Legal Research & Analysis Series

LEGAL RESEARCH & ANALYSIS SERIES

UNDERSTANDING THE LITIGATION PROCESS

PREVENTION OF PERFORMANCE IN LITIGATION

HOW ALLEGATIONS OF REFUSED PAYMENTS, BLOCKED ACCESS, WITHHELD APPROVALS, AND OTHER OBSTRUCTIONS CAN MOVE FROM A CONTRACT DISPUTE TO AN EVIDENTIARY ISSUE FOR THE COURT

When Nonperformance Becomes the Lawsuit, the Critical Question May Be Not Only Whether Performance Failed—but Who Caused It to Fail

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PREVENTION OF PERFORMANCE CHANGES THE LITIGATION QUESTION

Many lawsuits begin with a seemingly simple allegation:

“THE DEFENDANT FAILED TO PERFORM.”

The defendant may respond:

“I TRIED TO PERFORM.”

Or:

“THE PLAINTIFF PREVENTED ME FROM PERFORMING.”

That response can fundamentally change the litigation.

The case may no longer concern only whether contractual performance occurred.

It may also concern:

what performance was required;

whether a condition precedent existed;

whether the obligated party was ready and able to perform;

whether performance was actually attempted;

whether the opposing party controlled something necessary for performance;

whether that party refused, blocked, delayed, or interfered with performance;

whether the obstruction was wrongful;

whether another reasonable means of performance remained available;

and whether the obstruction actually caused or materially contributed to the nonperformance.

North Carolina recognizes a prevention doctrine under which a party who prevents the performance of a condition, or makes it impossible by that party’s own conduct, may not be permitted to take advantage of the resulting nonperformance. North Carolina decisions also emphasize an important limitation: the alleged preventive conduct generally must be wrongful and beyond the preventing party’s legal rights. 

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THE LITIGATION QUESTION IS NOT SIMPLY:

“WAS THERE NONPERFORMANCE?”

The better litigation analysis asks:

WHY WAS THERE NONPERFORMANCE?

Consider two cases.

CASE ONE

The contract required payment.

The defendant had the funds.

The defendant simply chose not to pay.

That is one factual theory.

CASE TWO

The contract required payment.

The defendant had the funds.

The defendant repeatedly attempted payment through the authorized method.

The plaintiff repeatedly refused the payment.

The plaintiff then sued alleging nonpayment.

That presents a substantially different factual and legal theory.

The end result may look identical:

THE PLAINTIFF DID NOT RECEIVE THE MONEY.

But the reason for that result can determine the legal significance of the nonperformance.

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PREVENTION IS GENERALLY A SUBSTANTIVE CONTRACT ISSUE

One distinction is particularly important.

“Prevention of performance” is ordinarily a substantive contract-law concept.

It should not automatically be confused with:

discovery obstruction;

failure to answer interrogatories;

failure to produce documents;

violation of a scheduling order;

failure to attend a deposition;

spoliation;

failure to comply with a subpoena;

or other misconduct occurring during litigation.

Those matters can carry separate procedural consequences under the applicable rules of court.

The substantive prevention doctrine instead focuses principally upon whether conduct by one contracting party prevented or hindered the contractual performance or condition that later became an issue in the lawsuit. Federal appellate courts have repeatedly recognized versions of this principle, particularly where one party seeks to rely upon the nonoccurrence of a condition that its own conduct materially hindered or prevented. 

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PREVENTION CAN BECOME BOTH A SWORD AND A SHIELD

In litigation, prevention may operate in different ways depending upon governing law and the pleadings.

AS A DEFENSE

The defendant may argue:

“MY NONPERFORMANCE SHOULD NOT BE USED AGAINST ME BECAUSE THE PLAINTIFF CAUSED IT.”

AS PART OF A BREACH CLAIM

A claimant may contend:

“THE OTHER PARTY’S WRONGFUL OBSTRUCTION ITSELF VIOLATED THE CONTRACT.”

AS AN ANSWER TO A CONDITION-PRECEDENT ARGUMENT

One party may say:

“THE CONDITION NEVER OCCURRED.”

The other responds:

“YOU ARE THE REASON IT NEVER OCCURRED.”

