would have to conclude
from the evidence that the defendant made a good faith effort that actually
achieved the essential purpose of the contract and provide the plaintiff with
the fundamental benefits that plaintiff was supposed to receive from the
contract.[2]
Now, let me
explain what happens if you conclude the breach was not minor but was
material. A breach is material if it
affects the purpose of the contract in an important or vital way.[3]
A material breach defeats the purpose of the contract and is inconsistent with
the intention of the parties to be bound by the contract terms. When a defendant materially breaches a
contract, the plaintiff has a right to terminate the contract and may be
excused from further performance of plaintiff’s remaining obligations under the
contract.[4] When the plaintiff’s promise under the
contract was dependent upon the defendant’s performance and the defendant fails
to perform, then the plaintiff is excused from his/her further performance of
his/her promise.[5]
When a party
materially breaches the contract but does not indicate any intention to renounce
or repudiate the remainder of the contract, the plaintiff can elect to either
continue to perform or cease to perform.
If the plaintiff elects to perform, plaintiff is deprived of an excuse
for ceasing performance. But even if the
plaintiff elects to perform, plaintiff can still sue for any injury or damages
suffered because of the material breach.[6]
[1]The
generally accepted rule is that “[W]hether a breach is material is a question
of fact.” Farnsworth on Contracts, Sec. 8.16 (1990). However, New Jersey courts will enforce a
contractual provision establishing that a particular breach is grounds for
termination of the contract. See Dunkin’ Donuts of Am., Inc. v.
Middletown Donut Corp., 100 N.J.
166 (1985) (upholding termination of franchise on basis of contractual
provision that made it clear that franchisee’s breach was grounds for
termination); Gorrie v. Winters, 214 N.J. Super. 103 (App. Div. 1986) (courts
shall enforce mutually agreed and expressly stated time of the essence clause),
certif. denied, 107 N.J. 114 (1987).
Dunkin’
Donuts involved the termination of a doughnut franchise because the
franchisee under reported gross sales.
Although the Court does not quote the provision of the franchise
agreement, it states “the contract quite simply provided that a breach
Smothergill (the franchisee) was to be ousted from the stores and lose his
right to transfer them for value.” Id. at 175. Although the trial court upheld the
franchisor’s termination of the franchise, it required the franchisor to
compensate the franchisee for the value of the terminated franchise. The Supreme Court reversed on the grounds
that the breaching party had no right to compensation. The Court explained that although equity
abhors a forfeiture, it was not free to change or abrogate the terms of the
contract.
The foregoing suggests that because the
franchise contracts are clear in making the under reporting of sales a material
breach of contract, thereby entitling Dunkin’ Donuts to terminate the franchise
and receive damages due, equity should and must respect these contractual
provisions. (Id. at 184).
It is not clear whether the franchise
agreement actually described under reporting of income as a “material breach”
or whether it simply stated that under reporting was a breach, and any breach
was a ground for termination. However, Dunkin’ Donuts does seem to indicate
that the court, not the jury, shall interpret the contract in the first
instance, and, if the contract makes clear that certain behavior shall be deemed
a material breach (that is, a breach warranting cancellation of the contract),
then the matter is an issue of law for the court. In this case, the jury would decide only any
factual issues relating to whether the material breach occurred.
[3]The
Restatement of Contracts sets forth the following criteria for determining
whether a breach is material:
a. the
extent to which the injured party will be deprived of the benefit which he/she
reasonably expected;
b. the extent to which the injured party
can be adequately compensated for the part of that benefit of which he will be
deprived;
c. the extent to which the party failing
to perform or to offer to perform will suffer forfeiture;
d. the likelihood that the party failing
to perform or to offer to perform will cure his failure, taking account of all
the circumstances including any reasonable assurances;
e. the
extent to which the behavior of the party failing to perform or to offer to
perform comports with standards of good faith and fair dealing. [2 Restatement,
Contracts 2d. § 241 at 237 (1981)].
