Boston College Law Review Volume 9 Article 3 Issue 4 Number 4
7-1-1968 The mpI act of Article 2 of the U.C.C. on the Doctrine of Anticipatory Repudiation E Hunter Taylor Jr
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Recommended Citation E H. Taylor Jr, The Impact of Article 2 of the U.C.C. on the Doctrine of Anticipatory Repudiation, 9 B.C.L. Rev. 917 (1968), http://lawdigitalcommons.bc.edu/bclr/vol9/iss4/3
This Article is brought to you for free and open access by the Law Journals at Digital Commons @ Boston College Law School. It has been accepted for inclusion in Boston College Law Review by an authorized editor of Digital Commons @ Boston College Law School. For more information, please contact [email protected]. E IM AC O A IC E 2 O E U.C.C. O E OC I E O A ICI A O Y E U IA IO E. U E AY O , . In An l A r n l , ntr t n r ll v d pr r r f pr pp rt d b ff nt n d r t n t r nd r th pr r pr l ll bl t r . Wh n ntr t n t p rf r d rd n t t t r t d t h v b n br h d, nd th l r r th br h n p rt t n r n d . In r t n , pr r nd r ntr t n t t th pr h nt nt n t t p rf r h bl t n t th t t ll b ll d f r b th ntr t. S h n t n t r d " nt p t r r p d t n" f th ntr t. Wh n n nt p t r r p d t n r , th t n r d h th r th pr h n d t l f r br h f th ntr t. Art l 2 f th Un f r C r l C d nt n n b r f pr v n d n d t pr v d r d n nt p t r r p d t n t t n . It th p rp f th rt l ( t x n th nt d nt t th C d r l , (2 t l t n b r f pr bl h h x t d nd r pr C d l , nd ( t th p t f th C d n h t t n .
I. ACKG OU —A ICI A O Y E U IA IO A COMMO AW At n l , f nd n f t l br h pr r t th t t f r p rf r n n t l ll p bl , f r t nl t th t t th t th bl r n b d t h v l ll bl t d h lf t d r n t t d p rt l r t r t f t . h , f A ntr t n n r t ppl d t n th f ll n b r , nd f n M r h , A l r t h nt nt n t t p rf r n b r , th r ld b n t n f r br h f ntr t. rdl f h xpr n f r p d t n, A ld n t b n d r d n br h nt l b r , th t t h h h t d l v r th d . S n A d d n t xpr l pr t l t h fr d f t n pr r t th n tr t d t f r p rf r n nd h r p d t n d n t pr l d h d l v r f th d , ld h v t t t l n np rf r n n b r b f r h ld h r d f r br h. In 8 , n th f h llp tt v. Ev n , r n r l rl nd ph t ll r j t d th n t n th t n nt p t r r p d t n ht n t t t pr ntl t n bl br h f ntr t: [ ] r ll th t [d f nd nt] t p l t f r , th t h ll b r d nd ll n t r v th d , nd p f r th , t , l n Un v r t , 6 M b r, nn r A t nt r f r, Un v r t f G r S h l f . All r f r n t th Un f r C r l C d ll b t th 62 Off l xt. 2 En . p. 200 (Ex. 8 . OS O CO EGE I US IA A COMME CIA AW E IEW
the time when by the contract he ought to do so. His contract was not broken by his previous declaration that he would not accept them; it was a mere nullity, and it was perfectly in his power to accept them nevertheless; and, vice versa, the plaintiffs could not sue him bef ore.3 This mechanistic view of a contract, requiring both an expiration of the contract time and a failure to perform before an action for breach, was later relaxed somewhat. In the 1853 landmark case of Hochster v. De la Tour,' plaintiff, a courier, contracted to accompany defendant to Europe from June 1 to September 1 for a fixed fee. On May 11, defendant emphatically repudiated. On May 22, plaintiff brought an action for breach and subsequently acquired work begin- ning on July 4. The defendant argued that his preperformance repudi- ation was in legal effect an offer to rescind the repudiated contract, an offer which presented to the nonrepudiating party two alternatives: acceptance or rejection. Rejection would necessitate that the non- repudiating party continue ready, willing and able to perform until the date specified in the contract for performance in order to put the repudiating party in default. Any other course of conduct, it was argued, would amount to an acceptance of the offer to rescind and would free the repudiator from