Courts have recognized prevention particularly in the context of conditions precedent—events that must occur before another contractual duty becomes enforceable. 

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WHAT THE PLAINTIFF ALLEGES MATTERS

Suppose a Complaint alleges:

18. Defendant was required to pay $1,500 on September 1.

19. Defendant failed to pay.

20. Defendant therefore breached the agreement.

Those allegations present one narrative.

The defendant’s Answer might respond:

18. Admitted that $1,500 became due September 1.

19. Denied. Defendant timely tendered the full $1,500 through the payment method designated by Plaintiff. Plaintiff rejected the tender.

20. Denied.

The dispute has now been narrowed.

The controversy is no longer necessarily:

WHETHER THE DEFENDANT HAD A PAYMENT OBLIGATION.

It may instead become:

WHETHER PAYMENT WAS PROPERLY TENDERED AND WRONGFULLY REFUSED.

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THE ANSWER SHOULD DISTINGUISH FAILURE FROM PREVENTION

An effective litigation response should avoid an ambiguous statement such as:

“Defendant did not pay because Plaintiff would not take it.”

The evidentiary questions are much more precise.

What amount was due?

What amount was offered?

When?

Through what method?

Who controlled that payment method?

Was that method authorized?

What happened to the attempted payment?

Was it rejected?

Was it refunded?

Were alternative payment methods available?

Did the defendant attempt them?

Did the defendant continue holding the funds?

What did the parties say afterward?

Precision at the pleading stage helps define the discovery that follows.

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THE CONTRACT REMAINS THE STARTING POINT

Before litigating prevention, identify exactly what the agreement required.

Examine:

payment provisions;

deadlines;

conditions precedent;

notice provisions;

approval provisions;

access requirements;

cooperation clauses;

cure provisions;

discretionary provisions;

authorized payment methods;

rejection rights;

and amendment procedures.

A party cannot ordinarily establish wrongful prevention merely by showing that the other side refused something the contract expressly allowed it to refuse.

North Carolina precedent emphasizes this limitation: conduct alleged to constitute prevention must be wrongful and beyond the actor’s legal rights before it will excuse the other party’s nonperformance. 

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PREVENTION REQUIRES MORE THAN SAYING:

“THEY MADE IT DIFFICULT.”

Federal and state authorities distinguish genuine prevention or substantial hindrance from ordinary difficulty or inconvenience.

In District-Realty Title Insurance Corp. v. Ensmann, the D.C. Circuit described prevention as involving conduct that completely forecloses or substantially hinders the occurrence of the contractual condition. 

Similarly, the Fourth Circuit has recognized prevention doctrine principles where a promisor prevents or hinders fulfillment of a condition to its own performance. 

Therefore, litigation should examine:

OBSTRUCTION

versus

INCONVENIENCE.

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EXAMPLE:

THE PAYMENT PORTAL WAS DISABLED

Suppose the plaintiff alleges:

“Tenant failed to pay September rent.”

The tenant produces evidence showing:

August 31 — rent funds available.

September 1 — tenant attempted portal login.

September 1 — portal access denied.

September 1 — tenant emailed management requesting access.

September 1 — management acknowledged the account was disabled.

September 2 — tenant asked how payment should be tendered.

September 2 — no alternative method provided.

September 5 — plaintiff assessed a late charge.

September 8 — plaintiff alleged nonpayment.

Now litigation may require the court to determine:

Was the portal the exclusive authorized payment method?

Who disabled it?

Why?

Were other authorized methods available?

Was the tenant aware of them?

Did the tenant attempt those methods?

Were funds available?

Did the tenant remain ready to pay?

Did the landlord’s conduct actually cause the nonpayment?

The screenshot showing “account disabled” is only one piece of the analysis.

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EXAMPLE:

PAYMENT WAS SENT AND RETURNED

A tenant sends the full rent payment using the landlord’s established electronic account.

The landlord returns it.

The tenant immediately asks:

“How should I tender payment?”

The landlord does not respond.

The landlord later alleges nonpayment.

Potential evidence may include:

the lease;

past payment history;

transaction receipt;

refund confirmation;

bank statements;

emails;

texts;

tenant ledger;

late-fee entries;

and testimony from the parties.

