Sodexo, a major food service vendor servicing South Carolina State University, alleges that the University breached its contract and failed to pay more than $6 million as obligated. The breach of contract, which was reported on May 12, is the latest in a series of financial troubles that has besieged S.C. State, which admitted that it owed vendors more than $10 million and is looking at a $24 million deficit this year. Sodexo said it has held up its end of the contract by providing S.C. State with the agreed-upon goods and services, but argues that S.C. State has breached the contract by failing to pay. Sodexo also claims that S.C. State is also in breach of its duty of “good faith and fair dealing” by accepting the goods from Sodexo without the intention of paying for them.
Earlier in March, the former president of S.C. State also filed a breach of contract lawsuit against the university. He claims the board of trustees’ move to fire him was without cause and thus he is entitled to severance pay. Specifically, the lawsuit argues “mere subjective and/or personal dissatisfaction” is not a valid reason for terminating his employment without compensation.
Breach of Contract Against South Carolina State Entities
Sodexo brought its breach of contract claims to the chief procurement officer at the South Carolina Budget and Control Board. Under South Carolina law, when a state body and a contractor or sub-contractor have a contract controversy, they have to initiate resolution proceedings before a state chief procurement officer by submitting a written request for resolution describing the controversy and the requested relief. This includes breach of contract claims. The request for resolution must be filed within one year of the date the contractor last performed work under the contract, or within three years of the date the requesting party first discovered or should have discovered the breach.
The chief procurement officer is required to try to arrive at a reasonable settlement by mutual agreement. If this fails, then he or she will conduct an administrative review and issue a decision. The party that did not prevail can request further review and/or a hearing by the Procurement Review Panel. The final decision of the panel then can be appealed to the appropriate South Carolina circuit court.
Duty of Good Faith and Fair Dealing
Sodexo alleges that S.C. State breached its duty of good faith and fair dealing. This duty is implied in every contract, and requires a party to refrain from acting in a way that evades the spirit of the contract or denies the other party an expected benefit from the contract. Sodexo’s claim that S.C. State breached this duty is based on the fact that although Sodexo never stopped providing the agreed-upon goods and services, S.C. State accepted the goods without the intention of paying.
If you believe you have a contract that has been breached by another party, you should consult with an attorney immediately. The attorneys at Pierce, Herns, Sloan, & Wilson LLC will help you seek the remedy you deserve.