UCC and Business Organizations
October 11, 2012
Banco International, Inc. v. Goody’s Family Clothing
United States District Court, Northern Division 54 F.2d 765
In the case of Banco v. Goody’s, the courts ruled that Goody’s was not wrong for canceling the contract due to the finding of justified in reasonably concluding that Banco could not deliver the product by the date set in the first purchase order between the parties and the failure to deliver the goods by that date would have substantially impaired the value of those goods to Goody’s.
Goody’s entered into a contract with Banco to purchase wind suits. On or about July 13, 1994, Goody’s agreed to change the delivery date of the first shipment to September 30, 1994 and assured Banco that the “letters of credit” would be amended appropriately. Around August 23, 1994, prior to the contract delivery date, Goody’s informed Banco that they were terminating the contract. Plaintiff comes to the courts for relieve in the matter to a breach of contract.
A Breach of contract is the nonperformance of a contractual duty. The breach is material when performance is not at least substantial. If there is a material breach, then the non-breaching party is excused from the performance of contractual duties and can sue from damages resulting from the breach. (Clarkson, Miller and Cross, Business Law Text and Cases, page 324). Before either party to a contract has a duty to perform, one of the parties may refuse to carry out his or her contractual obligations which is called anticipatory repudiation of the contract. When an anticipatory repudiation occurs, it is treated as a material breach of the contract, and the non-breaching party is permitted to bring an action for damages immediately, even though the scheduled time for performance under the contract may still be in the future. (Clarkson, Miller and Cross, Business Law Text and Cases, page...