The question becomes not merely:

“WAS THE LANDLORD PAID?”

but potentially:

“WHY WAS THE LANDLORD NOT PAID?”

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REFUSED TENDER SHOULD BE SEPARATED FROM NONPAYMENT

A litigation record should distinguish among:

NO PAYMENT ATTEMPT

FAILED PAYMENT ATTEMPT

INSUFFICIENT PAYMENT

UNAUTHORIZED PAYMENT METHOD

VALID TENDER

REFUSED TENDER

ACCEPTED PAYMENT

PAYMENT ACCEPTED AND LATER REFUNDED

PARTIAL PAYMENT

PAYMENT MISAPPLIED ON THE LEDGER

These are different factual circumstances.

They should not be collapsed into one generic category labeled:

“NONPAYMENT.”

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CONDITIONS PRECEDENT CAN BECOME CENTRAL

The prevention doctrine frequently appears where one party relies upon the failure of a condition precedent.

For example:

“Payment was due only after approval.”

Approval never occurred.

The party owing payment says:

“Therefore, nothing became due.”

But if that same party wrongfully prevented the approval from occurring, prevention doctrine may become relevant.

The D.C. Circuit has described prevention as an exception to the ordinary principle that no duty arises until a contractual condition occurs: where the promisor wrongfully prevents the condition, the condition may be excused. 

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NORTH CAROLINA:

PREVENTION REMAINS A LIVE CONTRACT DOCTRINE

A 2026 North Carolina Court of Appeals decision, Maldon v. Scott, expressly discussed prevention as one possible theory for excusing remaining contractual obligations and quoted North Carolina precedent that a party who prevents performance of a condition or makes performance impossible by its own act may not take advantage of the resulting nonperformance. 

That is especially significant for litigation analysis because prevention is not merely an academic historical concept.

The doctrine continues to appear in modern contract disputes.

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BUT NORTH CAROLINA ALSO REQUIRES MORE THAN A BARE ALLEGATION

In Cater v. Barker, the North Carolina Court of Appeals rejected a prevention theory where the evidence did not establish wrongful conduct rising to the level necessary to excuse performance. The court reiterated that the preventing conduct must be wrongful and beyond the alleged preventing party’s legal rights. 

That illustrates an essential litigation principle:

ALLEGING PREVENTION IS NOT THE SAME AS PROVING PREVENTION.

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THE BURDEN OF PRODUCING EVIDENCE MATTERS

A party asserting that performance was prevented should be prepared to produce evidence of:

the contractual obligation;

its own readiness;

its ability to perform;

its attempted performance;

the opposing party’s conduct;

the timing of that conduct;

the connection between the obstruction and nonperformance;

and, where relevant, the lack of a reasonable available alternative.

The opposing party may attempt to establish:

performance was never genuinely attempted;

the amount tendered was incorrect;

the tender was untimely;

the method was unauthorized;

the refusal was contractually permitted;

another method remained available;

or the alleged obstruction did not cause the failure.

That is how a legal doctrine becomes a factual dispute.

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READINESS AND ABILITY CAN BECOME CRITICAL EVIDENCE

A party cannot persuasively argue:

“THE OTHER SIDE PREVENTED MY PAYMENT”

if the evidence establishes the party never had the money.

Similarly, a contractor claiming prevention may need evidence that:

labor was available;

materials were available;

the work could otherwise have proceeded;

and access was actually the barrier.

The litigation theory is stronger when the record supports:

“BUT FOR THE OBSTRUCTION, PERFORMANCE WAS READY TO OCCUR.”

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BUILD THE PREVENTION TIMELINE

A prevention case should be reconstructed chronologically.

CONTRACT

September 1 — performance due.

READINESS

August 30 — funds available.

FIRST ATTEMPT

September 1, 9:02 a.m. — electronic payment initiated.

OBSTRUCTION

September 1, 9:03 a.m. — payment rejected.

NOTICE

September 1, 9:15 a.m. — written inquiry sent.

RESPONSE

September 1, 11:30 a.m. — recipient states payment will not be accepted.

CONTINUING READINESS

September 1–10 — funds remain available.

