In order to establish a claim for breach of contract, a party claiming breach must demonstrate (1) the existence of a contract; (2) a breach of the contract by the defendant; and (3) resulting damage. A breach of contract is not always constrained to the plain terms of the contract, as Arizona Courts imply into all Arizona contracts the duty that contracting parties work together in good faith and fair dealing. The implied terms include whether one party is impacting or depriving the other of the expected benefit of the bargain.
Where a non-breaching party’s performance is excused, the breaching party cannot claim damages for non-performance. Such a statement, however, simply begs the question about when a party is excused from further performance. Regardless of whether the non-breaching party is excused from further performance, he or she will have a claim if damaged. In Arizona, a non-breaching party must continue to perform in the face of breach unless the breach is material; but where a breach or repudiation is material, the non-breaching party need not further perform. Whether a specific breach is material is a question that depends on several factors:
(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.
