Legal Memorandum: Prior Breach Doctrine in MN

Issue: What is needed to establish a prior breach of a service agreement in Minnesota?

Area of Law: Business Organizations & Contracts, Litigation & Procedure
Keywords: Prior breach doctrine; Substantial or material breach; Service agreement
Jurisdiction: Minnesota
Cited Cases: 658 N.W.2d 522; 764 N.W.2d 585; 96 N.W.2d 537; 174 F. Supp. 2d 951
Cited Statutes: Restatement (Second) of Contracts § 237
Date: 05/01/2011

Modern courts, and the Restatement (Second) of Contracts, recognize that, typically, something more than an alleged substandard performance by one party to a contract is necessary to excuse the other party’s performance.  See 14 Richard A. Lord, Williston on Contracts § 43:5 (4th ed. 2011).  That is, the general rule is that where the performance of one party is due before that of the other party, an uncured failure of performance by the former will suspend or discharge the latter’s duty of performance only if the failure is material or substantial.  Id.  If the prior breach of a contract is slight or minor, as opposed to material or substantial, the non-breaching party is not relieved of his or her duty of performance.  Id.  In what is essentially a variation of this rule, some courts have indicated that a breach of contract that is only "partial," as opposed to "total," does not relieve the other party from its obligation to perform.  Id. 

Minnesota recognizes this “prior breach” doctrine.  Under Minnesota law, the non-performance by one party under a contract will excuse the future contractual obligations of the other party, but only when the prior breach is substantial or material. E.g., Nutrisoya Foods, Inc. v. Sunrich LLC, 626 F. Supp. 2d 985 (D. Minn. 2009) (citing Home Ins. Co. v. Nat’l Union Fire Ins., 658 N.W.2d 522, 534 (Minn. 2003); Melford Olsen Honey, Inc. v. Adee, 452 F.3d 956, 965 (8th Cir. 2006); Parkhill v. Minnesota Mut. […]

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