ANTICIPATORY REPUDIATION AND OTHER ASPECTS OF BREACH

Example: Owen, the owner of Blackacre, contracts with Contractor for the latter to build a house on Blackacre. The contract provides that Owen is to make a progress payment every week for the previous week’s work. Both parties perform as required during the first month of the contract. After the fifth week, however, Owen is three days late with the progress payment for that week. Assuming that this breach is not a material (or “total”) one, Contractor is not discharged from the contract. She may, however, immediately sue for whatever damages she sustained as a result of the partial breach by Owen.

II. ANTICIPATORY REPUDIATION GENERALLY

A. A recap: A party may make it unmistakably clear, even before his performance under a contract is due, that he does not intend to perform. When he does so, he is said to have anticipatorily repudiated the contract. As we have seen in the treatment of conditions (supra, p. 239), such a repudiation allows the other party to suspend, and perhaps to cancel, his own performance. Here, a different aspect of anticipatory repudiation is treated—may the aggrieved party institute a suit for breach even before the repudiator’s time for performance has arrived? As we shall see, the answer is generally “yes.”

1. Hochster v. De La Tour: The foundation of the modern doctrine of anticipatory repudiation was laid in an English case called Hochster v. De La Tour, 118 Eng. Rep. 922 (Q.B. 1853).

a. Facts of Hochster: Hochster involved a contract for services made between an employer and his employee. The contract was executed in April 1852, and provided that the employment was to begin on June 1, 1852. On May 11, the employer stated that he would not perform the contract. On May 22, the employee instituted an action for breach of contract. The employer asserted that as of the day suit was commenced, no breach had yet occurred.

b. Suit allowed: The court held that the action was not premature. The court’s reasoning, universally criticized today, was that if an immediate suit were not allowed, the plaintiff would either have to cancel the contract, giving up all his rights under it, or else ignore the repudiation completely, holding himself in readiness to perform until June 1 (and therefore not procuring another job). For some reason, the court did not recognize the possibility that the plaintiff could suspend his own performance (treating the repudiation as the non-occurrence of a constructive condition to the plaintiff’s duty of performance), yet wait until an actual breach before suing. Had this possibility been recognized by the court, the reasoning behind its allowance of an immediate suit would have failed.

c. American view: American courts now all permit a plaintiff this latter course of action, i.e., to suspend his own performance after the repudiation, but to wait until the time for the repudiator’s performance before bringing suit. Nonetheless, the result in Hochster is followed by nearly all American courts.