legal liability on the contract.' Lord Chief Justice Campbell refused to accept this argument. But it is surely much more rational, and more for the benefit of both parties, that, after the renunciation of the agreement by the defendant, the plaintiff should be at liberty to consider himself absolved from any future performance of it, retaining his right to sue for any damage he has suffered from the breach of it. Thus, instead of remaining idle and laying out money in preparations which would be useless, he is at liberty to seek service under another employer, which would go in mitigation of the damages to which he would otherwise be entitled for a breach of the contract.° Logically, this argument leads only to the conclusion that the plaintiff ought to be excused from performance. The court nevertheless, without considering the alternatives, allowed plaintiff to recover damages al- though he had brought his action prior to the time for defendant's performance. Although the doctrine that an anticipatory repudiation may amount to a presently actionable breach seems thus to have sprung
Id. t 202. 4 8 En . p. 22 (Q. . 8 . Id. t 2$. 0 Id. t 26. 8 A ICI A O Y E U IA IO
p b d nt, t h t n tr n r t n En l h nd A r n l . S v r l bj t n h v , h v r, b n dv n d n t th d tr n . h f r t n pt l—th r nn t b br h nt l th pr d p rf r n n t f rth n . h nd th t pr p rf r n d xp th r p d t r t n nb r n d f r r nd x t nd t th n nr p d t n p rt n nb r n d f r ndf ll. n ll , t d th t th d tr n n dl l pl t th f r l t n f d ? h n pt l d ff lt n b v r b r n z n th t n f th pr r f th l f ntr t pr t t n f th p rt r n bl xp t t n , n f h h th t th nt p t n f p r f r n h n d ll n t b thr t n d. ntr t nt ll v l nt r rr n nt, nd b t t nt b n p rt th t h ll n t p rf r t b t n t f v l , t l r th t n n t t n b t nt l thr t f n np rf r n n b r n z d b n th v rt l v l nt f lt t n np rf r n f th ntr t. h nd bj t n th t th d tr n xp th d f nd nt t nb r n d f r r . It n l b d, h v r, th t th f l r t pl nt th d tr n ld bj t th pl nt ff t d f r h h h d d n t b r n nd ht nr n bl d l h bt n n f r p n . A t ll , th d tr n b d n n pl d t r n th ntr t—th t n th r p rt ll fr tr t th th r b r n d f r xp t t n . It pl d th t th p rt ld h v r d h d th th ht f t, nd pp th ld l f ll b r n th r ht t f r n nt p t r br h. h f n l bj t n th t th d tr n pl t th f r l t n f d f r br h f ntr t. It h ld, h v r, b n t d th t h l th d tr n d pl t th t f r n d f r br h, t d n t th t r pl t d th n t n v r l th r n t n h r th l ll r v r f r l ll r n z d r n . r x pl , th r v r f f t r pr f t l t fr th nt rr pt n f n b n n n f br h f ntr t n b r v r d n n t n f r br h, f th nt rr pt n f r bl n n f br h t th t f ntr nt th ntr t. 8 h l l ll r v r f l t f t r rn n n n t n t r v r d f r d bl n t rt.° h nt f h l , f r , l ttl r th n ll l l t d . th th n t n , h v r, r d t n h bl fr th nt p t r r p d t n , f r, n th l tt r, th pr bl n b v d d pl b
S 4 A. C rb n, C ntr t 6 , t 8 64 ( . 8 S , . ., xb v GCI Y C r C ., 88 W . 8 , 206 .W. ( 2 . S , . ., G br lt r C l M n n C . v. M ll r, 2 K . 2 , 2 S.W.2d 8 ( 0 . S n r ll C. M C r , 86 ( . OS O CO EGE I US IA A COMME CIA AW E IEW requiring that the aggrieved party await the performance date speci- fied in the contract before bringing his action for breach. In light of this, the desirability of the doctrine can be reduced to a simple value judgment: Is the loss of expectation of performance an injury against which the law should offer protection even though to do so creates problems in the precise and accurate ascertainment of damages? The value judgment has apparently been made. The courts have taken the position that the importance of protecting the expectation interest outweighs the magnitude of the problem of lack of certainty in the measurement of damages created by recognition of the doctrine of anticipatory repudiation."
