The INTRODUCTION:
We have set up all sorts of things that we need to do under a contract—and the way we looked at it was that the only way to satisfy a contract was the exact performance that was agreed upon. That was the primary discussion last semester. Well, now we need to trivialize this. Now we need to see what will happen when there is a breach.
The FACTS:
Dr. Diane Gibson took a job as the superintendent of the city of Cranston, RI, school district in October of 1989. The school committee (committee) was her immediate supervisor. The committee is a political entity that was locally elected so the membership shifted during her time of employment. Her employment contract was a long one, and her term of employment was about three years. She only ended up working about a year before she left under the resignation provision.
When she resigned in December of 1990, she accused her committee of violating the terms of the contract by not providing her with an employment evaluation and a statement of goals and of infringing on her authority as the superintendent. She later sued in federal court in an action for damages, essentially for the benefit of her full term of employment.
The RULE:
If you have material breach you can’t have substantial performance.
The RATIONALE:
Factors to consider when you need to judge if a breach is material or immaterial.
1-the extent to which the injured party will be deprived of the benefit, which he reasonably expected;
2-the extent to which the injured party can be adequately compensated for the part of the benefit that he will be deprived;
3-the extent to which the party failing to perform of offer to perform will suffer forfeiture;
4-the extent to which the party failing to perform or offer to perform will cure his failure; taking into his account of all of the circumstances including any reasonable assurances.
5-the extent to which the behavior of the party failing the perform or to offer to perform comports with standards of good faith and fair dealing;
This is the restatement view— the actions of the school district really never satisfied any of these requirements and the breaches never got to the heart of the contract (or as the court put it “gutted the contract”. Really, the actions that the committee did never really amounted to anything that would justify her to cease performance and terminate the contract, and sue for damages. The lesson we should take from this case is that, not all breaches are alike.