Business Law 11th Edition by Kenneth Clarkson,Roger LeRoy Miller,Gaylord Jentz,Frank Cross

تمرين 10

Shah v. Cover-It, Inc.
Appellate Court of Connecticut, 2004. 86 Conn. App. 71, 859 A.2d 959.
• Background and Facts In November 1997, Cover-It, Inc., hired Khalid Shah to work as its structural engineering manager. Shah agreed to work a flexible schedule of thirty-five hours per week. In exchange, he would receive an annual salary of $70,000 for five years, a 2 percent commission on the sales of products that he designed, three weeks of paid vacation after one year, a company car, time off to attend to prior professional obligations, and certain other benefits. Either party could terminate the contract with ninety days' written notice, but if Cover-It terminated it, Shah would receive monthly payments for the rest of the five-year term. a In June 1998, Shah went on vacation and did not return until September. In mid-October, Brian Goldwitz, Cover-It's owner and president, terminated Shah's contract. Shah filed a suit in a Connecticut state court against Cover-It and others. The court determined that Shah had breached the contract and rendered a judgment in the defendants' favor. Shah appealed to a state intermediate appellate court.
SCHALLER, J. [Judge]
* * * *
On appeal, the plaintiff claims that the court improperly found that he had breached the contract or, in the alternative, that any breach was not material. Specifically, the plaintiff argues that the court failed to identify an express term or condition that was breached and instead merely found that certain acts, considered together, demonstrated a material breach prior to the termination of his employment. Therefore, according to the plaintiff, the defendants were not relieved of their obligations, under the terms of the contract, to pay his full salary for ninety days and to pay his post-termination salary pursuant to the schedule set forth in the contract.* * *
* * * *
It is a general rule of contract law that a total breach of the contract by one party relieves the injured party of any further duty to perform further obligations under the contract. [Emphasis added.]
* * * Section 241 of the Restatement (Second) of Contracts provides:
In determining whether a failure to render or to offer performance is material, the following circumstances are significant: (a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; [and] (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.
The standards of materiality are to be applied in the light of the facts of each case in such a way as to further the purpose of securing for each party his expectation of an exchange of performances. Section 241 therefore states circumstances, not rules, which are to be considered in determining whether a particular failure is material. [Emphasis added.]
In the present case, the court found that the plaintiff took a ten-week vacation, which exceeded the time authorized. After the plaintiff returned, he reported for work only two or three days per week and spent long periods of time visiting Internet Web sites that were unrelated to his professional duties. Additionally, after being instructed by [Cover-It's] human resources manager to document his attendance by use of a time clock, the plaintiff refused and simply marked his time sheets with a "P" for present. Last, the court found that when Goldwitz asked when certain designs would be completed, the plaintiff responded that he was not sure and that he would take his time in completing them. When reviewing those findings in light of the factors set forth in [Section] 241 of the Restatement (Second) of Contracts, we conclude that the court's finding of a material breach was not clearly erroneous.
It is clear from the court's findings that the plaintiff failed to perform under the obligations of the employment contract. * * * One cannot recover upon a contract unless he has fully performed his own obligation under it, has tendered performance or has some legal excuse for not performing. As a result of the material breach by the plaintiff, the defendants were excused from further performance under the contract, and were relieved of the obligation to pay the plaintiff his full salary for ninety days and to pay his post-termination salary pursuant to the schedule set forth in the contract.
• Decision and Remedy The state intermediate appellate court affirmed the judgment of the lower court. The appellate court held that Shah had materially breached his contract with Cover-It and that this breach excused Cover-It from further performance of its contractual duties, including any obligation to continue paying Shah's salary.
• What If the Facts Were Different Suppose that during his ten-week absence Shah was fulfilling prior professional obligations and that on his return he met Cover-It's hours and timekeeping requirements. Further suppose that Shah responded to Goldwitz's questions about his projects with reasonable estimates. Would the outcome of the case have been different Why or why not
• The E-Commerce Dimension If Shah had worked for Cover-It from his home by telecommuting over the Internet and other employees were therefore not aware of his conduct, would he have been in breach of his contract Explain.
[a. The contract provided that for up to two years of service, Shah would be paid $20,000 per year; for three years of service, $30,000 per year; and for four years of service, $40,000 per year.]