Anticipatory Repudiation

Question 1

What is anticipatory repudiation under the common law?

Answer 1

Under the common law, anticipatory repudiation occurs when a promisor clearly an unequivocally repudiates a promise before the time for performance is due. (by words or conduct)

Question 2

Under the common law, how can repudiation be retracted?

Answer 2

Under the common law, repudiation may be retracted until the promisee:

1. Acts in reliance on the repudiation;
2. Signifies acceptance of the repudiation; OR
3. Commences an action for breach of contract.

Question 3

What is anticipatory repudiation under the UCC?

Answer 3

Under the UCC, anticipatory repudiation occurs when:

1. The buyer or seller makes an unequivocal refusal to perform; OR
2. Reasonable grounds for insecurity arise regarding either party’s ability or willingness to perform, and the repudiating party fails to provide adequate assurances within a reasonable time (not to exceed 30 days) upon the non-repudiating party’s demands for such assurances.

Question 4

How can repudiation be retracted under the UCC?

Answer 4

Under the UCC, anticipatory repudiation may be retracted until the non-repudiating party cancels the contract or materially changes his position.

Question 5

Generally, what can a non- repudiating party do when anticipatory repudiation occurs?

Answer 5

When an anticipatory repudiation occurs, the non-repudiating party may:

1. Treat the repudiation as a breach and sue immediately for damages (however, if performance has not passed and the only performance left is payment, the non-repudiating party must wait until performance is due and the actual breach occurs before filing suit).
2. Ignore the repudiation, urge performance, and see what happens.