Legal Question in Business Law in California

Waiver of Breach

Written agreement was consummated to secure executive search services by my firm and a NC-based public corporation. The expiration date of the written agreement was 12/31/2007. However, the offeror (public corp employer) continued to seek services of offeree (recruiter) after this date despite the fact that they never offered to formally extend termination date of contract. In May 2008 a candidate was found and subsequently hired by offeror after offeree's services were continually solicited by offeror.

Offeror's Legal Department got involved and is attempting to claim there was no Waiver of Breach and thus has indicated that they will not honor offeree's invoice for services rendered.

If NC-based offeror remains adamant, may offeree pursue remedy in CA federal court or must a NC federal court district be used? Offeror's contract does not address jurisdiction of disputes.

Asked on 6/04/08, 3:56 pm

1 Answer from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Waiver of Breach

On the facts given, I don't find either a breach of contract or a waiver of any breach. What I do see is conduct of the parties beyond the technical expiration date of the contract as though the contract remained in effect and hadn't expired.

Perhaps one could think of this as a waiver of the expiration date term. In any event, it's not a waiver of a breach of contract.

I'd say that your firm, the supplier of services which hasn't been paid, has a strong case to recover payment on one or another of at least two theories that are better recognized than "waiver of expiration" or whatever. Those two theories are (1) contract implied in fact; and (2) quasi-contract.

Quasi-contract is also known by the names quantum meruit, unjust enrichment and restitution.

I'm not saying that a full review of the facts wouldn't show a breach and a waiver. That's entirely possible. I'm only saying it doesn't appear from the facts.

Federal jurisdiction can be invoked on either a "Federal question" basis or a "diversity" basis. Unless your dispute involves more than $75,000, you won't be able to get it into Federal Court on a diversity basis, and since it seems to be a straight contract case involving state law, there is no Federal question. So, I'd say the analysis has to be Yolo County Superior Court or somewhere in North Carolina.

What are your chances of getting a California court to find that it has jurisdiction? Pretty good, I'd say. I assume there is neither a forum-selection clause nor a choice of law clause in the contract. (A clause requiring application of NC law to disputes would not be fatal to California jurisdiction, but it wouldn't help.) There is a fairly recent case in which a California law firm was able to sue an out-of-state client in California state courts for nonpayment of legal fees, based primarily on the fee agreement and services rendered being sufficient to establish the minimum contacts necessary for jurisdiction. Daar & Newman v. VRL Int'l. (2005) 129 Cal.App.4th 482.

Pleas contact me directly for a more detailed free analysis of your issues.

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Answered on 6/04/08, 6:19 pm

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