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Keywords

contractbreach of contractdamagesappealtrialrescission
contractdamagesappealtrialrescission

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M & W Development, Inc. v. El Paso Water Co., Inc., 6 Kan.App.2d 735, 634 P.2d 166

Facts

M & W Development, Inc. is a real estate developer in Derby, Kansas, that advanced funds to El Paso Water Company to finance the extension of water lines. The contract stipulated that El Paso would issue promissory notes to M & W upon the maturation of the advancements. However, El Paso failed to issue these notes, leading M & W to sue for breach of contract. The trial court found in favor of M & W, awarding them a substantial amount, but El Paso appealed, arguing that the breach was not material and that the damages awarded were excessive.

M & W Development, Inc. is a real estate developer in Derby, Kansas, that advanced funds to El Paso Water Company to finance the extension of water lines.

Issue

Did El Paso Water Company materially breach the contract with M & W Development, Inc. by failing to issue promissory notes for the repayment of matured advancements, and what is the proper amount of damages?

Did El Paso Water Company materially breach the contract with M & W Development, Inc. by failing to issue promissory notes for the repayment of matured advancements, and what is the proper amount of damages?

Rule

To warrant rescission of a contract for breach, the breach must be material and substantial enough to defeat the object of the parties. Failure of consideration is not grounds for rescission unless it amounts to fraud, and the injured party should be placed in the same position as if the contract had been performed.

To warrant rescission of a contract for breach, the breach must be material and substantial enough to defeat the object of the parties.

Analysis

The court determined that while there was substantial evidence supporting the trial judge's finding that El Paso breached the contract by not issuing the notes, this breach was not material enough to justify rescission. The contract was largely executed, with the only remaining obligation being the repayment of the matured advancements. The court applied the principle that damages should reflect the position the injured party would have been in had the contract been performed, leading to the conclusion that the proper damages were $19,707.89.

The court determined that while there was substantial evidence supporting the trial judge's finding that El Paso breached the contract by not issuing the notes, this breach was not material enough to justify rescission.

Conclusion

The Court of Appeals reversed the trial court's judgment and remanded the case with directions to enter judgment for M & W in the amount of $19,707.89 plus interest on the unpaid installments.

The Court of Appeals reversed the trial court's judgment and remanded the case with directions to enter judgment for M & W in the amount of $19,707.89 plus interest on the unpaid installments.

Who won?

M & W Development, Inc. prevailed in the case, as the court found that El Paso breached the contract, but the damages were adjusted to reflect the proper amount owed.

M & W Development, Inc. prevailed in the case, as the court found that El Paso breached the contract, but the damages were adjusted to reflect the proper amount owed.

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