Repudiation

A contract is built on the expectation that both parties will perform when performance is due. Repudiation asks what happens when one party signals before that date that it will not perform. The doctrine lets the injured party act immediately rather than wait for an inevitable breach — but only when the signal is unequivocal.

Anticipatory repudiation and adequate assurance

R2d § 250. A repudiation is either a statement by the obligor that it will commit a breach amounting to total breach, or a voluntary act that renders the obligor unable (or apparently unable) to perform. The signal must be definite and unequivocal. Mere expressions of doubt, requests for help, or complaints of difficulty do not qualify. Hochster v. De La Tour (Q.B. 1853) supplies the background rule: a clear renunciation before the performance date is itself a breach, and the injured party may sue at once without waiting.

R2d § 251. Where reasonable grounds for insecurity arise short of an outright refusal, the insecure party may demand adequate assurance of due performance and may suspend its own performance until it arrives. A failure to provide adequate assurance within a reasonable time is itself treated as a repudiation.

UCC § 2-609. For sales of goods, a party with reasonable grounds for insecurity may demand assurance in writing and suspend performance; failure to give adequate assurance within a reasonable time, not exceeding thirty days, is a repudiation. The demand and the assurance are both measured by commercial reasonableness — a party that over-demands can itself become the repudiator. UCC § 2-610 then lets the aggrieved party await performance, resort to remedies for breach, or suspend its own performance.

Cases

McCloskey & Co. v. Minweld Steel Co. (3d Cir. 1955) shows what is not repudiation. A subcontractor, struggling to source steel during the Korean War, asked the general contractor for help obtaining it. That was an expression of difficulty and a request for assistance — not an absolute, unequivocal refusal or a positive statement of inability. No repudiation.

Hornell Brewing Co. v. Spry (N.Y. Sup. Ct. 1997) shows the assurance mechanism in action. A distributor’s chronic arrears, a bounced check, an empty warehouse, and a sham operation gave the supplier reasonable grounds for insecurity. Adequacy is judged on the whole course of dealing, so when new grounds arose after an initial demand was met, a second demand was permissible — and the distributor’s failure to satisfy it justified termination.

What you should be able to do

Apply § 250 to decide whether words or conduct cross from doubt into unequivocal repudiation. Run the § 2-609 two-step — reasonable grounds, then a commercially reasonable demand — and decide whether silence becomes repudiation. Apply the election rule: the injured party may sue now or wait, but mitigation begins at the repudiation, not at the performance date. Next class turns to excuse, where a party genuinely cannot perform through no fault of its own.