Are You Enforcing Your Contract Rights to Their Fullest

ARE YOU ENFORCING YOUR CONTRACT RIGHTS TO THEIR FULLEST?

By: Larry R. Leiby, Esq. and Robert S. Tanner, Esq.

About the Author: Larry Leiby, Esq. was the founder and first chairman of the Florida Bar Construction Law Committee in 1976. He is the author of the Florida Construction Law Manual. He is Board Certified in Construction Law and was on the Construction Law Certification Committee that creates and grades the tests for construction law board certification. He was awarded the lifetime achievement award by the Florida Bar Construction Law Committee and teaches construction law at the Florida International University College of Law. He can be reached at leiby@mkpalaw.com. For more information, please visit www.mkpalaw.com.

In Southern Crane Rentals, Inc. v. City of Gainesville, 429 So. 2d 771 (Fla. 1 st DCA 1983), Southern Crane Rentals ("Southern") entered into a contract with the City of Gainesville ("City") for the lease of a 90-ton crane for a period of approximately three months. The crane was to be used to set 115 foot concrete poles weighing 20 to 25 tons in the construction of electric transmission lines. Initially, construction was to begin on October 1, 1980.

Around the first or second week of October, the City's project superintendant notified Southern of a delay caused by the manufacture and delivery of the concrete poles. On October 23, 1980, Southern was advised to deliver the crane on November 17, 1980 to begin setting the poles on November 19, 1980. On November 10, 1980, Southern was put on hold for 60 days. Later, Southern was advised of further delay and then on January 19, 1981, the City decided to postpone the project indefinitely. Ultimately, on February 19, 1981, the City canceled Southern's contract. Southern filed suit for breach of contract.

The City moved for a summary judgment. Summary judgment is a procedure that concludes the litigation prior to trial and is only available where there is no genuine dispute as to any material facts and one of the parties is entitled to judgment as a matter of law. The City argued that because its contract with Southern was silent as to either party's right to cancel the contract, there was a "latent ambiguity" that required the court to rely upon "custom and usage" to supply the omitted provision. The City filed an affidavit that provided evidence that the custom in the crane rental industry was to allow unilateral cancellation of crane leases by the lessee. Southern did not file opposing evidence. Because there was no genuine dispute of material fact, the trial court entered judgment in favor of the City. Southern appealed.

Although the appellate court agreed that under some circumstances silence in a contract may create a latent ambiguity, it found that in this particular case the missing term concerning cancellation was supplied by the law. "The laws which exist at the time and place of the making of a contract enter into and become a part of the contract made, as if they were expressly referred to and incorporated in its terms, including those laws which affect its construction, validity, and enforcement or discharge." Accordingly, the appellate court reasoned that the laws of Florida concerning cancellation rights were part of the City's contract with Southern.

Florida law concerning cancellation in these particular circumstances, i.e., where the parties had an executory contract (a contract that was not fully performed), is that when one party directs the other not to proceed with their performance, the party giving the do-not-proceed directive has committed a breach and the other party is entitled to damages. The appellate court went on to note that, even if a custom in the industry existed whereby a crane lessee could unilaterally cancel, because the law concerning cancellation was actually part of the contract, that custom only reflected lessors' decision not to enforce their legal rights. Thus, although Southern could have chosen to follow custom by allowing the City to cancel, the City did not have the right to cancel. The result was that the summary judgment in favor of the City was reversed and the matter was sent back to the trial court for further proceedings where, presumably, Southern would simply establish its damages.

Contract law is a complex. Southern's use of a lawyer knowledgeable about that law probably resulted in Southern recovering the profits it expected to earn on the contract, as well as the attorney's fees it spent in litigating with the City. Are you enforcing your contract rights to your fullest benefit? Contact the attorneys at Malka & Kravitz, P.A. to find out.