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.
If the party who is not in default elects to treat the contract as still in force in spite of the renunciation by the adversary party, he may do so as long as such conduct on his part does not aggravate damages;1 but if he does so, he keeps the contract in force for the benefit of both of the parties thereto, and not merely for his own benefit. Accordingly, the party who renounced such contract may take advantage of any subsequent facts which would have operated as a discharge if he had not renounced liability thereunder.2 If by its terms a contract is to end upon the happening of a certain event, the party who has renounced the contract before such event has happened may take advantage of the happening of such event if the adversary party elects to treat the contract as in effect.3 If the party who is not in default elects to treat the contract as in force, and such contract becomes impossible of performance after such renunciation but before the time fixed for performance,4 as by reason of the outbreak of war which makes performance impossible,5 such facts operate as a discharge; and the party who is not in default can not recur to the original breach and elect to treat the contract as discharged by such breach. If the vendor of realty refuses to treat the renunciation by the purchaser as a discharge, he must then be able to show his readiness and willingness to convey on performance by the purchaser, in order to enable him to retain earnest money which was paid by the purchaser to be applied on the purchase price.6 If the seller of goods refuses to treat renunciation by the purchaser as breach, it has been said that the seller must then tender the full amount of such goods, and if he tenders a less amount he is liable himself for such breach.7 A, the owner of an opera-house, had a contract with B, a manager of a theatrical 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.8 If A, the lessor of an opera-house, agrees with B that B shall manage it for a certain sum per week and for a certain share of the profits, and if B is to pay a certain part of the rent, B's refusal to accept A's renunciation as a discharge makes it incumbent upon B to tender the part of the rent which he is bound to pay in order to keep the contract alive.9
Kansas. Kansas Flour Mills Co. v. Brandt, 08 Kan. 587, L. R. A. 1917A, 1000, 158 Pac. 1120.
Kentucky. Globe Fertilizer Co. v. Tennessee Phosphate Co. (Ky.), 85 S. W. 1177.
Maryland. Dugan v. Anderson, 30 Md. 507, 11 Am. Hep. 509.
Michigan. Hosmer v. Wilson, 7 Mich. 204, 74 Am. Dec. 710; Platt v. Brand, 26 Mich. 173.
Minnesota. Alger-Fowler Co. v. Tracy, 08 Minn. 432, 107 N. W. 1124.
New Jersey. O'Neil v. Supreme Council, 70 N. J. L. 410, 57 Atl. 403; Holt v. United Security Life Ins. & Trust Co., 70 N. J. L. 585, 21 L. R. A. (N.S.) 001, 72 Atl. 301.
New York. Howard v. Daly, CI N. Y. 362, 10 Am. Rep. 285; Windmuller v. Pope, 107 N. Y. 674, 14 N. E. 436; Tanenbaum v. Federal Match Co., 189 N. Y. 75, 81 N. E. 565.
North Dakota. Hart-Parr Co. v. Fin-ley, 31 N. D. 130, L. R. A. 1915E, 851, 163 N. W. 137 [overruling, on this point, Stanford v. MeGill, C N. D 536, 38 L. R. A 760, 72 N W 938].
Pennsylvania. Hocking v. Hamilton, 158 Pa. St. 107, 27 Atl. 836
Tennessee. Brady v. Oliver, 125 Tenn. 595, 41 L. R. A. (NS) 60, 147 S. W. 1135.
Vermont. Cobb v Hull, 33 Vt 233.
Washington. Hunter v Wenatchee Land Co, 50 Wash 438, 97 Pac 491
West Virginia. Davis v. Grand Rapids School Furniture Co, 41 W Va. 717, 24 S. E. 630; Pancake v. Campbell, 44 W Vu 82, 28 S. E 719; Catlett v. Bloyd, - W. Va. -, 99 S E 81.
The elements of an election to treat renunciation as a breach and the sufficiency of bringing an action after making such election, were discussed in Landcs v. Klopstock, 252 Fed. 89.
2 South Boulder & Rock Creek Ditch Co. v. Marfell, 15 Colo. 302, 25 Pae. 504.
3 Bishop v. T. Ryan Construction Co., 106 Wash. 254, 180 Pac. 126
I See Sec. 2898.
2 England. Avery v. Bowden, 5 El. & BI. 714.
Pennsylvania. Maguire v. Johnston, 207 Pa. St. 592, 57 Atl. 64.
Tennessee. Inman v. Elk Cotton Mills 116 Tenn. 141, 92 S. W. 760.
Texas. Grccnwall Theatrical Circuit Co. v. Markciwitx, 97 Tex. 479, 65 L. R. A. 302, 79 S. W. 1009.
Wisconsin. Woodman v. Blue Grass Land Co., 125 Wis. 489, 103 N. W. 230, 104 N. W. 920.
3 Maguire v. Johnston, 207 Pa. St. 592, 57 Atl. 64.
4 Avery v. Bowden, 5 El. & Bl. 714.
5 Avery v. Bowden, 5 El. & Bl. 714.
6 Woodman v. Blue Grass Land Co., 125 Wis. 489, 103 N. W. 236, 104 N. W. 920.
7 Inman v. Elk Cotton Mills, 116 Tenn. 141, 92 S. E. 700.
8 Bernstein v. Meech, 130 N. Y. 354, 29 N E. 255.
9 Greenwall Theatrical Circuit Co. v. Markowitz, 97 Tex. 479, 65 L. R. A. 302, 79 S. W. 1009.
While the time at which damages are to be fixed is to be determined by the contract and not by the renunciation thereof, as a general rule,10 it has been held that where renunciation is not accepted as a breach for a considerable time, the party in default may take advantage of any facts which have occurred after his renunciation, before the acceptance thereof, to lessen the amount of damages.11
The party who is not in default is not bound to accept a renunciation as a discharge of the contract or as a breach for the purpose of accelerating the period of limitations.12 If he does not elect to treat such renunciation as a breach, the period of limitations will not run until the time which is fixed for performance by the terms of the contract has arrived.13