6.7 Responses to Breach

• Library: Contract Law in Virginia (Virginia CLE) (2019 Ed.)

6.7 RESPONSES TO BREACH

6.701 Overview. Unless otherwise agreed in the contract, in the event of any breach of contract, the injured party may (i) accept the situation and terminate the relationship; (ii) sue for the breach; (iii) negotiate other terms for performance of the contract duties; or (iv) suspend performance until the breaching party cures the defect. The permissible responses depend on what the contract says and when the breach occurs.

6.702 Permissible Actions.

A. Pre-Performance Breach. Anticipatory breach is one in which, before the time for performance, a party indicates through words or actions that it will not perform. For total or partial failure of performance to excuse the injured party from performance, the act not performed must go to the root of the contract. ⁹⁹

If a party anticipatorily breaches a contract, unless the contract provides otherwise, the other party may (i) renounce the contract and sue for damages; ¹⁰⁰ (ii) treat the contract as still binding, wait until performance

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does not occur, and then sue for damages; or (iii) rescind the contract and then sue for quantum meruit. ¹⁰¹ Rescission is usually only granted if the parties can be returned to status quo before the breach. ¹⁰²

B. Breach During Performance. Unless the contract provides otherwise, a party confronted by another party's breach has a number of options depending upon whether the breach is material. If the breach is material, the aggrieved party may (i) cancel the contract or (ii) sue for total breach if the aggrieved party can show that it would have been ready, willing, and able to perform but for the breach. If the breach is immaterial, the aggrieved party may not cancel the contract but may be able to sue for a partial breach. The aggrieved party may also suspend performance until the defect is cured. ¹⁰³ These are common-law or UCC remedies that apply in the absence of contractual agreement to the contrary. The practitioner's starting point, however, must be the language of the contract itself: does the contract modify these otherwise available remedies?

6.703 Waiver. Under common law, where a party to a contract waives a default or breach by not pursuing remedies, the aggrieved party cannot again establish rights to proceed strictly under the terms of the contract without first notifying the breaching party of its intent to strictly enforce its rights. In other words, a party that sits on enforceable rights runs the risk of a waiver of...