Consider the case of nonpayment under a very simple contract, where the only promise made is that
Person A will perform and deliver some specific work, and
Business B will pay them a stated amount for it upon completion. And to provide
Person A with an incentive to terminate rather than sue for performance, say they also agreed to provide some small accessories to the main work after receipt of payment. So
Person A prefers to terminate if they get the opportunity to do so.
There's no dispute that the work has been completed and delivered, however
Business B has not provided payment despite being invoiced, despite taking possession of the delivered work, and despite the passage of multiple weeks and the delivery of multiple notices that payment is due.
Person A then delivers a notice along the lines of:
In relation to
Business B'scontinued nonpayment of the invoice delivered on
dateand the notice delivered on
later dateregarding same, which advised
Business Bthat its nonpayment has adversely affected
Person A'sfinances, that payment was now past due, and which requested payment in full by close of business on
the same day, I must inform you that no such payment has been received.
Business Bowes an amount of
payable amountfor work which was completed and delivered on
dateand has no reasonable grounds for withholding payment. This amount is past due and payable immediately.
This will be my final demand for payment of completed work, and any subsequent nonpayment will be taken as evidence that
Business Bis either unwilling or unable to uphold its obligations. Failure to dispatch payment, in full, before close of business on
todayshall be construed as nonpayment, notwithstanding any excuse which may be offered. For the avoidance of any doubt, with respect to the matter of payment time is of the essence.
Business B receives this and promptly replies stating that payment has now been issued. However,
Person A sees no evidence of any payment having actually been made. This should give rise to
Person A's right to terminate the contract due to repudiation and/or fundamental breach.
My question is, do
Business B's actual or stated motivations have any bearing on
Person A's right to terminate? For instance, if
Business B was just plain lying about having paid, that would certainly have no bearing (except that it may also constitute unconscionable conduct and/or fraud).
But what if
Person A terminates, and it was the case (or
Business B claims it was the case) that
Business B made an honest mistake issuing payment, and for instance sent payment to the wrong account or accidentally scheduled it to occur on some future date instead of immediately? Would that have any bearing on their repudiation of the contract or
Person A's right to terminate?
Is there any avenue of defense against termination that becomes accessible to
Business B by virtue of having claimed, in word, to have fulfilled their obligations whilst failing in deed to actually have done so?
Does the distinction between whether
Business B has been dishonest, legitimately incompetent, or devious (in feigning incompetence) make any difference?