CACI 303 Breach of Contract—Essential Factual Elements

New September 2003; Revised April 2004, June 2006, December 2010, June 2011, June 2013, June 2015, December 2016, May 2020

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Read this instruction in conjunction with CACI No. 300, Breach of Contract—Introduction.

Optional elements 2 and 3 both involve conditions precedent. A “condition precedent” is either an act of a party that must be performed or an uncertain event that must happen before the contractual right accrues or the contractual duty arises. (Stephens & Stephens XII, LLC v. Fireman’s Fund Ins. Co. (2014) 231 Cal.App.4th 1131, 1147 [180 Cal.Rptr.3d 683].) Element 2 involves the first kind of condition precedent; an act that must be performed by one party before the other is required to perform. Include the second option if the plaintiff alleges that the plaintiff was excused from having to perform some or all of the contractual conditions.

Not every breach of contract by the plaintiff will relieve the defendant of the obligation to perform. The breach must be material; element 2 captures materiality by requiring that the plaintiff have done the significant things that the contract required. Also, the two obligations must be dependent, meaning that the parties specifically bargained that the failure to perform the one relieves the obligation to perform the other. While materiality is generally a question of fact, whether covenants are dependent or independent is a matter of construing the agreement. (Brown v. Grimes (2011) 192 Cal.App.4th 265, 277–279 [120 Cal.Rptr.3d 893].) If there is no extrinsic evidence in aid of construction, the question is one of law for the court. (Verdier v. Verdier (1955) 133 Cal.App.2d 325, 333 [284 P.2d 94].) Therefore, element 2 should not be given unless the court has determined that dependent obligations are involved. If parol evidence is required and a dispute of facts is presented, additional instructions on the disputed facts will be necessary. (See City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395 [75 Cal.Rptr.3d 333, 181 P.3d 142].)

Element 3 involves the second kind of condition precedent; an uncertain event that must happen before contractual duties are triggered. Include the second option if the plaintiff alleges that the defendant agreed to perform even though a condition did not occur. For reasons that the occurrence of a condition may have been excused, see the Restatement Second of Contracts, section 225, Comment b. See also CACI No. 321, Existence of Condition Precedent Disputed, CACI No. 322, Occurrence of Agreed Condition Precedent, and CACI No. 323, Waiver of Condition Precedent.

Element 6 states the test for causation in a breach of contract action: whether the breach was a substantial factor in causing the damages. (US Ecology, Inc. v. State of California (2005) 129 Cal.App.4th 887, 909 [28 Cal.Rptr.3d 894].) In the context of breach of contract, it has been said that the term “substantial factor” has no precise definition, but is something that is more than a slight, trivial, negligible, or theoretical factor in producing a particular result. (Haley v. Casa Del Rey Homeowners Assn. (2007) 153 Cal.App.4th 863, 871–872 [63 Cal.Rptr.3d 514]; see CACI No. 430, Causation—Substantial Factor, applicable to negligence actions.)

Equitable remedies are also available for breach. “As a general proposition, ‘[t]he jury trial is a matter of right in a civil action at law, but not in equity. [Citations.]’ ” (C & K Engineering Contractors v. Amber Steel Co., Inc. (1978) 23 Cal.3d 1, 8 [151 Cal.Rptr. 323, 587 P.2d 1136]; Selby Constructors v. McCarthy (1979) 91 Cal.App.3d 517, 524 [154 Cal.Rptr. 164].) However, juries may render advisory verdicts on these issues. (Raedeke v. Gibraltar Savings & Loan Assn. (1974) 10 Cal.3d 665, 670–671 [111 Cal.Rptr. 693, 517 P.2d 1157].)

•Contract Defined. Civil Code section 1549.

•“A contract is a voluntary and lawful agreement, by competent parties, for a good consideration, to do or not to do a specified thing.” (Robinson v. Magee (1858) 9 Cal. 81, 83.)

•“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186 [169 Cal.Rptr.3d 475].)

•“Implicit in the element of damage is that the defendant’s breach caused the plaintiff’s damage.” (Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1352 [90 Cal.Rptr.3d 589], original italics.)

•“It is elementary a plaintiff suing for breach of contract must prove it has performed all conditions on its part or that it was excused from performance. Similarly, where defendant’s duty to perform under the contract is conditioned on the happening of some event, the plaintiff must prove the event transpired.” (Consolidated World Investments, Inc., v. Lido Preferred Ltd. (1992) 9 Cal.App.4th 373, 380 [11 Cal.Rptr.2d 524], internal citation omitted.)

