BALW20150 Chapter Notes - Chapter 18: Anticipatory Repudiation
21 Dec 2018
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Chapter 18 Notes: Performance and Discharge
• Anticipatory Repudiation:
o Before either party to a contract has a duty to perform, one of parties may refuse to
carry out his obligations
o When anticipatory repudiation occurs, treated as a MATERIAL breach of contract
and nonbreaching party is permitted to bring an action for damages
IMMEDIATELY
▪ can file a suit even though scheduled performance time is still in future
▪ However, until nonbreaching party treats an early repudiation as a breach,
repudiating party can retract anticipatory repudiation by proper notice and
restore parties to original obligations
o Treated as a present material breach because:
▪ 1. Nonbreaching party should NOT be required to remain ready and
willing to perform when other has repudiated contract
▪ 2. Nonbreaching party should have opportunity to seek a similar contract
elsewhere and may have a duty to do so to minimize loss
o Anticipatory Repudiation and Market Prices:
▪ AR often occurs when performance of contract would be extremely
unfavorable to one of parties because of sharp fluctuation in market prices
▪
Example:
•
think about situation from book in which supplier was supposed to
sell phones to Best Buy but prices of phones increased so by doing
so, supplier would be operating at a HUGE loss
• supplier tells Best Buy that it cannot deliver phones at contract price
thus signifying in email AR
• Best Buy can treat AR as a material breach and immediately pursue
remedy even though contract specifies delivery later in future
• Time for Performance:
o If no time states in contract, then reasonable time = implied, but if specified then
must follow that instead
