It is well established by the courts in Pennsylvania that a material breach of a contract relieves the non-breaching party from any continuing duty of performance thereunder. Berkowitz v. Mayflower Securities, 455 Pa. 531, 534–535, 317 A.2d 584, 586 (1974) (citing 6 Williston, A Treatise on The Law of Contracts, § 8 (3d. ed.1962)). It is equally well established, that “[a] party also may not insist upon performance of the contract when he himself is guilty of a material breach of the contract.” Ott v. Buehler Lumber, 373 Pa.Super. 515, 541 A.2d 1143, 1145 (1988) (citing 17 Am.Jur.2d Contracts § 425; Murray, Contracts § 215 (2d. Rev Ed.1974)). However, until the state Supreme Court handed down its decision in LJL Transp., Inc. v. Pilot Air Freight Corp., 599 Pa. 546, 560, 962 A.2d 639, 648 (2009), there was not a clear rule as to how the courts should treat the following issue: whether a party’s conduct in breaching a contract may justify its immediate termination, even if the contract includes an express provision granting the breaching party the opportunity to cure before the contract is terminated?
In LJL Transp., Inc, the appellants-the franchisee and its owners-argued that the terms of the agreement in issue gave the franchisee an unqualified right to cure a breach, pursuant to paragraph 23(c) of the contract in issue which provided a right to cure within 90 days of notice. LJL Transp., 962 A.2d at 643. The franchisor, Pilot Air Freight Corp. (“Pilot”), argued that the cure provisions were not the exclusive means by which the agreement could be terminated and that the parties intended cumulative remedies. Pilot pointed to the provisions in paragraph 30 of the agreement which provided that “its electionto exercise any remedy available by law or contract shall not be deemed a waiver of nor preclude exercise of any other remedy. Id. at 647. Therefore, the franchisor argued that when the two paragraphs of the franchise agreement were considered together, the cure provisions of paragraph 23(c) were merely a cumulative remedy and not an exclusive one.
The Court in LJL Transport looked to other jurisdictions, which appeared to be in accord that, unless the termination provisions of a franchise agreement are, by their terms, exclusive, a termination clause affording the right to notice and cure is, as Pilot suggested, merely a cumulative remedy which does not bar the non-breaching party from exercising other remedies available to it in the event of a breach by the other party going directly to the heart of the contract, and destroying the fundamental trust upon which the contractual relationship is built. Furthermore, the Court in LJL Transport also recognized that courts in other jurisdictions have likewise concluded that, in the event of an incurable breach, the non-breaching party may immediately terminate the agreement without following its notice and cure provisions. Id. at 650-51 (citing Southland v. Mir, 748 F.Supp. 969 (E.D.N.Y.1990); In re Best Film and Video, 46 B.R. 861 (Bkrtcy.E.D.N.Y.1985); L.K. Comstock v. United Engineers, 880 F.2d 219 (9th. Cir.1989).
Consequently, with the law in other jurisdictions as a guide, the Pennsylvania Supreme Court held that when there is a breach of contract “going directly to the essence of the contract, which is so exceedingly grave as to irreparably damage the trust between the contracting parties, the non-breaching party may terminate the contract without notice, absent explicit contractual provisions to the contrary”. Id. at 652.