Contracts - Anticipatory Repudiation
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An anticipatory repudiation is a prospective breach that occurs...
before the date due for the K's performance
a repudiation must be a refusal to perform. Expression of are insufficient
Where a party has reasonable grounds for insecurity regarding the other party's prospective performance, ....
it may demand assurances of performance
The repudiating party may retract its repudiation by giving notice of retraction if...
- the aggrieved party has not acted in reliance on the repudiation by materially changing its position
- commencing an action for breach
Exception to the Rule:
The doctrine of anticipatory breach does not apply where there is a repudiation of an executory K ...
for the payment of money only.
The aggrieved party must await the time for performance to bring suit for damages
Doctrine of Anticipatory Repud. applies only where there are executory obligations ...
on both sides of the K·
Anticip. Repud. does not apply if a party repudiates a unilateral promise to pay money
in the future or in future installments
Antic. Repud. doesnt apply if there is a bilateral K where the aggrieved party has
fully performed its end of the bargain
CAN be through WORDS or CONDUCT
Anticipatory Repudiation (Definition)
A party may make it unmistakably clear, even before his performance under a contract is due [before he has a present active duty to perform], that he does not intend to perform. When he does so, he is said to have anticipatorily repudiated the contract.
Repudiation allows the other party to
suspend, and perhaps to cancel,his own performance.
But, a party must be relatively certain that the other party’s performance will not be forthcoming before treating it as a
she is the one indanger of becoming the breaching party by wrongfully suspending her ownperformance
Injured party no longer needs to hold herself
ready, willing and able to perform her part of the bargain but is able to make alternate arrangements
Hocester v. De La Tour
- provided the
- foundation of doctrine of anticipatory repudiation.
- Facts of Hochster: K for services between an
- employer and employee. The K was
- executed in April 1852, and provided that the employment was to begin on June
- 1, 1852. On May 11, the employer
- stated that he would not perform the K.
- On May 22, the employee instituted an action for breach of K. The employer asserted that as of the
- day suit was commenced, no breach had yet occurred.
- whether a repudiation gives rise immediately to a claim for total breach; and
- whether a repudiation by one party discharges the non-repudiating party’s
- remaining duties under the K
- answers YES to BOTH issues
- held that the action was not premature. The court’s reasoning, universally
- criticized today, was that if an immediate suit were not allowed, the plaintiff
- would either have to cancel the K, giving up all his rights under it, or else
- ignore the repudiation completely, holding himself in readiness to perform
- until June 1 (and therefore not procuring another job), meaning the wheels of
- the economy would’ve been standing still.
Technical exception (rule of substantive K law)
- This is a pitfall of commercial litigation: If one side has fully performed and the other side has a sequence of
- performances, there is no such thing as an anticipatory repudiation that will
- give rise to present claim for damages.
If one party has already performed
(non-executory K), you must wait until
other party fails to perform to bring a claim for Antic. Repud.
Assurances: UCC introduced to concept that where a party has reasonable grounds for
insecurity regarding the other party’s prospective performance, it may in writing
“adequate assurance of due performance” UCC 2-609(1)
Right to Assurances - Restatement view differs in 2 ways from the UCC
- (1) doesn’t require that
- the demand for assurances be made in writing; (2) doesn’t set a 30-day period
- in which to provide assurances
to a Repudiation:
Several options: (In either case, the party
can suspend its own performance)
- (1) Wait a reasonable time for performance; or ·
- (2) Treat the repudiation as a present breach and resort to its remedies, even as it urges the repudiating party to perform§253(1)
When the aggrieved party brings suit, it must show that had there been no repudiation,
it would have been ready, willing, andable to perform its end of the bargain §253(2)
In determining damages, a court will consider any costs
saved in not performing as well as any damages that could have beenavoided by appropriate action
Aggrieved party is bound by the duty tomitigate damages – when is a tougher question·
UCC 2-610(a) – aggrieved party may wait for “a commercially reasonable time”
Comment 1. If he awaits performance beyond a commercially reasonable time he cannot recover resulting damages which he should have avoided
§257. Effect of Urging
Performance in Spite of Repudiation
The injured party does notchange the effect of a repudiation by urging the repudiator to perform in spiteof his repudiation or to retract his repudiation.
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