Case Problem Analysis: Material Breach

Federer & Co$.($Federer$)$ signed a written contract to lease a large neon advertising

sign to Harris Bolat, who is in the dry$-$cleaning business, for $$148\mathrm{.}50$ a month. The

contract stated that Federer, as the lessor of the sign, would $"$at its expense $...$

maintain and service the sign $...[$and would perform$]$ cleaning and repainting of sign

in original color scheme as often as deemed necessary by lessor to keep sign in first$-$

class advertising condition and make all necessary repairs to sign and equipment

installed by lessor."

A few weeks the sign was installed, "little spider cobwebs" appeared in the sign's

corners. Bolat repeatedly asked Federer to fix the sign, but Federer did not do so$.$ As a

result, Bolat made no further payments and Federer sued Bolat for remainder of the

lease payments pursuant to the contract's terms. Did Federer make a material breach

of the contract?

Identifying the Facts and Issues

If a party enters a contract,

is the most common

way for that party to discharge its duties under the contract. In this case, Federer

obligated to maintain and service the sign.

A breach of contract occurs when there is

of a

contractual duty. If the performance is substantial, but not complete, there

a breach.

Substantial performance results in a

breach.