II. " E I I E ESS" A "SU S A IA I Y" O E U IA IO An anticipatory breach of contract occurs when a "definite and unequivocal" repudiation of intent to perform a "substantial" part of the contract at the due date is made, either expressly or impliedly, prior to the time for performance and is communicated, either directly or indirectly, to the party on the other side of the contract." The application of this rule has resulted in two major problems: (1) that of determining whether a repudiation is "definite and unequivocal," and (2) that of deciding whether the repudiation is sufficiently "sub- stantial" to amount to a breach. There is a great deal of precedent on the question of definiteness, not all of it consistent. It is generally said that merely to express doubt as to one's ability to perform is too indefinite to amount to an anticipa- tory repudiation. A statement of prospective inability to pay the contract price when due and a request for an extension has been held to be not sufficiently definite.' 2 So too, a statement by a subcontractor that he is having difficulty obtaining necessary materials, accompanied by a request for help in procuring them, has been held to be too
t Onl M h tt nd br r d n t t r n z th d tr n f nt p t r r p d t n. S n l v. t n, 4 M . 0 ( 8 4 C r t n v. M n ld, 8 b. 8 8, .W. ( 8 4 . h r , h v r, n d r bl d bt t h th r br nt n t r f r n t n t th d tr n . S x n M p C . v. br t C ., 8 .W. 8 2 ( b. 04 ld, p d t n f C ntr t , b. . ll. 26 , 2 0 ( 2 . S 4 A. C rb n, C ntr t § ( . h r f th r r nt f n t n th t t nt f rd Ch f t C pb ll: h nt nt n f th d f nd nt ht b pr v d b h n th t h nt r d n h d r r nd t th t ff t nd, rt nl , n t n ld l f r nt r n h r nd . t th t n t th ff t f n t n t th th r d , d th t h ht n th t nt nt n nd t p n t. h t r v. l r, 8 En . p. 22, 2 (Q. . 8 . 2 S l t v. W r h , C l. App. 2d 2, 20 .2d 26 ( 8 M ll r v. M C nn ll, I , .W. 4 ( . 920 ANTICIPATORY REPUDIATION
nd f n t ." A l ndl rd t t nt, f ll n d tr t n f th l d pr , th t h h n f nd th h h t p rf r h v n nt t r t n b ld n h l b n h ld n t t b n nt p t r br h," nd th r lt r h d n h r rp r t b r t t d t th ll r th t th rp r t nt t t b d lv d nd th t p nt ld n t b d nt l ft r th nd n p." An xpr n f pr p t v n b l t t p rf r h , h v r, b n h ld t nt t d f n t nd n v l r p d t n. r x pl , n DeForest Radio Tel. & Tel. Co. v. Triangle Radio Supply Co.' 6 n p rt t ntr t nf r d th th r th t n nj n t n bt n d b th rd p rt ld pr v nt p rf r n , nd th t t nt h ld t b n nt p t r br h. Ev n n t l t t nt f nt nt n t t p rf r r t d ff lt . A n r l r l , h t t nt th l r t f r f nt p t r r p d t n b t th n t n v r . It h ft n b n h ld th t l n th pr r r n z th ntr t b nd n h n d n n bl t n t p rf r d nd d b th th r p rt , th t th d n l nt n t n nt p t r br h." Al d nd f r p rf r n n rd th n n rr t nt rpr t t n f th ntr t n t f t lf n nt p t r r p d t n," nl th p rt n th d nd t l r th t h ll n t p rf r f h d nd n t t." W rd r n t n nt l l nt f nt p t r r p d t n, f r th br h b ff t d b nd t. r x pl , h r n h h ntr t d t ll p f d ll th t n th r, th t b ff nt, f t lf, t nt t n nt p t r r p d t n f th ntr t? In f t, n r l pr p t n, n v l nt r t f th p rt h h r nd r p rf r n p bl r pp r ntl p bl n nt p t r r p d t n. An dj d t n f b n r pt v l nt t n nt p t r r p d t n h th r v l nt r r nv l nt r ? On th th r h nd th r n lv n f p rt
M Cl & C . v. M n ld St l C ., 220 .2d 0 ( d C r. . 4 hn t n v. M ll n , I 886] 6 Q. . . 460. W n l n t CO. . nf ld, 6 C nn. 82, 6 A. 8 ( . 6 24 .Y. 28 , .E. ( 26 . S Y r f In . C . v. l , 2 U.S. 6 2 ( 6 b r n M t. C . C . v. Kl tz, 2 .2d 4 ( th C r. 8 . 8 S K l v. M r St t f In . C ., .2d 2 ( 0th C r. 4 M lt n v. .C. St n b r C ., 6 .2d 8 ( . Ill. 28 , ff d, 6 .2d 8 ( th C r. 2 . 0 S M h n Y ht & r C . v. h, 4 . 2 (6th C r. 06 h l v. S r nt n St l C ., .Y. 4 , .E. 6 ( 8 . 20 d n v. r n , 0 En . p. 8 (K. . 808 . S S n v. S n , [ 8 4 Q. . . 466. t th f t th t t tl n th rd p rt nd n t pl d th r b th ntr t n v nd r ft r nt r n nt th ntr t t nv , nt t n th r r p d t n n r pr nt br h. S r r v. S l b r , 6 C l. 22, 40 . 0 ( 4 . 2 C ntr l r t C . v. Ch A d t r A n, 240 U.S. 8 ( 6 . h r l 2 OS O CO EGE I US IA A COMME CIA AW E IEW
h n r ll b n h ld n t t b n nt p t r r p d t n,22 v n th h th nd t n ld pr t l tt r n t t p rf r n n pp r nt p b l t . h f x pl r fl t n f th t b n n th ppl t n f th d tr n f nt p t r r p d t n— n rt nt t h n t t nt r t t b " v l" nd b "d f n t nd n v l" r p d t n. h nd r n h h th rt h v h d d ff lt th d t r n t n f h n n nt p t r r p d t n f p rt f ntr t ff ntl b t nt l t nt t br h f th nt r ntr t. h r h v b n f n th p nt, b t th b t t n b d t b nt ll th th t t f r d t r n n h n br h f n n t ll nt f n n t ll nt ntr t l br h f th h l . p d t n f p rt f th ntr t pr r t th d d t f r p rf r n n nt p t r br h f th h l f th p rt r p d t d, h n n d r d l n " r th th r r p d t d p rt n f th ntr t," n " nt l p rt" f th ntr t.