SECOND ATTEMPT

September 2 — alternate payment tendered.

SECOND REFUSAL

September 2 — payment returned.

LATER LITIGATION POSITION

September 12 — nonpayment alleged.

That timeline tells the story more clearly than:

“THEY WOULD NOT TAKE MY MONEY.”

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DOCUMENTS CAN MAKE OR BREAK THE THEORY

Important documents may include:

contracts;

leases;

amendments;

payment instructions;

portal records;

transaction confirmations;

refund confirmations;

bank statements;

account ledgers;

emails;

texts;

letters;

certified-mail receipts;

delivery confirmations;

access logs;

calendar records;

repair requests;

inspection requests;

approval requests;

and notices of attempted performance.

The strongest case generally uses contemporaneous evidence rather than reconstructed memory.

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ORIGINAL DOCUMENTS MATTER

Preserve the original:

transaction receipt;

email;

text thread;

bank statement;

portal screenshot;

ledger;

and uploaded file.

Do not preserve only an edited screenshot prepared for court.

Working exhibits may be annotated later.

The underlying source record should remain intact.

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DISCOVERY CAN TEST THE PREVENTION THEORY

Once litigation moves into discovery, the parties can seek information that confirms or undermines the theory.

Questions may include:

Who controlled the payment account?

Who disabled the portal?

When was access removed?

Why was access removed?

What did the internal ledger show?

Did employees receive instructions not to accept payment?

What alternative payment methods existed?

Were other tenants permitted to use those methods?

Did the recipient receive the transfer?

Was the money returned?

Who authorized the refund?

What communications occurred internally?

Discovery converts allegations into an evidence search.

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INTERROGATORIES CAN IDENTIFY THE ACTORS

A party might ask:

Identify every person who participated in the decision to reject the payment.

State every reason the payment was rejected.

Identify every payment method available on the date payment was due.

State whether the electronic payment account remained operational.

Identify every person with authority to disable or restore the tenant’s account.

The objective is to identify:

WHO DID WHAT AND WHY.

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REQUESTS FOR PRODUCTION CAN TARGET THE RECORD

Potential requests may seek:

tenant ledger;

electronic payment history;

portal-access logs;

internal emails;

refund records;

bank transaction records;

payment policies;

management instructions;

account notes;

communications concerning refusal;

and documents supporting the claimed balance.

The relevance of any particular request depends upon the claims, defenses, scope of discovery, governing rules, and court orders.

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REQUESTS FOR ADMISSION CAN NARROW THE CASE

Under Federal Rule of Civil Procedure 36, parties may request admissions concerning facts, application of law to fact, opinions about either, and genuineness of documents. The federal rules currently in effect include Rule 36 as part of the discovery framework. 

A prevention dispute might use carefully framed admissions such as:

Admit that Plaintiff received Defendant’s $1,500 transfer on September 1.

Admit that $1,500 was the monthly base rent then due.

Admit that Plaintiff returned the transfer.

Admit that Defendant requested another authorized payment method.

Admit that Plaintiff did not provide another payment method before September 5.

Admit that Plaintiff subsequently assessed a late fee.

Admit that Exhibit A is a genuine copy of the transaction confirmation.

Each admission may remove one factual dispute.

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THE DIFFERENCE BETWEEN FACT AND LEGAL CONCLUSION MATTERS

An RFA saying:

“Admit that Plaintiff violated the prevention doctrine”

may be less strategically useful than admissions establishing the underlying conduct.

For example:

Admit payment was tendered.

Admit payment was refused.

Admit no alternative method was provided.

Admit Defendant requested payment instructions.

Admit Plaintiff later alleged nonpayment.

Once the facts are fixed, the parties can argue their legal significance.

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DEPOSITIONS CAN TEST THE DECISION-MAKING PROCESS

A witness may be asked:

Who decided to refuse the payment?

What contractual authority supported that decision?

Was the tenant notified?

What happened to the money?

Were alternative methods available?

Why does the ledger show a balance?

Did the landlord possess records showing attempted payment when the complaint was filed?

Those answers may affect:

credibility;

causation;

contract interpretation;

damages;

and the viability of the prevention theory.

