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Javier A. Reyes, Key words: Contract, Damages, UCC

Blog Post: Javier A. Reyes, Key words: Contract, Damages, UCC

Contracts: Service provider was entitled to damages for the unexpired term of the contract, not only the unpaid invoices.

In ThyssenKrupp Elevator Corp. v. Hampton Manor at Deerwood, LLC, the Fifth DCA  reversed the lower court’s judgment holding that it violated the parties’ clear and unambiguous contract.

ThyssenKrupp entered into a contact with Harbor Manor to provide service for five years with an automatic renewal for a second five-year term. The contract had automatically renewed for a second term when Harbor Manor breached the contract by failing to pay for work performed in the amount of $1,157.14. The contract specifically provided that upon Harbor Manor’s failure to pay ThyssenKrupp could either: (1) suspend all service until all amounts due had been paid in full or (2) declare all sums for the unexpired term of the agreement due immediately and terminate the contract. ThyssenKrupp, won on summary judgment, but despite finding Harbor Manor liable for breach it awarded only the unpaid invoices in the amount of $1,157.14 and denied the sum for the unexpired term of $29,102.52. The Fifth DCA reversed holding that:

The contract is clearly unambiguous, and its plain meaning sets forth that upon default Thyssenkrupp is entitled to recover the monthly fee for the remaining term of the contract. When the terms of a contract are clear and unambiguous, a court has no right to give it a meaning other than that expressed in it. To hold otherwise would be to do violence to the most fundamental principle of contracts.

ThyssenKrupp Elevator Corp. v. Hampton Manor at Deerwood, LLC, 152 So. 3d 758, 759 (Fla. 5th DCA 2014) (internal citations omitted).

Takeaways: While other considerations are taken into account with regard to remedies in the sale of goods and services under the Uniform Commercial Code, this was a service contract and therefore the plain language of the contract was enforced. It is important to understand the consequence of the breach—here $1,157 liability turned into $30,000 in damages.