III. A ICI A O Y EAC U E E U.C.C. h h th Un f r C r l C d , n t n 2 60 , 2 6 0 nd 2 6 , t f rth r d f r nt p t r r p d t n, th t r "r p d t n" n t p f ll d f n d. S nd r t nd n f th rd d n th C d n, h v r, b l n d fr n nd r t nd n f t n 2 60 . S t n 2 60 ( p d t t pr v d " d t r n f d p rf r n " f r nd f r n r t r nd f th r n d nd d n r t n b th p rt h r ht nd r th ntr t thr t n d. l r t pr v d d t r n " th n r n bl t n t x d n th rt d . r p d t n f th ntr t. h nt p t r br h pr bl l r n th nt xt f t n 2 6 2, h h d l th br h
f r l t d t f l t t th pr v n f rt n n t r d nd nl d t d l S n r ll W. M hl n, n r pt § 6 ( 6 . 22 M nn p l Ir n St r C . v. E.G. St d Mf . C ., M nn. 0 , 8 .W. 6 ( 22 h n x t l n v. W t rb r , .Y. 6 , 0 .E. 4 ( 0 rd v. K n d , 00 .Y. 2 ( 88 . 2 S p. 2 nfr . 24 , . ., .W. Ell n, S n & C . v. l t p Gr r C ., 6 W. . 80, SE. ( hn t n v. M ll n , [ 886] 6 Q. . 460 (r p d t n f v n nt t r b ld h ld n t t b r p d t n f nt l p rt f l ntr t . 2 S , . ., r r v. ll, M . 4 ( 882 (pr nt br h f n t ll nt ntr t pl n f t d nt nt n t t p rf r n th f t r . It h ld b n t d th t r r v. ll n t n n t nt th n l v. t n, 4 M . 0 ( 8 4 , h r th d tr n f nt p t r r p d t n h ld n t t bt n n M h tt . In r r th r pr nt br h f p rt f th ntr t h h, h n t n t th r th th r p d t n, v d br h f th h l , h l n n l th r n pr nt br h f ntr t. 2 U.C.C. § 2 60 (4 . 22 ANTICIPATORY REPUDIATION
f n t ll nt ntr t . h t n l t th r ht f b r h r v n n nf r n d p rt p rf r n f lt p rf r n ntr t. h b r r j t h n n t ll nt nl f th n n nf r t " b t nt ll p r th v l " f th n t ll nt nd nn t b rr t d r f th n n nf r t l n th r r d d nt , b t n ll th r h t pt t f th ll r v d t r n f t r . It nl n t r l t th t n 2 60 d f n t n f " d t r n " n th t n 2 6 2 nt xt. h , r ld h v t b f rth n " th n r n bl t n t x d n th rt d " r th r ld b n d t l t n bl r p d t n. h h t n 2 60 d f r th d f n t n, h v r, t h ld n t b d th t f l r t r ld nt t "r p d t n f th ntr t" nd r t n 2 60 (4 t r l br h f th n t ll nt. Wh th r th ll nt t br h f th nt r ntr t n b d t r n d nl nd r t n 2 6 2( , h h pr v d : Wh n v r n n nf r t r. d f lt th r p t t n r r n t ll nt b t nt ll p r th v l f th h l ntr t th r br h f th h l . t th r v d p rt r n t t th ntr t f h pt n n nf r n n t ll nt th t n bl n t f n f n
2 h t xt f th C d d n t pr v d t nd rd f r th d t r n t n f " b t nt l p r nt." Off l C nt 4 t § 2-612 d l r : "S b t nt l p r nt f th v l f n n t ll nt n t rn n t nl n th l t f th goods b t l n h f t r t , nt t , rt nt, nd th l . It t b j d d n t r f th n r l r p f ll n n p rp f th ntr t." h nt l t th t th p rt n th r ntr t d f n " b t nt l p r nt," v n n v r tr t t r . h nt d , h v r, l f th : "A l r r n r t pl n nd t n t th r ht t pt n t, h v r, h v b n r n, t v d p n h rd h p b rpr nd bj t t v r r t d pl nt b pr t l n tr t n." On p rt nt t n l ft p n b § 2 6 2 h th r " b t nt l p r nt" r f r t t l bj t