ANTICIPATORY REPUDIATION AND OTHER ASPECTS OF BREACH

c. Made to promisee: Most courts hold that the promisor’s statement of unwillingness must, to be a repudiation, be made to the promisee, not to some third party. Rest. 2d, § 250, Comment b.

d. Proposals to modify the contract: Frequently the promisor will not flatly announce that she does not intend to perform, but will instead ask the promisee for more favorable terms (e.g., a better price), leaving an implication that if the new terms are not agreed to, the promisor will breach. Whether a particular request for more favorable terms constitutes a repudiation obviously depends on how clear the threat not to perform is; it is impossible to formulate a clear test. But the basic idea is that a request for greater performance than that provided for under the contract is repudiation “when under a fair reading it amounts to a statement of intention not to perform except on conditions which go beyond the contract.” Comment 2 to UCC § 2-610.

4. Voluntary acts rendering performance impossible: The promisor may commit an act which renders his performance impossible. The vendor under a land contract might, for instance, convey the land to some other person prior to the time for conveyance to the vendee. If he does so, the vendee may sue immediately for breach, without waiting for the date set in the contract for conveyance.

a. Performance must be impossible: The act must (either actually or apparently) make the act impossible, not merely more difficult or less likely to occur. The act must also be voluntary. See Rest. 2d, § 250(b), and Comment c thereto.

5. Prospective inability to perform: It may appear to the promisee that the promisor will be unable to perform, although he desires to do so. Where such prospective inability to perform is obvious, all courts agree that the promisee may suspend his performance; this was discussed supra, p. 239. Some courts further hold that the conventional doctrine of anticipatory repudiation applies, i.e., that the promisee may not only stop his own performance but sue for breach. Other courts, however, take the view that where the prospective inability to perform stems from factors beyond the promisor’s control, the promisee should not be able to sue until the time for performance has arrived. See Murray, p. 423.

6. Insolvency: A party’s bankruptcy is generally considered to be an anticipatory repudiation, which has the effect of allowing the other party to make a claim in bankruptcy. On the other hand, a party’s actual or apparent insolvency does not constitute an anticipatory repudiation, according to most courts.

a. Grounds for insecurity: Under the UCC, the insolvency of a party is not in itself a repudiation. However, such insolvency would almost certainly give rise to “reasonable grounds for insecurity,” (§ 2-609(1)), and would allow the other party to demand assurances of performance. Unless the insolvent party furnished such assurances (e.g., in the form of a bank statement) within thirty days, the contract would be deemed repudiated. § 2-609(4).

7. Threatened breach must be material: Even where the statement of repudiation is unequivocal, or the act makes full compliance with the contract impossible, there will be an anticipatory repudiation only if the breach being threatened would itself be material or “total.” Rest. 2d, § 250. That is, even the most bold-faced statement by a party that he will commit a “partial” breach does not constitute an anticipatory repudiation.