Failure to preform
Failure to preform
3 Ways to breach contract (failure to perform) CC. 1994
Delay in performance
Performance was rendered but in an untimely fashion
Performance was rendered but in a manner inconsistent with the contractual commitment
Performance was never rendered
3 Remedies for failure to perform
1. Specific performance
CC. 1986- Court shall grant specific performance + damages for delay if the obligee so demands. If Specific performance is impracticable court can allow damages to obligee. Up to discretion of the court if obligation has another object.1986 ONLY ALLOWS OBLIGEE A RIGHT TO SEEK SPECIFIC PERFORMANCE COURT HAS DISCRETION ON WHETHER OR NOT TO ALLOW S.P IF REMEDY IS IMPRACTICAL
1986 specific performance is granted 3 categories:
Failure to not do a thing 1987
Court can grant specific performance
Failure to execute an instrument (Document) 1988
Failure to deliver a thing
Court can grant specific performance
LA SC says specific performance is impracticable (Weingarten case)IF IMPRACTICAL COURT CAN ALLOW DAMAGES
Greatly disproportionate in cost to the actual damage caused
no longer in creditors interest
of substantial negative effect on the interest of third parties
CC. 1987- obligor may be restrained from doing anything in violation of an obligation not to do
CC. 1988- A failure to perform an obligation to execute an instrument gives the obligee the right to a judgment that shall stand for that act
(Ch. 10) CC.1994-right to damages
CC. 1995- Measure of damages
Loss sustained by the obligee + deprived profit
CC. 1996- Liable only for damages that were FORSEEABLE at time contract was made (LIMITED FORSEEABILITY)
CC. 1997- Liable for all damages FORSEEABLE or not that are direct consequence of failure to perform, as long as no superseding intervening cause
Bad faith is intentional and malicious failure to perform
CC. 1998- Nonpecuinary damages
Obligor intended to hurt obligee with the intentional breach
Obligee had non pecuniary interest, contract was intended to gratify non pecuniary interest
CC 2006- Nullity of the principal obligation renders the stipulated damages clause null.
Nullity of the stipulated damages clause does not render the principal obligation null.
CC 2007- An obligee may demand either the stipulated damages or performance of the principal obligation, but he may not demand both unless the damages have been stipulated for mere delay.
CC 2005- Parties may stipulate the damages to be recovered in case of nonperformance, defective performance, or delay in performance of an obligation.
That stipulation gives rise to a secondary obligation for the purpose of enforcing the principal one.
CC 2008- An obligor whose failure to perform the principal obligation is justified by a valid excuse is also relieved of liability for stipulated damages.
CC 2010- An obligee may not avail himself of a clause stipulating damages for delay unless the obligor has been put in default.
CC 2011- Stipulated damages for nonperformance may be reduced in proportion to the benefit derived by the obligee from any partial performance rendered by the obligor.
CC 2012-Stipulated damages may not be modified by the court unless they are so manifestly unreasonable as to be contrary to public policy.
CC 2009- An obligee who avails himself of a stipulated damages clause need not prove the actual damage caused by the obligor's nonperformance, defective performance, or delay in performance.
Delay damages-->> Moratory damages are delay damages which are given in conjunction with the remedy of specific performance. CC 1989
When are they recoverable?
Obligor automatically put into default when term of performance is automatically fixed or clearly determined (obligor failed to perform during set term of performance) CC. 1990 But you can't put obligor in default before specific performance is due
Other cases obligee has duty to place obligor in default by one of the methods listed in CC 1991. IF NO SET TERM OF SP THEN OBLIGEE MUST FOLLOW STANDARD FOR PUTTING THE OBLIGOR IN DEFAULT
Putting in default: letting the obligor know they consider there has been a breach. Putting in default is useful for setting up time frame from which to start asserting damages.
3 ways to put in default CC1991
Oral + two witnesses
File lawsuit against obligor. Filing the suit puts obligor in default.
