Anticipatory Repudiation

Question 1

What is an anticipatory repudiation?

Answer 1

• A breach of contract caused by a party’s unequivocally repudiating the contract, i.e. indicating that he will not perform when performance is due.

Question 2

When is an anticipatory repudiation established?

Answer 2

• AR may be established by:
  o party’s definitive statement that it will breach; or
  o party’s voluntary act that renders party unable to perform its contractual obligations.

Question 3

What may a party do if they have not received an AR but have doubts about the other party willingness to perform?

Answer 3

• If AR cannot be established but there are reasonable grounds for insecurity, the insecure party may make a demand for adequate assurance of performance.
  o EXAMPLE: After making a contract with a manufacturer. A wholesaler become aware that the manufacturer’s employees are out on strike. This gives reasonable grounds to confirm with the manufacturer that the contract will be performed.

Question 4

What happens if a party fails to give adequate assurances upon reasonable request?

Answer 4

• Failure to respond with reasonable assurances = repudiation.
• This can occur where the other party:
  o does not respond to the demand for assurance in a reasonable time (30 days under the UCC); or
  o does not respond in a way that provides reasonable assurances.

Question 5

What does the aggrieved party have the right to do upon repudiation?

Answer 5

• Cancel K and terminate all rights/obligations under it;
• Bring action for damages or specific performance; OR
• Ignore the repudiation and continue under the K.

Question 6

May a party retract their repudiation?

Answer 6

• A party who has made an AR to the other party may retract unless/until the other party:
  o acts in reliance on repudiation;
  o accepts repudiation by signaling this to breaching party; OR
  o commences suit for damages/specific performance.