09 Aug Anticipatory Repudiation
Once a duty to perform has become absolute, or the conditions have been excused or discharged, the failure to perform will constitute a breach of contract. This is why knowing all your condition rule statements and fully understanding duty is so important; for a refresher or more information see our article on conditions.
What Time Is It?
Identifying whether a breach is material or minor depends upon when the breach occurs in relation to the time for performance. This means you have to look at a totality of the circumstances surrounding the breach; you have to use your reasonable prudent person brain. I know this brain was locked in a file cabinet with all your prior law school knowledge but its time to pull that guy out and dust him off.
Identifying if the breach is minor or material can drastically effect the events. If a breach is found to be material then the non-breaching party may suspend her performance and bring suit for damages or demand assurances, or continue, you get the picture. The big issue is whether the non-breaching party suspends performance, this is usually where fact patterns lead us.
Remember, your reasonable person brain should be able to look at the fact pattern and distinguish if the breach is minor or material. You want to look at the amount of total performance that the non-breaching party has already received at the time of breach. If the non-breaching party has 3/4 a house built, then 3/4 is more than 1/2, and you should find a minor breach. If the house is only 1/2 built you have more of an argument on your hands and you should be wary of picking a side. In these situations I would argue both, even if you don’t see how it could be, this ensures your not writing yourself out of an essay. ** You should always argue both sides, but sometimes, in a 1/2 situation we forget that and make the fatal error of being conclusion.
You should always argue both sides!
The key to look for is substantial performance. If the duty has been substantially performed then there will only be a minor breach. If there is only a minor breach then the remedies and options available to the non-breaching party change.
As with most contracts issues, remember, there is always that good faith issue floating around. If the breaching party has not acted in bad faith the breach will more likely be considered minor than material and the breaching party may have remedies himself.
Perfectly Tendered Breach
The UCC does not hold the same as Common Law. Under Common Law a minor breach may be treated by a buyer as material under the perfect tender rule (subject to the sellers right to cure of course). The UCC there are more options available; the buyer may 1.) reject the whole 2.) accept the whole and 3.) accept any of the unit(s) and reject the rest. Remember this is for the buyer, a seller has different options.
Under the UCC if the buyer rejects the goods the seller, if time for performance has not expired, may notify the buyer of an intention to cure and then deliver conforming goods; but this must be done within the time for performance. Where the buyer rejects nonconforming goods the seller sent reasonably believing they were acceptable, the seller may seasonably notify the buyer of his intention to cure and will be give more time, reasonably of course, after time for performance to tender conforming goods. This often shows in MCQ’s as the hearing aid question:
“Axel wrote Grant saying: “Please ship 175 Model X Hearing Aids per catalog price…” Grant shipped 175 Model Y Hearing Aids, which are superficially similar to Model X and can be distinguished only by taking them apart. Model Y is an obsolete model with no market demand.
On tender of delivery, Axel discovered the discrepancy and demanded that Grant deliver Model X Hearing Aids. Grant refused.
If Axel sues for breach of contract what result?
- Grant wins, because there was no meeting of the minds
- Grant wins, because his shipment was only a counteroffer which Axel rejected
- Axel wins, because the offeror is master of his offer
- Axel wins, because Grants shipment of Model Y Hearing Aids constituted an acceptance of Axels offer to buy Model X hearing aids.”
Look for the correct answer at the bottom of the article.
Acceptance and Then Rejection
Where the buyer has accepted the sellers goods/units, the buyer may reject the goods/units which substantially impair the value if 1.) he reasonably believed the non-conforming goods would be cured and it was not timely 2.) if he failed to discover a nonconformity because it was reasonably undiscovered. The rejection of these goods must be within a reasonable time after discovery of the non-conformity and the buyer must notify the seller.
This often shows in fact patterns where something has been delivered in large quantities in boxes that are not generally inspected until needed and there is a passage of time from identification of the non-conforming goods and the delivery.
To answer your question above the answer is four. Remember, this is a brief overview of anticipatory repudiation and there are many ins and outs which are not discussed here. If you have questions reach out to your professors!