These are damages which are allotted to the obligee when the ultimately receive the benefit of performance as set out in the contract but there is some sort of damage suffered by the delay in which performance was received. Moratory damages are a type of pecuniary damage when they deal with strictly monetary considerations to repay the obligor for both loss sustained and profit deprivedMoratory damages are given in conjunction with specific performance and are thus separate from compensatory damages which are given as part and parcel of a dissolution decree- (However, some compensatory damages may actually include delay damages).
Delay damages can be part of stipulated damages set out by terms and wording of the contract upon formation (in creation of secondary obligations CC 2005). In order to recover stipulated damages you must put obligor in default.
Limits on recovery
Mitigate damages(reasonable effort to reduce damages) CC 2002
2002, an obligee who seeks damages is required to take reasonable efforts to mitigate damages which result from an obligor’s nonperformance (failure to perform, delay in performance, defective performance).
If the obligee who seeks recovery from the obligor for nonperformance fails to take these reasonable efforts, the obligor has the right to ask the court to adjust damages according to the fault of the obligee. This adjustment of damages will take into account both the negligence of the obligee in failing to mitigate damages and the consequences of that negligence.
Reasonable efforts: According to the comments thereto, "reasonable efforts" are those which do not put an undo burden on the obligee who is suffering nonperformance.
CC 2003 Obligee in bad faith
CC 2004 Clause that excludes or limits liability
CC.2013 (either party can request dissolution upon other's failure to perform)
CC 2013-> Extra Judicial Dissolution : Obligee can regard contract as dissolved in following circumstances (CC 2015, 2016, 2017) Based on Louisiana jurisprudence in numerous decisions
CC 2017- Express Dissolution Clause: Obligee can regard a contract as dissolved if theres an express agreement between the parties that the contract will be dissolved for failure to perform obligation
CC 2015- Dissolution After Notice to Perform: Obligee may give notice to perform within a certain time with a warning that the contract will be dissolved if the obligor fails to perform.
Notice must reasonable
Notice must meet formalities governing the putting in default of an obligor, and for recovery of damages for delay have same effect as putting obligor in default
CC 2016- Dissolution Without Notice to Perform: When delayed performance no longer is of value or if evident obligor won't perform. Obligee may regard contract as dissolved without giving notice to obligor.
CC. 2013 -> Judicial Dissolution: Unless requirements for extra judicial dissolution are met the obligee who seeks judicial dissolution is not entitled to dissolution. Court can grant obligor additional time within which to perform.
Factors considered by court
Extent and gravity of the failure to perform alleged by the complaining party
Nature of obligors fault
Good or bad faith of parties involved
Surrounding economic circumstances that make dissolution opportune or not
CC. 2014- Substantial Performance- Dissolution may not be granted but you can still get damages. Two part test protects interests of both parties
CC. 2014- Contract may not be dissolved when the obligor has rendered a substantial part of performance
CC 2014- and the unperformed part not rendered does not substantially impair the interest of the obligee
Effects of dissolution
CC 2019- In contracts providing for continuous or periodic performance the effect of the dissolution shall not extend to any performance already rendered
CC 2018- Upon dissolution of a contract parties shall be restored to situation that existed before the contract was made
CC. 2018- If partial performance has been rendered and that performance is of value to the party seeking to dissolve contract dissolution does not preclude recovery for that performance whether in contract or quasi-contract
CC. 2020- When a contract has been made by more than two parties one party's failure to perform may not cause dissolution of the contract for the other parties, unless the performance that failed was essential to the contract
CC. 2021- Dissolution of a contract does not impair the rights acquired through an onerous contract by a third party in good faith
CC. 2024- Contract of unspecified duration may be terminated at the will of either party by giving notice reasonable in time and form to the other party
Defenses to non performance
CC. 2022- Party can refuse to perform his obligation if the other has failed to perform or does not offer to perform his own at the same time if the performances are due simultaneously
CC. 2023- If situation of a party, financial or otherwise has become such as to clearly endanger his ability to perform an obligation the other party may demand in wiring that adequate security be given and upon failure to give that security that party may withhold or discontinue his own performance