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National Farmers Organization v. Bartlett & Co., Grain

    Brief Fact Summary.

    Defendant alleged that Plaintiff’s ceasing delivery was an anticipatory repudiation and setoff the payments for partially completed deliveries. Plaintiff sued Defendant to recover the balance due on partially completed deliveries. The trial court found that Plaintiff had repudiated the contracts and found in favor Defendant. Plaintiff appealed.

    Synopsis of Rule of Law.

    A statement is an anticipatory repudiation when under a fair reading it amounts to a statement of intention not to perform except on conditions, which go beyond the contract. 

    Facts.

    National Farmers Organization (Plaintiff) agreed to sell grain to Bartlett & Co., Grain (Defendant) in a series of forty-five contracts. Both parties fully performed under the first thirty-one of these contracts, leaving fourteen at issue. Over the next six contracts, Plaintiff began not fully completing its grain deliveries on time. During this period, Defendant began withholding some payment on grain that actually was delivered “as protection against realized or potential loss caused by failure on [Plaintiff’s] part to perform all contracts not yet fully performed.” About a month later, with eight contracts still due to be performed, Plaintiff informed Defendant that it was ceasing delivery on the outstanding contracts until Defendant made substantial payment for deliveries already made. Defendant treated this communication as an anticipatory repudiation of the remaining eight contracts. Defendant then paid Plaintiff the amount owed on the previous six partial deliveries, setoff by damages due to Plaintiff’s breach of those six contracts, as well as Plaintiff’s anticipatory repudiation of the remaining eight contracts. Plaintiff objected to the setoff with respect to the eight remaining contracts and sued, claiming that its communications to Defendant did not constitute anticipatory repudiation. The trial court found that Plaintiff had repudiated the contracts and found in favor Defendant. Plaintiff appealed.

    Issue.

    Whether a statement is an anticipatory repudiation when under a fair reading it amounts to a statement of intention not to perform except on conditions which go beyond the contract.

    Held.

    Yes. The trial court’s ruling is affirmed. A statement is an anticipatory repudiation when under a fair reading it amounts to a statement of intention not to perform except on conditions, which go beyond the contract. 

    Discussion.

    A statement is an anticipatory repudiation when under a fair reading it amounts to a statement of intention not to perform except on conditions which go beyond the contract. One example of such a condition would be to demand that the other party make good on a separate contract between the parties. Indeed, a party does not obtain the right to breach one contract as a result of the opposition breaching a separate contract between the parties. In this case, Plaintiff’s statement regarding its performance under the final eight contracts constitutes an anticipatory repudiation of those contracts. Plaintiff stated that it would not perform under the final eight contracts unless Defendant paid for deliveries already made under the six preceding contracts. This statement amounts to a statement of intention not to perform on those remaining eight contracts except on a condition, which goes beyond the contracts—the condition being payment on separate contracts. Plaintiff does not obtain the right to breach the eight contracts as a result of Defendant breaching the previous six.


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