Silverman v. Caddo Gas & Oil Co.
127 La. 928, 1911 La. LEXIS 484, 54 So. 289 (1911)
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Rule of Law:
A party to a commutative (bilateral) contract who is in default for failing to perform their own obligation, such as payment for goods delivered, cannot recover damages from the other party for an alleged breach of contract. A conditional offer to perform one's own obligation is not sufficient to cure the default.
Facts:
- Plaintiff and Defendant entered into a contract for the delivery of 100,000 barrels of oil.
- Defendant delivered a portion of the oil, amounting to approximately 12 to 15 carloads.
- Plaintiff failed to pay for 7 or 8 of the delivered carloads, accumulating a debt of $858.20.
- Defendant took the position that it no longer recognized the contract as being in effect.
- Plaintiff sent a letter offering to pay the outstanding amount and for future deliveries only on the condition that Defendant provide assurances it would fulfill the remainder of the contract.
- Following the letter, Plaintiff refused to pay a draft from the Defendant for the $858.20 that was owed.
Procedural Posture:
- Plaintiff sued Defendant in a Louisiana trial court for damages for an alleged breach of contract.
- The trial court rendered a judgment in favor of the Defendant.
- Plaintiff, as appellant, appealed the judgment to the reviewing appellate court.
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Issue:
Does a buyer's failure to pay for goods already delivered under a contract, while making payment conditional on the seller's assurances of future performance, constitute a default that prevents the buyer from recovering damages for the seller's alleged breach?
Opinions:
Majority - Land, J.
Yes. A buyer's failure to pay for goods already delivered constitutes a default that bars recovery for the seller's alleged breach. The court reasoned that the contract was commutative, meaning the obligations of each party are correlative. Under Louisiana Civil Code art. 1913, a party seeking to put another in default must first offer to perform their own obligations. Here, the plaintiff admitted owing $858.20 and not only failed to offer payment but actively refused to pay. The plaintiff's offer to pay was conditional upon receiving assurances of future performance, which is not a valid tender of performance. Citing precedent, the court concluded that a party cannot claim damages for the nonperformance of a contract when they themselves are in default.
Analysis:
This decision reinforces the fundamental contract law principle that a party seeking to enforce a contract or sue for its breach must have 'clean hands' regarding their own performance. It clarifies that a conditional offer to perform an existing, unconditional obligation (like paying for goods already received) is not a valid performance and does not cure a party's default. The ruling solidifies the concept that in a bilateral contract, performance obligations are interdependent, and one party cannot demand performance from the other while simultaneously withholding their own.