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AFFIDAVITS AND DECLARATIONS CAN ESTABLISH THE TIMELINE

At summary judgment, sworn evidence may become important.

A useful declaration focuses on facts within personal knowledge.

For example:

On September 1, I possessed sufficient funds to pay the $1,500 rent obligation. At 9:02 a.m., I transmitted $1,500 using the electronic payment account previously designated by the property manager. The transaction was returned. At 9:15 a.m., I requested another authorized means of payment.

That is different from merely asserting:

“Plaintiff prevented performance.”

One states evidence.

The other largely states a legal conclusion.

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SUMMARY JUDGMENT IS WHERE THE THEORY MAY BECOME DECISIVE

Federal Rule 56 governs summary judgment, and the current Federal Rules of Civil Procedure continue to place Rule 56 in the adjudicatory framework following discovery. 

At that stage, the dispute may no longer concern what the parties alleged in their pleadings.

The record may contain:

authenticated payment records;

bank statements;

ledger entries;

sworn declarations;

admissions;

deposition testimony;

emails;

and undisputed contract provisions.

The question becomes whether a genuine dispute of material fact remains and whether the applicable substantive law entitles either side to judgment.

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THE MOVING PARTY MAY ARGUE:

PAYMENT WAS NEVER MADE.

The opposing party may respond:

PAYMENT WAS TENDERED AND WRONGFULLY REFUSED.

The court may then need to determine whether the relevant facts are genuinely disputed.

If the material facts concerning tender, refusal, contractual authority, and causation are undisputed, the prevention issue may become principally one of legal application.

If those facts remain genuinely disputed, trial may be necessary.

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PARTIAL SUMMARY JUDGMENT MAY ALSO MATTER

The entire lawsuit does not necessarily have to be resolved at once.

A court might potentially determine one issue while leaving another for later resolution.

For example:

Whether payment was tendered.

Whether a condition was excused.

Whether liability exists.

Whether damages remain disputed.

That procedural possibility makes careful issue definition especially important.

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PREVENTION CAN UNDERMINE A NONPERFORMANCE NARRATIVE

A plaintiff may initially present the case as:

CONTRACT + NONPERFORMANCE = BREACH.

But if discovery establishes:

CONTRACT

READINESS TO PERFORM

TIMELY ATTEMPT

PLAINTIFF’S OBSTRUCTION

RESULTING NONPERFORMANCE,

the causation narrative changes.

The litigation then asks whether the plaintiff may legally rely upon a failure the plaintiff helped create.

That is the heart of prevention analysis.

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PREVENTION DOES NOT AUTOMATICALLY ESTABLISH LIABILITY

Even strong evidence of obstruction does not necessarily decide every claim.

The court may still have to determine:

whether the conduct was wrongful;

whether the contract authorized it;

whether the obstruction materially caused the failure;

whether alternative performance remained possible;

whether conditions precedent existed;

whether the prevented party adequately performed its own obligations;

whether damages resulted;

and what remedy governing law permits.

Prevention is part of the legal analysis—not an automatic judgment.

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ANTECEDENT BREACH MAY PRESENT A DIFFERENT THEORY

North Carolina’s 2026 Maldon decision is instructive because the Court of Appeals discussed both prevention and antecedent breach as possible theories that could excuse later contractual performance. 

These concepts should not automatically be merged.

PREVENTION

focuses upon conduct causing or obstructing the other party’s performance.

ANTECEDENT OR PRIOR MATERIAL BREACH

may concern whether one party’s earlier breach relieved the other party of subsequent contractual obligations.

The facts may support one, both, or neither.

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GOOD FAITH MAY ALSO APPEAR—but IT IS NOT AUTOMATICALLY THE SAME DOCTRINE

A litigant may characterize obstruction as:

bad faith;

breach of contract;

prevention of performance;

breach of an implied covenant;

waiver;

estoppel;

or another doctrine.

Those labels are not interchangeable.

Each theory should be researched separately under the governing jurisdiction.

The prevention doctrine’s central focus is causation between the challenged conduct and the failure of contractual performance or a contractual condition.

