Question

state Farm insurance hired James Falls as an agent trainee. after completing an internship phase, he was given an “agent start-up kit.” He hired Michelle Quinlan, who had to pass online computer tests to be licensed to work for a state Farm agent. a problem with the internet kept the tests from being marked as completed on her transcript. she told Falls, who contacted Yolanda wilson, another state Farm employee, for help. They could not solve the problem. since Quinlan was not working the next day, she gave Falls her coursework user name and password in case he needed to get into the online transcripts. The next day, wilson told Falls that Quinlan’s transcripts were still not showing up as completed. Falls logged onto Quinlan’s account and completed coursework she had not com- pleted. when state Farm later found out that Falls had completed the coursework, it terminated him. Falls sued state Farm for breach of contract. state Farm alleged that Falls had failed to act in good faith and thus it was justified in ending their agreement. was state Farm so justified?

Answer 1

The state Farm according to me was justified in its approach. Since, Michelle Quinlan had to finish the test on her own in order to be licenced to work for a state Farm agent and Falls completing her coursework for her was nothing but unethical behaviour.

Even when Falls had the user ID and password, he should not have appeared and cleared the test which was meant to be the criteria for Quinlan to start working.

If a breach constitutes a material failure of performance, then the non -breaching party is discharged from all liabilities under the contract.

When one of the parties does not act in good faith, it is very much possible for the other party to end the contract.

Good faith can be defined as honest behaviour on Falls’ part. Falls should not have entered other person’s login credential and should not have appeared for the test. This was a breach of contract and was so grave as to directly hit at the foundation of contract and it irreparably damaged the trust between the contracting parties.

The beaching party could definitely terminate the contract. A material breach by one party to a contract entitles the non-breaching party to suspend performance.

Entering into other employee’s account and completing her coursework for her, amounted to material breach by Falls and hence state Farm was justified in terminating the contract.