Breach of Contract

Breach of Contract

Most construction claims arise out of a disagreement concerning the interpretation of a written agreement. The California Civil Code, the Business and Professions Code and other relevant statutes contain a wide variety of provisions relating to the drafting, interpretation and enforcement of contracts. Although most construction contracts in this day and age are relatively standard, the manner in which they are interpreted, and the diverse set of circumstances they ostensibly must address, are diverse and the results in court are often unpredictable. The authors of construction contracts are forever attempting to produce a contract, which will meet the needs of the contracting parties while addressing, or at least setting forth, a procedure by which unforeseen events can be handled in a manner which will be expeditious and economical. However, when this fails, a claim ensues and the most prevalent theory under which claims are presented is breach of contract.

A breach of contract is generally defined as the unjustified, or unexcused, failure to perform a contract. Although ordinarily the breach of contract is the result of an intentional act, the negligent performance of a contract may also constitute a breach, giving rise to alternative contract and tort actions. We will address further in this chapter tort damages, but for the time being let us direct our attention to purely contractual damages resulting from a breach.

The building industry generally involves contracts that provide for a payment by the owner to the contractor in installments based upon objective criteria specifically delineated within the contract itself, e.g., percentage of work completed. The question arises when one installment is not paid when it becomes due, whether or not this is a breach of contract. One view has been that the delay is only a temporary excuse for non-performance; i.e., the contractor may stop work until the progress payment is received, but he must resume work when paid, unless the delay is so unreasonably long as to amount to a material breach or failure of consideration, in which case it gives rise to the usual remedies of rescission or damages.