Anticipatory Repudiation

Contracts – Prof Merges

4.21.2011

Hoechster v. De La Tour

John Ruskin, The Stones of Venice

Lord J. Campbell

Hoechster v. De La Tour

• Facts

• Procedural History

Hoechster timeline

April, 1852: K made

May, 11: Δ

reneges

June 1: Δ’s trip to begin

May, 22: π files

suit

What is the issue in the case?

What is the issue in the case?

• “. . . So as to entitle A before the day to commence an action against B . . .”

Holding?

Holding?

• π may sue before June 1 in this case

Why is this helpful to Δ?

Why is this helpful to Δ?

• Permits π to find substitute employment – mitigation principle

– Policy of Rockingham County

What if Δ had said “I may not be going to Europe . . .”

What if Δ had said “I may not be going to Europe . . .”

• The current case “states a great deal more than a passing intention on the part of Δ which he may repent of . . .”

But wasn’t De La Tour’s performance a condition of

Hoechster’s?

But wasn’t De La Tour’s performance a condition of

Hoechster’s?

• Yes, but the condition was “dispensed with” (waived? Made irrelevant?) by the unequivocal breach.

Kanavos v. Hancock Bank & Trust

http://www.hancockbank.com/

Kanavos v. Hancock Bank & Trust

• Facts

• Procedural History

Right of 1st refusal

• What does it mean?

• How much is it worth to the bank to get rid of it? Why?

What is the issue in the case?

What is the issue in the case?

• Must π Kanavos prove he was “ready, willing and able” to perform in order to recover?

–Who has the burden of proof regarding ability of Kanavos to perform?

What is the issue in the case?

• Must π Kanavos prove he was “ready, willing and able” to perform in order to recover?

– Who has the burden of proof regarding ability of Kanavos to perform?

The π, Kanavos

McCloskey v. Minweld Steel

McCloskey v. Minweld Steel

• Facts

• Procedural History

“Let’s choose sides!”

• ½ for π

• ½ for Δ

McCloskey timeline

May 1, 26:

Reqts K made

June 8: π asks about time

July 24: Minweld

response, asking for

help

July 20: Δ writes

letter

McCloskey timeline

May 1, 26:

Reqts K made

June 8: π asks about time

6/30 situation

• What are McCloskey’s goals?

McCloskey timeline

May 1, 26:

Reqts K made

June 8: π asks about time

July 20: Δ writes

letter

What was Minweld’s situation upon receipt of 7/20 letter?

Art. V, p. 777

• Help for McCloskey?

McCloskey timeline

May 1, 26:

Reqts K made

June 8: π asks about time

July 24: Minweld

response, asking for

help

July 20: Δ writes

letter

What is the holding re: the 7/24 letter?

• What risk did McCloskey take in dealing with it?

P. 778-79

• “There is no indication in the letter that Minweld had definitely abandoned all hope of . . . receiving the steel . . .”

• “Minweld’s letter was not a breach of the agreement . . .”

Cosden Oil v. Karl O. Helm Akt.

http://tarlton.law.utexas.edu/collections/hyder/index.html

Cosden Oil v. Karl O. Helm Akt.

• Facts

• History

Who breached this K?

Who breached this K?

• Cosden, as to all 4 orders

• No excuse in Helm’s failure to pay for part of 1st order

What is the damages issue?

What is the damages issue?

• When to measure buyer’s damages under the code . . .

§ 2-713. Buyer's Damages For Nondelivery Or Repudiation

• (1) Subject to Section 2-723, if the seller wrongfully fails to deliver or repudiates or the buyer rightfully rejects or justifiably revokes acceptance:

• (a) the measure of damages in the case of wrongful failure to deliver by the seller or rightful rejection or justifiable revocation of acceptance by the buyer is the difference between the market price at the time for tender under the contract and the contract price together with any incidental or consequential damages under Section 2-715, but less expenses saved in consequence of the seller's breach; and

(b) the measure of damages for repudiation by the seller is the difference between the market price at the expiration of a commercially reasonable time after the buyer learned of the repudiation, but no later than the time stated in paragraph (a), and the contract price together with any incidental or consequential damages provided in this Article (Section 2-715), less expenses saved in consequence of the seller's breach.

What is proper date for determining the damages?

• A commercially reasonable time after learning of the breach

Pittsburgh-Des Moines Steel Co.

Pittsburgh-Des Moines Steel Co.

• Facts

• History

Original vs revised agreement

• Revised agreement called for 1 payment of $175,000 when the steel tank was completed

§ 2-609. Right To Adequate Assurance Of Performance

(1) A contract for sale imposes an obligation on each party that the other's expectation of receiving due performance will not be impaired. If reasonable grounds for insecurity arise with respect to the performance of either party, the other may demand in a record adequate assurance of due performance and until the party receives the assurance may if commercially reasonable suspend any performance for which it has not already received the agreed return.

(2) Between merchants, the reasonableness of grounds for insecurity and the adequacy of any assurance offered shall be determined according to commercial standards.

(3) Acceptance of any improper delivery or payment does not prejudice the aggrieved party's right to demand adequate assurance of future performance.

(4) After receipt of a justified demand, failure to provide within a reasonable time not exceeding 30 days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.

Holding

• What PDM asked for here went far beyond an assurance of performance

• It was in effect a new set of K terms – not what the code envisions

“Reasonable grounds for insecurity”

• NOT found here

• Why not? Payment term was end of construction; Brookhaven’s problems obtaining a loan are NOT reasonable grounds for insecurity