This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
In jurisdictions where renunciation before performance is due is considered as a breach, it is a breach and discharge only if the adversary party elects to treat it so.1 The adversary party has the election between treating such renunciation as a breach or disregarding it as inoperative and waiting until the time fixed by the contract for performance, in order to give the party who has renounced the contract an opportunity to comply with its terms and perform according to his agreement.2 Thus A had agreed to sell to B from three hundred tons to five hundred tons at B's option, and A on delivering three hundred tons ordered by B notified B that he would deliver no more. It was held that B could ignore such notice, demand two hundred tons more and sue A for non-delivery.3 If the party not in default elects to treat the contract as still in force, he cannot excuse a subsequent breach on his part. Thus A, the owner of an opera-house, had a contract with B, a manager of a theatrical rule. . . . We think it obvious that both as to renunciation after commencement of performance and renunciation before the time for performance has arrived, money contracts, pure and simple, stand on a different footing from executory contracts for the purchase and sale of goods." Roehm company, by which A was to furnish his opera-house and B was to take a certain percentage of the receipts. B subsequently submitted to A a new "contract" giving B a larger percentage of the receipts, B stating that he could not think of playing for less. A returned the new " contract " unaccepted, claiming to have a contract with B. A was thereupon bound to furnish the opera-house in accordance with the original contract.4 Some authorities hold that this election to treat such renunciation as a breach must be made promptly if at all.5 At any rate, delay for a time agreed upon by the adversary party to decide whether he will accept a new contract is not a modification or waiver of rights under the old.6 He may, however, at any time before the party who has renounced the contract withdraws his renunciation, elect to treat it as a breach, even if he has at first refused to consider it as a breach, and has demanded performance.7 This right of election exists only so far as it is consistent with the rule that the party not in default must do nothing after default to increase damages. After notice of renunciation the adversary party who has not yet performed and is not in default cannot proceed with performance and recover from the party who has renounced the contract, the entire contract price.8 His right of recovery in such cases is measured by the damages caused him by such renunciation, the contract being for this purpose considered as broken at the time of the renunciation. Thus where A agreed with B to erect a creamery9 or a cheese and butter factory10 and before A has done any work' B renounces the contract, A cannot proceed to construct the factory and then recover the entire contract price from B. The party so renouncing cannot, after such renunciation has been accepted by the adversary party as a discharge, treat the contract as still in force.11 Formal surrender of the written contract is unnecessary.12 Thus a contract of sale provided for delivery in installments, the vendee to give his notes, payable at a future day, as each installment was delivered. Before the contract was completely performed the vendee refused to give his notes. The vendor was allowed to bring an action at once before the expiration of the time fixed for the credit, and the vendee cannot then insist on such term of credit.13
17 Greenway v. Gaither, Taney (U. S. C. C.) 227; Daniels v. Newton, 114 Mass. 530; 19 Am. Rep. 384.
18 American Mfg. Co. v. Klar-quist, 47 Minn. 344; 50 N. W. 243.
1 Smith v. Banking Co.. 113 Ga. 975; 39 S. E. 410; Dambmann v. Lorentz, 70 Md. 380; 14 Am. St. Rep. 364; 17 Atl. 389.
2 Dambmann v. Lorentz, 70 Md. 380; 14 Am. St. Rep. 364; 17 Atl. 389.
3 Dambmann v. Lorentz, 70 Md. 380; 14 Am. St. Rep. 364; 17 Atl. 389.
4 Bernstein v. Meech, 130 N. Y. 354; 29 N. E. 255.
5 Kilgore v. Society, 90 Tex. 139; 37 S. W. 598.
6Goodsell v. Telegraph Co., 130 N. Y. 430; 29 N. E. 969.
7 Ault v. Dustin, 100 Tenn. 366; 45 S. W. 981.
8 Gibbons v. Bente, 51 Minn. 499;
22 L. R. A. 80; 53 N. W. 756; Davis v. Bronson, 2 N. D. 300; 33 Am. St. Rep. 783; 16 L. R. A. 655; 50 N. W. 836.
9 Davis v. Bronson, 2 N. D. 300; 33 Am. St. Rep. 783; 16 L. R. A. 655; 50 N. W. 836.
10 Gibbons v. Bente. 51 Minn. 499; 22 L. R. A. 80; 53 N. W. 756.