•“When a party’s failure to perform a contractual obligation constitutes a material breach of the contract, the other party may be discharged from its duty to perform under the contract. Normally the question of whether a breach of an obligation is a material breach, so as to excuse performance by the other party, is a question of fact. Whether a partial breach of a contract is material depends on ‘the importance or seriousness thereof and the probability of the injured party getting substantial performance.’ ‘A material breach of one aspect of a contract generally constitutes a material breach of the whole contract.’ ” (Brown, supra, 192 Cal.App.4th at pp. 277–278, internal citations omitted.)

•“The obligations of the parties to a contract are either dependent or independent. The parties’ obligations are dependent when the performance by one party is a condition precedent to the other party’s performance. In that event, one party is excused from its obligation to perform if the other party fails to perform. If the parties’ obligations are independent, the breach by one party does not excuse the other party’s performance. Instead, the nonbreaching party still must perform and its remedy is to seek damages from the other party based on its breach of the contract.” (Colaco v. Cavotec SA (2018) 25 Cal.App.5th 1172, 1182–1183 [236 Cal.Rptr.3d 542], internal citations omitted.)

•“Whether specific contractual obligations are independent or dependent is a matter of contract interpretation based on the contract’s plain language and the parties’ intent. Dependent covenants or ‘[c]onditions precedent are not favored in the law [citations], and courts shall not construe a term of the contract so as to establish a condition precedent absent plain and unambiguous contract language to that effect.’ ” (Colaco, supra, 25 Cal.App.5th at p. 1183, internal citations omitted.)

•“The wrongful, i.e., the unjustified or unexcused, failure to perform a contract is a breach. Where the nonperformance is legally justified, or excused, there may be a failure of consideration, but not a breach.” (1 Witkin, Summary of California Law (10th ed. 2005) Contracts, § 847, original italics, internal citations omitted.) “Ordinarily, a breach is the result of an intentional act, but negligent performance may also constitute a breach, giving rise to alternative contract and tort actions.” (Ibid., original italics.)

•“ ‘ “Where a party’s breach by non-performance contributes materially to the non-occurrence of a condition of one of his duties, the non-occurrence is excused.” [Citation.]’ ” (Stephens & Stephens XII, LLC, supra, 231 Cal. App. 4th at p. 1144.)

•“ ‘Causation of damages in contract cases, as in tort cases, requires that the damages be proximately caused by the defendant’s breach, and that their causal occurrence be at least reasonably certain.’ A proximate cause of loss or damage is something that is a substantial factor in bringing about that loss or damage.” (U.S. Ecology, Inc., supra, 129 Cal.App.4th at p. 909, internal citations omitted.)

•“An essential element of [breach of contract] claims is that a defendant’s alleged misconduct was the cause in fact of the plaintiff’s damage. [¶] The causation analysis involves two elements. ‘ “One is cause in fact. An act is a cause in fact if it is a necessary antecedent of an event.” [Citation.]’ The second element is proximate cause. ‘ “[P]roximate cause ‘is ordinarily concerned, not with the fact of causation, but with the various considerations of policy that limit an actor’s responsibility for the consequences of his conduct.’ ” ’ ” (Tribeca Companies, LLC v. First American Title Ins. Co. (2015) 239 Cal.App.4th 1088, 1102–1103 [192 Cal.Rptr.3d 354], footnote and internal citation omitted.)

•“Determining whether a defendant’s misconduct was the cause in fact of a plaintiff’s injury involves essentially the same inquiry in both contract and tort cases.” (Tribeca Companies, LLC, supra, 239 Cal.App.4th at p. 1103.)

•“b. Excuse. The non-occurrence of a condition of a duty is said to be ‘excused’ when the condition need no longer occur in order for performance of the duty to become due. The non-occurrence of a condition may be excused on a variety of grounds. It may be excused by a subsequent promise, even without consideration, to perform the duty in spite of the non-occurrence of the condition. See the treatment of ‘waiver’ in § 84, and the treatment of discharge in §§ 273–85. It may be excused by acceptance of performance in spite of the non-occurrence of the condition, or by rejection following its non-occurrence accompanied by an inadequate statement of reasons. See §§ 246–48. It may be excused by a repudiation of the conditional duty or by a manifestation of an inability to perform it. See § 255; §§ 250–51. It may be excused by prevention or hindrance of its occurrence through a breach of the duty of good faith and fair dealing (§ 205). See § 239. And it may be excused by impracticability. See § 271. These and other grounds for excuse are dealt with in other chapters of this Restatement. This Chapter deals only with one general ground, excuse to avoid forfeiture. See § 229.” (Rest.2d of Contracts, § 225, comment b.)