CHAPTER 19: BREACH OF CONTRACT AND REMEDIES 17
A waiver extends to subsequent defective performance, however, when there is a “pattern” of
2. Effect on the Contract
In effect, a waiver operates to keep a contract going, but the breaching party remains liable for
damages for the breach.
V. Contract Provisions Limiting Remedies
Provisions that affect the availability of certain remedies may be enforced, depending on the type of breach
excused by the provision.
A. THE UCC ALLOWS SALES CONTRACTS TO LIMIT REMEDIES
Under the UCC, remedies can be limited, but different rules apply (see Chapter 22).
B. ENFORCEABILITY OF LIMITATION-OF-LIABILITY CLAUSES
Unenforceable: clauses that exclude liability for injuries that are inflicted intentionally, that occur as a
result of fraud, or that result from illegal acts. Possibly enforceable: a clause excluding liability for
negligence, if the parties were in roughly equal bargaining positions (large corporations, for instance,
would have equal bargaining power).
WHAT DO YOU DO WHEN YOU CANNOT PERFORM?
Not every contract can be performed. If you are a contractor, you may take on a job that, for one reason
or another, you cannot or do not wish to perform. Simply walking away from the job and hoping for the best
normally is not the most effective way to avoid litigation—which can be costly, time-consuming, and
emotionally draining. Instead, you should consider different options that may reduce the likelihood of litigation.
For example, suppose that you are a building contractor and you sign a contract to build a home for the
Andersons. Performance is to begin on June 15. On June 1, Central Enterprises offers you a position that will
yield you two and a half times the amount of net income you could earn as an independent builder. To take
the job, you have to start on June 15. You cannot be in two places at the same time, so to accept the new
position, you must breach the contract with the Andersons.
What can you do in this situation? One option is to subcontract the work to another builder and oversee
the work yourself to make sure it conforms to the contract. Another option is to negotiate with the Andersons
for a release. You can offer to find another qualified builder who will build a house of the same quality at the
same price. Alternatively, you can offer to pay any additional costs if another builder takes the job and is more
expensive. In any event, this additional cost would be the measure of damages that a court would impose on
you if the Andersons prevailed in a suit for breach of contract. Thus, by making the offer, you might be able to
avoid the expense of litigation—if the Andersons accept your offer.