v p r nt f th v l f th ntr t t th b r r h th r t nt nd d n n bj t v n . h nt, h n t r f r n t j d nt " n t r f n r l r p f ll n n p rp f th ntr t" t n bj t v t nd rd ppl nt d b th t l n l d f th ll r t th b r p rp . A f rth r t n f n nt nd d bj t v t nd rd n § 2-612 can b h d b r d n § 2 608 nd § 2 6 2 t th r. S t n 2 608 r f r p f ll t b t nt l p r nt "t h ," r f rr n t th b r. h f l r t th rd n n § 2 6 2 t n nt nd d bj t v ppr h. W th r rd t th t d nt rpr t t n, t h b n d th t th b tt r r n d nd r th n l pr v n f t n 4 f th Un f r S l A t ph z d th p r n l t f br h n n t r l t . It h p d th t th d r p n n l n b t n 2 6 2 nd 2 608 n t nt nd d t nv f r th n t ll nt ntr t th t th l h r t r, th d f th bj t v b rv r, th r f r n f r th nj r , nd, h n , th r ht t b nd n. t r , d f r r h f C ntr t l t n t th S l f G d Und r th Un f r C r l C d : A d p f r Art l , Y l . . , 22 (1963). 923 OS O CO EGE I US IA A COMME CIA AW E IEW
cellation or if he brings an action with respect only to past installments or demands performance as to future install- ments. "Substantial impairment," without explanation whether this refers simply to actual impairment in value to the buyer or substantial im- pairment as judged by the ordinary reasonable man, is made the test of whether it is a breach of one installment or the whole contract. If the breach substantially impairs the value of the whole contract, it is both a present breach and an anticipatory repudiation so long as the contract is not "reinstated" by the aggrieved party. As noted above, under pre-Code law an insignificant or partial preperformance repudiation would not operate as an anticipatory breach. Neither would a statement or act indicating a lack of intent to perform, if the statement or act were equivocal. Not even insolvency would amount to anticipatory breach unless accompanied by an ad- judication of bankruptcy. Under the Code, however, it is possible for any of these occurrences to become an anticipatory breach of a con- tract, even though some of them will not directly amount to a breach. Since the Code nowhere defines repudiation, we might suppose that general contract principles still govern whether an act is sufficiently "definite and unequivocal" to amount to a breach. 2 On the other hand, the substantiality of the breach seems to be governed by new principles geared not to the laying down of general rules but to deciding the individual case. Insolvency though not adjudicated, 2 prior default under similar contracts, change in management of a corporate party, statements of doubt of ability to perform and unwarranted demands as conditions to performance are examples of the type of occurrence which can properly be treated as impairing the "other's expectation of receiving due performance." One ought, however, to be cautious in demanding assurance of performance, for substantiality is difficult to gauge.
