This appeal is from a directed verdict by the District Court of Salt Lake County in favor of plaintiff-respondent (“Polygly-coat”) on a counterclaim asserted by defendant-appellant (“Holcomb”) in Polygly-coat’s action on an open аccount obligation. The counterclaim alleges Polyglycoat’s breach of a written contract by which Po-lyglycоat gave Holcomb exclusive right to market its product (a wax sealant for car finish protection) in Utah and surrounding statеs, the alleged breach being Polygly-coat’s refusal to fill Holcomb orders and use of other distributors by Polyglycoat in Holcomb’s exclusive marketing area.
Polyglycoat was granted summary judgment on its complaint, and the matter proceeded tо jury trial on the counterclaim. When both parties had rested, the district court granted Polyglycoat’s motion for directed verdict by order which recites that certain dispositive facts had been established as a matter of law.
For purposes of this decision, it is only necessary for this Court to confirm that one or more of the facts identified by the District Court (1) were estаblished as a matter of law and (2) compelled the disposition of the matter in Polyglycoat’s favor.
We agree that the evidence established as a matter of law that Holcomb’s conduct with respect to performance of the contract justified its termination by Polyglycoat, and that Polyglycoat did terminate it. Because the contract was justifiably аnd effectively terminated before any Polyglycoat conduct inconsistent with it, the counterclaim must fail, and a directеd verdict was appropriate.
The contract does not expound upon Holcomb’s obligations as an exclusive distributor of Polyglycoat. Holcomb had acted as Polyglycoat’s distributor under oral agreement for almost a yeаr before the contract was prepared, and it was prepared more as a proof (for Holcomb’s potential dealers and customers) of Holcomb’s distributor status than afs a complete exposition of the rights and duties of the parties. The litigants agree that their- relationship was governed by the Uniform Commercial Code. There is consequently both statutory 1 and common law basis for imposing on both parties an obligation of good faith in performance of their contract even though the instrument does not directly address the subject.
In this record, there is evidence of Holcomb’s having undertaken to market his own product under the Polyglycoat label, and that evidence is virtually unrefuted. He admits having proсured some 1,400 bottles of the same size and shape as Polygly-coat’s containers. He admits having caused the Polyglycоat logo and legend to be reproduced on those bottles. He admits having purchased raw materials for manufaсture of a sealant which would not be readily distinguishable from the Polyglycoat sealant. He admits having duplicated, with minimal modifiсation, the printed warranty form which Polyglycoat inserted with its kits. He denies having actually filled these bottles with his own product and having thereby effected sales of that product on express or implied representation that it was authentic Polyglyсoat, but his associate’s testimony was explicit that Holcomb helped fill the bottles and did effect at least one such sale.
In
Coronado Mining Corp. v. Marathon Oil Co.,
Utah,
There is no dispute about Polyglycoat’s having taken timely and unequivocal action to cancel the contract and the Holcomb distributorship. The only issue remaining is whether Holcomb’s breach constituted justificаtion for contract cancellation.
As a general proposition, a party to a contract has a right оf rescission and an action for restitution as an alternative to an action for damages where there has been a material breach of the contract by the other party. 3 What constitutes so serious a breach as to justify rescission is not easily reduced to precise statement, but cеrtainly a failure of performance which “defeats the very object of the contract” or “[is] of such prime impоrtance that the contract would not have been made if default in that particular had been contemplatеd” 4 is a material failure.
We cannot imagine a course of conduct by Holcomb which would more certainly defeat Polyglycoat’s purрose in granting him the exclusive marketing right than the course on which Holcomb embarked. That course of conduct was cаlculated to preclude any sales of authentic Polyglycoat product while Holcomb exploited the Polyg-lycoat image to his own advantage. It is likewise inconceivable that Polyglycoat would have made the contract if it had known of Holcomb’s intention to distort its plan for distribution of its product. Whether Holcomb did so was an issue which, on the evidenсe, the District Court could determine as a matter of law, and we find no error in the determination the Court made. Affirmed. Costs to Pоlyglycoat.
Notes
. Section 70A-1-203, U.C.A., 1953, as amended.
.
Brigham v. Moon Lake Electric Ass’n,
. Williston on Contracts, Third Edition, Volume 12, Sec. 1455.
. Havas v. Alger,