Anticipatory Repudiation

Question 1

Does a party have a duty to mitigate damages?

Answer 1

Yes, a party has an affirmative duty to mitigate damages.

Question 2

When does a party have to sue after a party anticipatory repudiates a contract?

Answer 2

They have the option to sue immediately or wait until the date of performance was supposed to occur.

Question 3

What is the maximum a party can recover for a breach of contract?

Answer 3

The maximum value of the contract.

Question 4

RS 250: When a Statement or an Act is a Repudiation

Answer 4

A repudiation is:

(a) a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the oblige a claim for damages for total breach, or
(b) A voluntary affirmative act which renders the obligor unable or apparently unable to perform without such a breach.

Question 5

Restatement 251: When a Failure to Give Assurance May Be Treated as a Repudiation

Answer 5

Obligee has a right to demand an assurance that the other party is going to perform when they feel insecure about the contract.

Question 6

If an attempt to mitigate damages would be futile, will the court still require a party to attempt it?

Answer 6

No, the law does not require a futile effort to attempt to mitigate damages.

Question 7

Define: Repudiation

Answer 7

A clear and unequivocal or distinct and positive statement of an intent not to perform.

Question 8

Is a failure to prepare to take action or mere failure to take action a repudiation?

Answer 8

”Though where affirmative action is promised mere failure to act, at the time when action has been promised, is a breach, failure to take preparatory action before the time when any performance is promised is not an anticipatory breach, even though such failure makes it impossible that performance shall take place, and though the promisor at the time for the failure intends not to perform his promise.”

Question 9

In a case when a party anticipatory repudiates and the price of the goods has a tendency to fluxuate (like oil), how long does a party have to mitigate damages?

Answer 9

An injured party is allowed to wait for a commercially reasonable time before choosing a legal remedy.

Question 10

What standard is the duty to mitigate damages within a commercially reasonable time held to?

Answer 10

The objective standard and also a duty of good faith.

Question 11

UCC 2-610- Anticipatory Repudiation

Answer 11

When either party repudiates the contract with respect to 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 reach;
(C) in either case suspend his own performance.

Question 12

UCC 2-711: Buyer’s Remedies in General

Answer 12

(1) Where the seller fails o make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance then with respect to any goods involved, and with respect to the whole if the breach goes to the whole contract, the buyer may cancel and whether or not he has done so may in addition to recovering so much of the price has been paid:
(a) Cover and have damages under the next section as to all goods affected whether or not they are identified.
(b) recover damages for non-delivery
(2) Where the seller fails to deliver or repudiates the buyer may also:
(a) if the goods have been identified, recover them
(b) in a proper case obtain specific performance or replevy the goods
3) On rightful rejection or justifiable revocation of acceptance a buyer has a security interest in goods in his possession or control for any payments made on their price and expenses reasonably incurred in their inspection, receipt, transportation, care and custody ad may hold such goods and resell them in like manner as an aggrieved seller.

Question 13

UCC 2-712 : Cover; Buyer’s Procurement of Substitute Goods

Answer 13

(1) After a breach within the preceding section the buyer may “cover” by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller.
(2) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined, but less expenses saved in consequence of the seller’s breach.
(3) Failure of the buyer to effect cover within this section does not bar him from any other remedy.

Question 14

UCC 2-713 : Buyer’s Damages for Non-Delivery or Repudiation

Answer 14

(1) Non-Delivery or Repudiation - Damages = (market price at time of when buyer learned of breach + contract price + incidental and consequential damages) - expenses saved from non-performance of contract.
(2) Market Price is determined as the place for tender or at the place of arrival.

Question 15

UCC 2-723 : Proof of Market Price: Time and Place

Answer 15

(1) Market Price shall be determined at the time the party learned of the breach.
(2) If the market price in (1) is not available, then any reasonable time before or after that time will work.

Question 16

What is an Adequate Assurance?

Answer 16

A party may request adequate assurance that the obligor will perform their obligation. If obligor refuses to provide adequate assurance, it may be treated as a breach.

Question 17

When may a party retract their repudiation?

Answer 17

The repudiator has the power of retraction of their repudiation prior to any change of position by the other party, but not afterwards.

Question 18

When does a party change their position in reliance on a repudiation?

Answer 18

Common Law - Any time before the other acts upon or relies on the repudiation.
Modern Law - Any indication that the repudiation is final, is enough. Even accepting the repudiation, will make it final.

Question 19

Can a party demand an assurance of due performance?

Answer 19

Ordinarily, an oblige has no right to demand reassurance by the obligor that the latter will perform when his performance is due. However, a contract imposes an obligation on each party that the other’s expectation of receiving due performance will not be impaired.

Question 20

UCC 2-609: Right to adequate assurance of Performance

Answer 20

(1) A contract for sale imposes an obligation to perform so that the other parties expectations are not impaired. When reasonable grounds for insecurity arise with respect to performance, then the other may demand adequate assurance of performance and until he receives such assurance may, if commercially reasonable, suspend performance.
(2) Between merchants the reasonableness of grounds for insecurity and the adequacy of assurances offered will be held to commercial standards.
(3) Acceptance of any improper delivery or payment does not prejudice the aggrieved parties right to demand adequate assurances of future performance.
(4) After receipt of a justified demand for assurances, failure to provide within a reasonable time such assurance of performance will count as a repudiation.

Question 21

What is the purpose of a demand for adequate assurances?

Answer 21

A protective device when reasonable grounds for insecurity arise; it is not a pen for rewriting a contract in the absence of those reasonable grounds having arisen, particularly when the proposed rewriting involves the very factors which had been waived by the one now attempting to wield the pen.

Question 22

What is the test for determining whether you are buying a good or a service?

Answer 22

The Predominant Factor test:
“The court describes the test as whether the predominate factor is the rendition of service, with goods incidentally involved or is a transaction of sale, with labor incidentally involved.”

Question 23

What are the two exceptions to the rule that adequate assurances are not allowed under the common law/ Restatement?

Answer 23

1) Bankruptcy

2) Complex, Long Term Contracts