28 S U.C.C. 0 . • 20 It h ld b n t d th t th Un f r C r l C d d f n t n f n lv n d ff r fr th t f th f d r l n r pt A t, U.S.C. §§ 0 ( 64 . A p r n h ll b d d n lv nt th n th pr v n f th t tl h n v r th r t f h pr p rt , x l v f n pr p rt h h h h v nv d, tr n f rr d, n l d, r v d, r p r tt d t b n l d r r v d, th nt nt t d fr d, h nd r, r d l h r d t r , h ll n t t f r v l t n b ff nt n nt t p h d bt .... U.S.C. § ( ( 64 . h d f n t n h b n r t z d b d bt r th n n t r d l n t r t n t l l d t d t th r t ll f r v l t n nn t n r ll b f r d nt b n r pt nt l h f n n l t t n h r tl d t r r t d. S W. M hl n, n r pt § , t 2 ( 6 . h Un f r C r l C d d pt d f n t n f n lv n v rt ll th th t d f n t n. It d f n d n 20 (2 : "A p r n n lv nt h th r h d t p h d bt n th rd n r r f b n r nn t p h d bt th b d r n lv nt th n th n n f f d r l b n r pt l ." 24 ANTICIPATORY REPUDIATION
But, assuming that one party makes a legitimate claim for as- surance, how can he determine the "adequacy" of the assurances he receives in return? Section 2-609 offers little help; subsection (2) provides: "Between merchants . . . the adequacy of any assurance offered shall be determined according to commercial standards." The official comments add little clarification; comment 4 offers the following illustration of what the drafters intended: [W]here the buyer can make use of a defective delivery, a mere promise by a seller of good repute that he is giving the matter his attention and that the defect will not be repeated, is normally sufficient. Under the same circumstances, how- ever, a similar statement by a known corner-cutter might well be considered insufficient without the posting of a guaranty or, if so demanded by the buyer, a speedy replacement of the delivery involved. By the same token where a delivery has defects, even though easily curable, which interfere with easy use by the buyer, no verbal assurance can be deemed adequate which is not accompanied by replacement, repair, money-allowance, or other commercially reasonable cure. A partial elimination of this lack of certainty can be achieved by including in sales contracts a provision requiring one party to make certain specified assurances of performance on demand and declaring that a failure to do so is a repudiation of the contract. The certainty of such a provision will be limited by the section 1-203 requirement: "Every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement." Also section 1-208 might well be extended by analogy to cover such provisions. Section 208, which covers options to accelerate at will, provides: A term providing that one party or his successor in interest may accelerate payment or performance or require collateral or additional collateral "at will" or "when he deems himself insecure" or in words of similar import shall be con- strued to mean that he shall have power to do so only if he in good faith believes that the prospect of payment or per- formance is impaired. The burden of establishing lack of good faith is on the party against whom the power has been exercised. The basic advantage of this approach of providing in the contract for the effectiveness of a demand for adequate assurance of per- formance "at will" is indicated in this last sentence of section 1-208. The party of whom the demand is made should have "the burden of establishing lack of good faith...." On the other hand, in the absence 925 OS O CO EGE I US IA A COMME CIA AW E IEW
f h n r nt, t n 2 60 l n ld ppl , nd t ld th t th p rt n th d nd r r j t n n r n f p rf r n n d t ld h v th b rd n f t bl h n th j t f t n f r h p t n. h n r l n l r l h b n th t th d tr n f nt p t r br h n t ppl bl h n n p rt h f ll p rf r d. h , nl th n nr p d t n p rt bl t d nd r th ntr t t th t f th r p d t n, th r p d t n n t tr t d br h pr r t th t p f d n th ntr t f r p rf r n ." h xpl n t n f r th h t r l. A pr v l nd t d, th pr r n rn n Hochster v. De la Tour" f r th n nr p d t n p rt —th n h ld h v h d t h b t n r n n r d t p rf r nd b n tr t d h v n pt d n ff r t r nd. h n d n t th h n th f r p d t n ft r h h p rf r d, n rt h v n t ppl d th d tr n t th t t n. r x pl , h n d r ld f r r d t, t t nt b th b r th t h ll n t p h n p nt ll b d d n t nt t n ff t v nt p t r br h." It b tt d th t th h t r l b rr t n h ld b h ld t b d pl d b th C d . h h n t n f th C d xpr l r j t th r l nd th h t n 0 pr v d th t "[ jnl d pl d b th p rt l r pr v n f th A t, th pr n pl f l nd t . . . h ll ppl nt t pr v n ," th nt r C d t b r d n l ht f t n 02( : " h A t h ll b l b r ll n tr d nd ppl d t pr t t nd rl n p rp nd p l ." h h n n f th " nd rl n p rp nd p l " f th C d p f ll t t d n t n 02(2 r p rt l rl ppl bl , th r "p rp nd p l " b f nd pl t n th C d xpr pr v n , f r th ff t f b t n ( n t nl t pr v d th C d th th f r f l , b t l t t r f l ," On f th "p rp nd p l " th r n t n f th xp t t n nt r t f ll p rt n th r ntr t r ht . S n pr t t n f th nt r t th r l b f r th d tr n f nt p t r r p d t n, t ld th t th C d d nd d nt n n f 0 S , . ., Op r t r O l C . v. rbr , 6 .2d 8 ( 0th C r. M n f t r r rn t r C . v. d, 2 Ar . 