RITCHEY & ASSOCIATES, INC., A FLORIDA CORPORATION, APPELLANT,
v.
EAGLE COMMUNITIES, INC., A FLORIDA CORPORATION, APPELLEE
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Ritchey & Associates contracted with Eagle Communities to provide design services for a congregate living facility. Eagle terminated the agreement after a change in corporate officers without receiving or approving a final design plan. The court reversed the lower court's order denying damages, holding that even in an executory contract, termination without valid grounds constitutes an actionable breach when the terminating party fails to exercise contractual approval rights in good faith.
Termination of an executory contract may constitute an actionable breach subjecting the terminating party to liability for damages. When a contract conditions performance on a party's authorization or approval, that party must exercise such approval rights in good faith based on honest evaluation of performance. Unilateral termination not based on honest dissatisfaction with performance constitutes an actionable breach.
[1] A party's termination of an executory contract may constitute an actionable breach, even if the contract contains no express provision for unilateral termination.
[2] A contractual right to accept or reject performance based on personal satisfaction must be exercised in good faith and upon an honest evaluation of performance.
Previewing 2 of 4 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“Even though the parties' contract was executory, appellee's termination of the agreement may constitute an actionable breach subjecting it to liability for appellant's damages.”
Establishes the core holding that executory contracts can give rise to breach liability upon wrongful termination.
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Join FLexlaw to unlock all legal intelligenceRitchey & Associates entered into an agreement with Eagle Communities to provide design services for a congregate living facility, with compensation s…
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WENTWORTH, Judge.
Appellant seeks review of an order denying its claim for damages in a breach of contract action. We conclude that the court erred by declining to find an actionable breach, and we therefore reverse the order appealed.
Appellant entered into an agreement with appellee to provide design services for a congregate living facility. The agreement identified the services to be provided, and specified appellant’s compensation with a schedule of payments. Performance under the agreement was conditioned upon appellee’s authorization and acceptance of appellant’s design proposal.
Appellee subsequently informed appellant that its services were no longer desired. This decision was made after a change in appellee’s corporate officers, and was ostensibly based upon appellee’s dissatisfaction with certain provisions in the parties’ agreement. At the time the decision was made appellant had not yet made a formal presentation or received approval of a final design plan.
Appellant sought damages for appellee’s termination of the agreement. A hearing was held and the court determined that the parties’ agreement was intended to serve as a contract. However, the court noted that no standard was provided in the agreement regarding appellee’s acceptance or rejection of appellant’s design proposal. Concluding that appellee could accept or reject the proposal “at its option,” the court determined that appellant therefore can not recover any damages.
Even though the parties’ contract was executory, appellee’s termination of the agreement may constitute an actionable breach subjecting it to liability for appellant’s damages. See Southern Crane Rentals v. City of Gainesville, 429 So. 2d 771 (Fla. 1st DCA 1983). The contract contains no express provision which would empower appellee to unilaterally terminate the agreement, and such a right should not be implied. See generally, Southern Crane, supra. While the contractual obligations are conditioned upon appellee’s authorization and approval of appellant’s design proposal, this is a requirement of personal satisfaction which must be exercised in good faith upon an honest evaluation of appellant’s performance. See Cartozian & Sons, Inc. v. Ostruske-Murphy, Inc., 64 Wash.2d 1, 390 P. 2d 548 (1964); see also, Hazen v. Cobb, 96 Fla. 151, 117 So. 853 (1928). Appellee’s termination of the parties’ agreement was not based upon an honest dissatisfaction with appellant’s performance, and thus constitutes an actionable breach subjecting it to liability for damages.
The order appealed is reversed and the cause remanded.
SMITH, C.J., and WIGGINTON, J., concur.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Authorities Cited
- Hazen v. Cobb, 96 Fla. 151 (Fla. 1928)
- S. Crane Rentals, Inc. v. City OF Gainesville, 429 So. 2d 771 (Fla. 1st DCA 1983)