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RULE 11 BECOMES IMPORTANT WHEN THE EVIDENCE IS ALREADY KNOWN

Federal Rule of Civil Procedure 11 governs representations made to a federal court in pleadings, written motions, and other papers and requires appropriate factual and legal grounding for those submissions. 

That makes one litigation situation particularly significant.

Suppose a party possesses records showing:

payment was tendered;

payment was received;

payment was returned;

and alternative payment instructions were requested.

Yet the party submits a categorical allegation:

“DEFENDANT NEVER ATTEMPTED PAYMENT.”

The existence and investigation of the contrary evidence may become relevant to litigation accountability.

That does not mean every inaccurate allegation automatically constitutes a Rule 11 violation.

But pleadings should accurately reflect the factual basis reasonably available to the signer.

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THE SAME PRINCIPLE APPLIES TO THE PARTY CLAIMING PREVENTION

A defendant should not allege:

“PLAINTIFF INTENTIONALLY BLOCKED PAYMENT”

merely because an electronic transaction failed.

Possible causes might include:

bank rejection;

insufficient funds;

incorrect recipient information;

platform error;

transaction limit;

expired account;

or an unauthorized payment method.

The evidence must support the allegation.

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PROCEDURAL OBSTRUCTION DURING THE LAWSUIT IS A DIFFERENT ISSUE

Suppose the underlying lawsuit involves prevention of contractual performance.

During discovery, one side then refuses to produce relevant payment records.

That later refusal is not necessarily another instance of the substantive prevention doctrine.

It may instead implicate:

discovery obligations;

motions to compel;

court orders;

sanctions;

evidentiary consequences;

or other procedural remedies under the governing rules.

The Federal Rules separately regulate pleadings, discovery, admissions, and summary judgment through Rules including 8, 11, 26, 36, and 56. 

Keeping the substantive and procedural theories separate prevents analytical confusion.

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PREVENTION IN LITIGATION REQUIRES A CAUSATION MAP

A useful case-development tool is:

1. CONTRACTUAL DUTY

What exactly was the party required to do?

2. PERFORMANCE DATE

When was performance required?

3. READINESS

Was the party ready and able?

4. ATTEMPT

What concrete act was taken?

5. REQUIRED COOPERATION

What did the other party control?

6. OBSTRUCTION

What was refused, blocked, withheld, or disabled?

7. AUTHORITY

Was the conduct contractually or legally authorized?

8. ALTERNATIVE

Could performance reasonably have occurred another way?

9. CAUSATION

Did the obstruction cause or materially contribute to the failure?

10. AFTERMATH

What happened next?

11. LITIGATION POSITION

What did each party later allege?

12. DAMAGES

What legally cognizable consequence resulted?

That matrix can become the blueprint for discovery.

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THE PAYMENT-PREVENTION EVIDENCE MATRIX

For refused-payment litigation, compare:

CONTRACT

What amount was due?

AUTHORIZED METHOD

How was payment supposed to be made?

FUNDS

Were funds available?

TENDER

Was the full amount actually offered?

DATE

Was it timely?

RECIPIENT

Was the correct party approached?

REFUSAL

Who rejected it?

REASON

Why?

RETURN

Was money refunded or transaction reversed?

ALTERNATIVE

Was another authorized method offered?

CONTINUED READINESS

Did the payer retain the ability to perform?

LEDGER

How was the account recorded?

LATER CLAIM

Was nonpayment subsequently alleged?

SUPPORTING EVIDENCE

What proves each step?

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THE LITIGATION STORY SHOULD BE DOCUMENT-DRIVEN

Weak:

“Plaintiff prevented me from performing.”

Stronger:

Contract provision → payment instructions → bank record → tender confirmation → refusal → written request for alternative method → second refusal → ledger → complaint alleging nonpayment.

That is an evidentiary sequence.

The courtroom ultimately deals in proof.

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CONTRADICTORY RECORDS REQUIRE RECONCILIATION

A case may contain:

a tenant screenshot showing payment;

a bank statement showing reversal;

a landlord ledger showing no credit;

an email acknowledging receipt;

and a later refund.

Do not select only the favorable document.

Analyze the entire chain.

The purpose of legal research and litigation analysis is not merely to collect supportive evidence.

It is to understand how all relevant evidence fits together.