642, 2 0 S.W. ( 2 Sh t ff v. r v d n , C nn. 8 , A.2d 22 ( 4 ff n v. M rt n, 226 K . , 0 S.W.2d 6 6 ( 28 h lp v. rr , 2 Md. 22 , A.2d ( n v. rn d ll n C ., 0 M . 2 6, 2 4 S.W. 6 ( 2 . 8 8 En . p. 22 (Q. . 8 . 02 S , . ., h lp v. rr , 2 Md. 22 , A.2d ( . t n t th d ff r nt r l n b n r pt S C ntr l r t C . v. Ch A d t r A n, 240 U.S. 8 ( 6 ( n l t r l n t r d n d bt h ld pr v bl n b n r pt n th r nd th t dj d t n f b n r pt n nt p t r br h . S r n l n, On th l M th d f th Un f r C r l C d , 6 & C nt p. r b. 0 ( . 26 ANTICIPATORY REPUDIATION th rt f l d t n t n b t n ntr t h h h v b n f ll p r f r d b n p rt nd th h h r pl t l x t r . Ev n f th C d n t nt rpr t d r j t n th tr d t n l r l , th t r l nd r n d t l r xt nt b th xpr l n f t n 2 60 ( : "Wh n r n bl r nd f r n r t r th r p t t th p rf r n f th r p rt th th r n r t n d nd d t r n f d p rf r n nd nt l h r v h r n f r ll r n bl p nd n p rf r n f r h h h h n t lr d r v d th r d r t rn." S t n 2 60 (4 ppl nt th b v : "Aft r r pt f j t f d d nd f l r t pr v d th n r n bl t n t x d n th rt d h r n f d p rf r n d t nd r th r t n f th p rt l r r p d t n f th ntr t." r th rd n f th pr v n t l r th t r p d t n f n bl t n, th n d r t n f r h h h lr d b n p rf r d, n r nd r t n 2 60 . S t n 2 60 ( r f r t "th p rf r n f th r p rt ," n t t th p rt l r t p f p rf r n . , At n l , th r p d t x d fr f t r p rf r n , th r p d t n pr v d n h th d f n . 4 h t ll th l nd r t n 2 6 0( , h h v th n nr p d t n p rt th r ht t " p nd h n p rf r n " n f pr p rf r n r p d t n h h b t nt ll p r th v l f th ntr t. Und r n r l ntr t l th r , h v r, t t: If th n n r p d t n p rt was n t n p t n t p rf r th r t th t f r p d t n r t t th r ft r pr r t th d t f r p r f r n , h h d n r d ." h f t th t th r p d t n h v b n nj t f d d d n t h n th r lt," nd th b rd n f pr v n th n r b l t t p rf r n th n nr p d t n pl nt ff." Wh r n b l t t p rf r n rd n th th t r f th ntr t x t t th t f r p d t n b t n b rr t d pr r t th p rf r n d t , th n b l t d n t pr v nt f l nt n n f br h f ntr t t n r n fr th nt p t r r p d t n." 4 r n v. ll, 0 C nn. 48 , A. 60 ( 6 . G rl v. d b rd S l Mf . C ., . . . 4 2, A. 40 ( 8 (th f t th t th ll r d d n t bt n d n t t d l v r n rd n th ntr t t r h ld t pr l d r v r f r pr r nt p t r r p d t n f th ntr t Str b r r v. rb r r, 2 .Y. , 4 .E. 8 4 ( 22 (n nr p d t n p rt d n d r v r b f f l r t pr v b l t t p p r h pr r d . 6 rtr nd . n , 8 . . S p r. 2 , 6 A.2d 6 ( . Un t d St t Ov r A rl n v. C p n A r j Expr , 246 .2d (2d C r. Str b r r v. rb r r, 2 .Y. , 4 .E. 8 4 ( 22 . 8 E. ., S h ll v. C b n n z l n O l t n r t, 28 .2d 8 (2d C r. 60 (th f t th t pr nt f n n l n b l t ld h v b n rr t d b l n fr th r h n r d , ll n nd bl t h l n h ld ff nt t ll n nr p d t n p rt t f r nt p t r br h . 2 BOSTON COLLEGE INDUSTRIAL AND COMMERCIAL LAW REVIEW
The continued viability of the requirement of ability to perform as a requisite to the successful maintenance of an action for antici- patory breach is in doubt under the Uniform Commercial Code. No section or comment mentions the rule, but this fact alone should not be viewed as a rejection of the principle. For its rejection would allow the nonrepudiating party to recover at least some damages, when, in actuality, he is not damaged. In fact, it can reasonably be said that the repudiation operates to his benefit, for without it he, being unable to perform, would have incurred liability for breach of contract. The principle should be considered to be preserved under section 1-103: "Unless displaced by the particular provisions of this Act, the prin- ciples of law and equity . . . shall supplement its provisions." Nor would "liberal construction" under section 02 require or even suggest a contrary conclusion, for there seems to be no underlying purpose or policy which such a result would serve. The interest in expectation cannot be said to be preserved by allowing the repudiatee to sue, for absent the repudiation all he could have realistically ex- pected was a lawsuit. Further, it can be said that proper interpreta- tion of section 2-610 itself would demand that the rule continue in effect. Section 2-610 requires that the repudiation "substantially im- pair" the value of the contract before the provisions of that section become operative. It can be argued persuasively that no repudiation substantially impairs the value of a contract unless the nonrepudiating party could have satisfied his obligations under the contract, for without this ability, the contract had no value to him which could be impaired.
