Lancellotti v. Thomas - Case Brief PDF

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Contracts II

Class 38

Lancellotti v. Thomas Court: Superior Court of Pennsylvania (1985)

Facts: The parties entered into an agreement in which the PL agreed to purchase DF’s luncheonette business and to rent from the DF the premises on which the business was located. The $25,000 was paid as agreed, but problems arose from the construction of the addition. PL claims that the building permit got in the way. However, an addition was built after the DF obtained a building permit and constructed it (claiming PL agreed to pay them back). A year later, PL no longer wanted to operate the business.

Issues: Whether a defaulting purchaser of a business who has also entered into a related lease for the property can recover any part of his payments made prior to default.

Procedural History: The trial court, without a jury, found against appellant on the original claim, allowing DF to retain the $25,000 paid by the PL, and the DF on the counterclaim, allowing them to recover the $6,665.

Judgement: Remanded.

Reasoning: The court first analyzed the old rule which prohibited a defaulting party on a contract from recovering. The court traced the development of the rule from Britton v. Turner to academic criticism the Restatement of Contracts § 357. It analyzed the treatment other jurisdictions have given the restatements. The majority then addresses the issue of the adoption, incorporating it into the state’s adoption of the UCC. The court found the Restatement’s view more persuasive than the common law’s, as the contract breaker “is not an outlaw.” Because the court was applying a new rule, it remanded the case to the trial court.

Rules: The party who committed a breach should be entitled to recover any benefit in excess of the loss that he has caused by his own breach....