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PRESERVATION BECOMES ESSENTIAL

Once litigation is reasonably foreseeable, relevant records should be preserved.

For a prevention dispute, this can include:

original contracts;

payment records;

bank statements;

portals;

messages;

emails;

ledgers;

refund confirmations;

internal communications;

access records;

documents concerning alternative performance;

and records explaining why performance was refused.

The factual chronology may ultimately depend upon records that existed long before the complaint was filed.

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PREVENTION MAY AFFECT CREDIBILITY

Suppose a party alleges:

“WE NEVER REFUSED PAYMENT.”

Discovery produces an email stating:

“Do not accept any further payments from this tenant.”

That contradiction may matter far beyond the isolated document.

It can affect:

credibility;

factual findings;

summary-judgment arguments;

cross-examination;

and the overall theory of the case.

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INTENT AND EFFECT SHOULD NOT BE CONFUSED

A party may argue:

“WE DID NOT INTEND TO PREVENT PERFORMANCE.”

But some prevention doctrines focus significantly on whether the conduct actually hindered or prevented the contractual condition, although the required level of wrongfulness and intent varies by jurisdiction.

The Fourth Circuit has recognized that prevention may apply where conduct materially contributes to the nonoccurrence of a condition, while other authorities formulate causation somewhat differently. 

Therefore, research the controlling jurisdiction rather than assuming one universal causation standard.

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A LAWFUL EXERCISE OF CONTRACTUAL RIGHTS MAY DEFEAT THE THEORY

Suppose the lease says:

“Landlord may reject personal checks after any returned payment.”

The tenant later submits a personal check.

The landlord rejects it.

If another authorized payment method remained available, the landlord may contend that it merely exercised an express contractual right.

That is materially different from disabling every authorized payment method and then alleging default.

The contract matters.

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PREVENTION CAN ALSO OCCUR OUTSIDE PAYMENT CASES

The doctrine can potentially arise in litigation concerning:

construction;

employment;

real estate closings;

broker commissions;

insurance;

financing;

service contracts;

licensing;

commercial transactions;

procurement;

settlement agreements;

and many other contractual relationships.

Federal cases applying or discussing prevention have involved contexts ranging from real-estate transactions to construction and other contractual conditions. 

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ACCESS PREVENTION

Contractor must complete work by October 1.

Owner locks contractor out September 1.

Owner later sues because project was unfinished October 1.

Litigation asks:

Was access required?

Did the owner have authority to deny access?

Could the contractor perform without access?

Was the contractor otherwise ready?

Did the denial cause the missed deadline?

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DOCUMENT PREVENTION

Buyer must secure financing by September 15.

Seller must provide documents required by lender.

Seller refuses.

Financing deadline passes.

Seller alleges buyer failed to obtain financing.

The litigation may center upon whether the seller’s refusal prevented satisfaction of the financing condition.

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APPROVAL PREVENTION

Payment becomes due after approval.

The party responsible for approving the work refuses even to inspect it.

Payment is withheld because approval “never occurred.”

The question becomes:

CAN A PARTY RELY UPON THE ABSENCE OF AN APPROVAL THAT ITS OWN CONDUCT PREVENTED?

That is precisely the kind of condition-precedent structure prevention doctrine is designed to analyze. 

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THE COURT MUST SEPARATE THREE QUESTIONS

QUESTION ONE:

WHAT HAPPENED?

That is factual.

QUESTION TWO:

WHY DID IT HAPPEN?

That is causational.

QUESTION THREE:

WHAT LEGAL CONSEQUENCE FOLLOWS?

That is governed by substantive law.

A strong litigation analysis does not skip any of the three.

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PREVENTION DOES NOT ELIMINATE THE NEED TO MITIGATE

Even where one party caused an obstruction, the other party may still face questions concerning reasonable efforts to limit resulting damages.

Could another authorized method have been used?

Could access have been requested?

Could a replacement document have been obtained?

Could the problem have been cured?

Could losses have been reduced?

Mitigation and prevention are separate doctrines, but both may become relevant to the damages stage.

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DAMAGES COME AFTER LIABILITY ANALYSIS

Even if the court determines that performance was wrongfully prevented, the party seeking money generally must still establish whatever damages elements governing law requires.

