Lane Enterprises, Inc. v. L. B. Foster Co.

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Lane Enterprises, Inc. v. L. B. Foster Co.
Court Superior Court of Pennsylvania
Citation 700 A.2d 465 (1997)
Date decided 1997

Facts

Foster subcontract to defendant Lane in a two-stage agreement to build a bridge in accordance with the ODOT specifications. During cleaning of the steel, residue remained on the steel which was in violation of the specifications. Foster sent a letter stating that they would withhold payments until corrections were made. Lane notified plaintiff that they were unable to complete the project, so plaintiff hired a third party to do so, resulting in a balance of $7,082 owed to Lane. The letter from Foster to Lane stated that this balance would not be paid until Lane could assure that the second phase of the project could be completed.


Procedural History

Judgment for the defendant. They found that withholding of $7,082 constituted a material breach.


Issues

  1. Whether a party’s good faith withholding of a small percentage of the overall contract price constitutes a material breach as to excuse the other party from performing its contractual obligations.
  2. Whether a party has a right to request adequate assurances that a contract will be performed when it appears that they cannot complete the contract.

Holding

Judgment reversed and Foster is entitle to $34,972 in net award.


Reasoning

  • 1) There is no evidence that the small percentage withholding constituted a material breach of the contract.
  • 2) Anticipatory breach of a contract occurred because there had been a definite and unconditional repudiation of the contract by one party communicated to another, and the party was warranted in demanding adequate assurance of performance.

Notes:

Reversed on other grounds.