Contracts: Breach of Contract

Harrell v. Seal Colony, Inc.:

Court of Special Appeals of Maryland

35 Md. App. 300 (1977)

Issue: Did the plaintiff breach the contract?

Rule: Anticipatory Breach

Application: No evidence that Defendant ever gave notice, written or otherwise, to plaintiff of "substantial completion" of the condominium unit he had agreed to purchase.

-Defendant unilaterally attempted to convert plaintiffs request for a mutual recession of the contract to an anticipatory breach or repudiation on his part.

-The evidence does not support the conclusion that the plaintiff breached his contract.

-Defendant argues that plaintiffs statements on May 28th, that he "wanted to cancel the contract" and "did not want to proceed with the settlement" because his "personal financial situation… was such that he felt he could not proceed with the purchase of this unit" amounted to an impermissible unilateral cancellation of the contract, and therefore, defendant was justified withholding the deposit.

-Defendant concedes that the July request to cancel was not a breach, but argued that the contract had already been breached.

-Defendant points to the fact that plaintiff failed to answer defendants requests to chose which of two attorney's offices he preferred as the location for settlement

-It was the defendants obligation to chose the location for settlement. Plaintiffs failure to reply cannot be considered a breach.

-The evidence, as a whole, is legally insufficient to permit a finding that there was "a definite and unequivocal manifestation of intention" of the plaintiffs part that "he would not render the promised performance when the time fixed for it arrived"

-Trial court never reached the issue of whether or not defendant was guilty of an anticipatory breach as alleged by plaintiff when it resold the property to a third party.

-It is a permissible finding, for the trial court to find, that there was a mutual recession of the contract effected by the words and conduct of the parties.

Conclusion: No, at least not unilaterally

History:

-Nov 14, 1972: Plaintiff agreed to buy, and defendant agreed o sell (for $74,900) a condominium unit to be constructed by defendant.

-Called for a deposit of $11,235 and the balance of the purchase price to be paid "at settlement." Deposit consisted of $5,000 cash paid by plaintiff, and a promissory note for the remaining $6,235, payable "at settlement."

-Jan 12, 1974: Parties agreed, in writing, to extend the limiting date for delivery to Dec 31, 1974.

-Nov 12, 1974: Plaintiff filed a declaration in the Circuit Court for Montgomery County against defendant, and its agent (Freeman), seeking damages for an alleged anticipatory breach of contract

-Plaintiff claimed that defendants had "repudiated" the contract and sold the condominium unit to another buyer for more than the contract price

-Plaintiff presented various documentary exhibits, his own testimony, and testimony of an employee of the defendants agent.

-Judge concluded that the plaintiff was without justification to unilaterally cancel the contract, and judgment was entered for the defendant

-After the contract was formed, defendant Freeman was only an agent and thus will not be liable

-May 28, 1974: Plaintiff asked if he could assign the contract, and was told he couldn't.

-Told defendant that he would be interested in getting out of the contract.

-Was sent a letter, enclosing a "cancellation request, which must be signed in order to process the release"

-Plaintiff responded with a letter, stating that his cancellation was predicated on the return of his deposit. Also included the cancellation request

-Aug 18, 1974: Defendant entered into a contract to sell the condo for $82,000 to a 3rd party

-Aug 23, 1974: Defendant sent plaintiff letter, stating that his request to cancel the contract was accepted, and that his deposit would be kept as liquidated damages

-Aug 28, 1974: Letter returning the promissory note, also contained the cancellation request, with the plaintiffs condition of returning the deposit crossed out.

Procedural History:

-Trial Court: Found that plaintiff breached the contract