Potential issues may include:

causation;

foreseeability;

certainty;

mitigation;

contractual limitations;

offsets;

and available remedies.

A finding concerning prevention does not automatically establish a particular monetary award.

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A STRONG PREVENTION CASE FILE SHOULD CONTAIN

□ The complete contract.

□ Amendments and addenda.

□ Payment or performance requirements.

□ Proof of readiness.

□ Proof of ability to perform.

□ Every attempted performance.

□ Every rejection or obstruction.

□ Communications requesting cooperation.

□ Evidence of available alternatives.

□ Evidence concerning why alternatives failed.

□ Original electronic records.

□ Bank or financial records where relevant.

□ Ledgers.

□ Refund records.

□ Witness identification.

□ Chronological timeline.

□ Discovery responses.

□ Admissions.

□ Deposition testimony.

□ Affidavits or declarations.

□ Damages documentation.

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THE CENTRAL LITIGATION QUESTION

When a lawsuit alleges nonperformance, do not stop with:

“DID PERFORMANCE OCCUR?”

Ask:

“IF IT DID NOT OCCUR, WHY NOT?”

Then:

“WHO CONTROLLED THE THING THAT PREVENTED IT?”

Then:

“DID THAT CONDUCT WRONGFULLY CAUSE OR MATERIALLY CONTRIBUTE TO THE FAILURE?”

Then:

“WHAT DOES THE CONTROLLING LAW DO WITH THAT FACT?”

That is prevention-of-performance analysis.

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THE BOTTOM LINE

Prevention of performance can transform a breach-of-contract lawsuit.

What initially appears to be a straightforward allegation—

“THE DEFENDANT DID NOT PERFORM”—

may become an evidentiary inquiry into whether the plaintiff itself refused, blocked, delayed, withheld, or otherwise interfered with the very performance it later claims never occurred.

North Carolina recognizes that a party who wrongfully prevents performance of a condition may not simply take advantage of the resulting nonperformance, while also requiring the alleged preventing conduct to exceed the party’s legal rights. 

Federal appellate authority similarly recognizes prevention in circumstances where a contracting party hinders or prevents fulfillment of a condition upon which contractual performance depends. 

But prevention must be proven.

The litigant should establish:

THE DUTY.

THE READINESS.

THE ATTEMPT.

THE OBSTRUCTION.

THE WRONGFULNESS.

THE CAUSATION.

THE RESULT.

And then connect every important proposition to admissible evidence.

Because once litigation begins:

“I WAS PREVENTED FROM PERFORMING” IS AN ALLEGATION.

THE DOCUMENTED CHAIN SHOWING HOW PERFORMANCE WAS PREVENTED IS THE EVIDENCE.

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GREENSBORO ENTREPRENEUR

LEGAL RESEARCH & ANALYSIS SERIES

PREVENTION OF PERFORMANCE IN LITIGATION

Nonperformance tells the court what did not happen.

Prevention evidence may explain why.

Research. Understand. Document. Analyze.

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EDUCATIONAL & LEGAL RESEARCH NOTICE

This newsletter is provided solely for general educational, informational, and legal-research purposes. It is not legal advice and does not create an attorney-client relationship.

The prevention doctrine is a substantive contract-law doctrine whose elements, causation standard, available defenses, relationship to conditions precedent, relationship to good faith, and available remedies vary by jurisdiction. North Carolina appellate authority recognizes the doctrine while also requiring qualifying wrongful conduct, and federal appellate decisions illustrate additional formulations used in other jurisdictions. 

The Federal Rules of Civil Procedure discussed here apply to litigation in United States district courts. State courts operate under their own constitutions, statutes, rules of civil procedure, evidence rules, appellate precedent, local rules, administrative procedures, standing orders, and case-specific orders. The Federal Rules currently include separate provisions addressing pleadings, representations to the court, discovery, Requests for Admission, and summary judgment. 

Before asserting or defending a prevention-of-performance theory in an actual case, verify the controlling contract, substantive state law, applicable statutes, procedural rules, evidentiary rules, appellate decisions, local rules, and orders governing the particular litigation.