-
An anticipatory repudiation is a prospective breach that occurs...
before the date due for the K's performance
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a repudiation must be a refusal to perform. Expression of are insufficient
clear, unequivocal
doubt
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Where a party has reasonable grounds for insecurity regarding the other party's prospective performance, ....
it may demand assurances of performance
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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
- OR
- commencing an action for breach
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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
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Doctrine of Anticipatory Repud. applies only where there are executory obligations ...
on both sides of the K·
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Anticip. Repud. does not apply if a party repudiates a unilateral promise to pay money
in the future or in future installments
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Antic. Repud. doesnt apply if there is a bilateral K where the aggrieved party has
fully performed its end of the bargain
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ANTICIPATORY REPUDIATION
CAN be through WORDS or CONDUCT
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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.
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Repudiation allows the other party to
suspend, and perhaps to cancel,his own performance.
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But, a party must be relatively certain that the other party’s performance will not be forthcoming before treating it as a
repudiation or
she is the one indanger of becoming the breaching party by wrongfully suspending her ownperformance
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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
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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.
- Issues:
- 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
- Court
- 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.
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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.
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Right to
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
demand
“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
-
Responding
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)
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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)
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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
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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
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§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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