Anticipatory Repudiation

• Author: Jeffrey Lehman, Shirelle Phelps

Page 294

The unjustifiable denial by a party to a contract of any intention to perform contractual duties, which occurs prior to the time performance is due.

This form of breach, also known as anticipatory breach of contract, occurs when one party positively states that he or she will not substantially perform a contract. The mere assertion that the party is encountering difficulties in preparing to perform, is dissatisfied with the bargain, or is otherwise uncertain whether performance will be rendered when due is insufficient to constitute a repudiation. Another type of anticipatory breach consists of any VOLUNTARY ACT by a party that destroys, or seriously impairs, that party's ability to perform the contract.

The remedies available to the nonrepudiating party upon an anticipatory repudiation entail certain obligations. If the nonrepudiating party chooses to ignore the repudiation and proceeds with his or her performance, the duty to mitigate damages?which imposes on the injured party an obligation to exercise reasonable effort to minimize losses?mandates that the nonrepudiating party not perform if the consequence of performance would be to increase the damages. In addition, this duty requires, where applicable, the procurement of a substitute performance.

If the nonrepudiating party implores or insists that the other party perform, this demand, in and of itself, does not divest the nonrepudiating party's right to damages. The presence or absence of a breach of contract depends solely upon the repudiating party's actions. The prevailing view is that the nonrepudiating party may pursue any remedy for breach of contract, even though he or she...