Anticipatory Repudiation
2 ways anticipatory repudiation occurs
(1) a statement that clearly indicates an intent to breach or (2) a voluntary, affirmative act that renders (or apparently renders) a party unable to perform. (conduct triggering an anticipatory repudiation must be both voluntary and affirmative)
What rights does an aggrieved party have following repudiation - common law
- Terminate the contract and pursue remedies based on such termination. - Treat the repudiation as an immediate breach and sue immediately for any damages sustained. - Treat the contract as binding until the time for performance arrives, and at such time bring an action on the contract for breach. [risk: the repudiation can be retracted]
4 steps to determine if there is a repudiation
1) express statement, voluntary action that makes performance impossible 2) threatened breach must be one that would qualify as material breach 3) repudiation must be definite and unequivocal 4) AND If aggrieved party is in doubt, they must seek adequate assurance of performance.
When can a party suspend performance?
A party to a contract may suspend his own performance and demand adequate assurance if there are reasonable grounds to believe that the other party may be unable to perform. If the other party does not provide adequate assurance within a reasonable time, then the suspending party may sue for a remedy.
What is an anticipatory repudiation?
An anticipatory breach occurs when one of the parties to a contract repudiates (refuses to fulfill or discharge) the contract before the date performance is due.
Rule from Wholesale Sand & Gravel, Inc. v. Decker 630 A.2d 710 (Me. 1993)
An anticipatory repudiation of a contract is a definite and unequivocal manifestation of intention on the part of the repudiator that he will not render the promised performance when the time fixed for it in the contract arrives. The manifestation of an intention to repudiate a contract may be made and communicated by either words or conduct. The words or conduct evidencing such refusal or inability to perform, however, must be definite, unequivocal, and absolute.
Unique Sys., Inc. v. Zotos Int'l, Inc. 622 F.2d 373 (8th Cir. 1980) rules:
Anticipatory repudiation occurs only when one party expressly renounces a contract and announces an intention not to perform. There must, at a minimum, be an overt communication of intention or an action which renders performance impossible or demonstrates a clear determination not to continue with performance. A secret intention not to perform or a negative attitude does not rise to the level of repudiation. If a party to a contract demands of the other party a performance to which he has no right under the contract and states definitely that, unless his demand is complied with, he will not render his promised performance, an anticipatory repudiation has been committed. A suggestion for modification of a contract does not amount to a repudiation unless the party makes it clear that he will not perform without the modification
What should an aggrieved party do if they're in doubt?
If the aggrieved party is in doubt, they must seek adequate assurance of performance before they cancel the contract.
Can there be doubt an anticipatory repudiation?
NO; The repudiation must be definite and unequivocal (an expression of doubt about one ability to perform is not enough)
How does a repudiation occur?
Repudiation can occur in several ways (e.g., express statement, voluntary action that makes performance impossible).
Can a party retract their repudiation under the UCC?
YES -> under UCC §2-611 (1) Until the repudiating party's next performance is due he can retract his repudiation unless the aggrieved party has since the repudiation cancelled or materially changed his position or otherwise indicated that he considers the repudiation final. (2) Retraction may be by any method which clearly indicates to the aggrieved party that the repudiating party intends to perform, but must include any assurance justifiably demanded under the provisions of this Article (Section 2-609). (3) Retraction reinstates the repudiating party's rights under the contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation.
Is anticipatory repudiation Material?
YES; The threatened breach must be one that would qualify as material breach (consider the gravity of the anticipated action).
When is anticipatory repudiation considered final?
anticipatory repudiation is considered final when either the injured party has materially changed position in reliance on the repudiation or where the injured party has indicated to the repudiating party that the anticipatory repudiation is considered final. Id. at § 256.
What rights does an aggrieved party have following repudiation - UCC
under UCC §2-610 When either party repudiates the contract with respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may (a) for a commercially reasonable time await performance by the repudiating party; or (b) resort to any remedy for breach (Section 2-703 or Section 2-711), even though he has notified the repudiating party that he would await the latter's performance and has urged retraction; and (c) in either case suspend his own performance or proceed in accordance with the provisions of this Article on the seller's right to identify goods to the contract notwithstanding breach or to salvage unfinished goods (Section 2-704).