IV. DAMAGES Under pre-Code law, damages for anticipatory breach were meas- ured by the difference between the contract price and the market price at the time and place for performance. If the action were tried before the performance date, the market price at the time of trial would prevail." The Code can be said to follow the former but not the latter rule. Such a statement is, however, oversimplified, and it is necessary
In r Y r , . . & . . ., 2 8 .2d 6 (2d C r. 62 In r M r h ll G r , 6 .2d (2d C r. . h r n f r th r l th t th r t pr t th t f tr l th b t v d n f th f t r r t pr . If, h v r, th ntr t p f d n p rf r n d t nd th r th n d t n t n b t n pr nd p tp rf r n t n , th r t pr t th t f r p d t n ht b d v . M n n C rp. v. rth C r l n t r l G C rp., 00 .2d 4, 80 (4th C r. 6 , rt. d n d, U.S. 8 0 ( 62 . r f r C rb n r d th t th r d t n n th n b l t v l f th n tr t h h r lt d fr th r p d t n ht t b th r f d . A C rb n, C ntr t § 0 ( 64 . S rt r d. S Ch pl n v. , 2 K. . 86, . S l W ht l v. t n l Alf lf rn l C ., 0 I 2 , 6 .W. 80 ( 20 K n C t , M. & O. . . ll, S.W. 22 ( x. C v. App. . 28 A ICI A O Y E U IA IO to take a closer look at the Code's provisions to see just what they require in anticipatory breach cases. In the first place, the Code remedies depend entirely on whether it is the buyer or the seller who has repudiated or breached. The sections will be discussed one by one; first, the remedies of a buyer against a breathing seller, and then the reverse. When the buyer sues on account of an anticipatory breach, the damages equal the difference between "market price at the time when the buyer learned of the breach," and the price specified in the con- tract.' The phrase which needs interpretation here is "when the buyer learned of the breach." In an ordinary breach situation, this phrase is not hard to apply, for its purpose is quite plain: If a seller breaches on the date for performance, but the buyer does not learn of the default for some time,' the later time should be the time for measuring dam- ages. In the anticipatory breach situation the result becomes somewhat puzzling. If the time when the buyer "learns of the breach" is inter- preted to mean the time when he hears a "definite and unequivocal" repudiation from the seller, then the Code has given the seller power over the date when market price will be computed, and hence power to keep the amount of damages low. This is not, however, a necessary result. If the buyer decides to wait a "commercially reasonable time," as section 2-610 allows him to, before determining that the seller has really breached, one wonders whether he learns of the breach when the seller repudiates or when he, the buyer, determines that the repudi- ation is a breach. No matter which line of reasoning is applied, the same objection obtains: In the former case, a seller can issue his repudiation when he wants and thus absolutely control damages; in the latter, the buyer can be "pigheaded" in determining when the repudiation amounts to a breach and thereby to a great extent control the amount of damages. In this situation the Code seems to force the choice of providing an advantage to one of the two parties, and it seems we must choose the buyer. The seller will always control the time he issues a repudi- ation. The buyer, on the other hand, is at least limited in his choice by the "commercially reasonable time" of section 2-610. If so, repu- diation is automatically converted into a breach after the expiration of a commercially reasonable period for awaiting performance, even though the repudiatee may not treat it as such. For example, on January 1, A agrees to sell and B to buy specified goods at $10.00 per unit to be delivered on December 1. The market price at the time the contract is entered into is $10 per unit. The market price then rises
4° U.C.C. § 2 (0. 4 n d n t b l x. h r b l t nt d f t h h r nd r th pr d t n r h nt bl . 2 BOSTON COLLEGE INDUSTRIAL AND COMMERCIAL LAW REVIEW t $2 n l . A n th t A r p d t b f r l nd th t l v d th nd f r ll r n bl t f r t n p rf r n , th b r h ld b tr t d h v n "l rn d f" th br h t th t t . h f B t r v r nd r t n 2 ( h ll b l t d t th d ff r n b t n th ntr t pr nd th r t pr n l . th r th t xt f t n 2 6 0 n r th ff l nt t r t r n t b ppl d n d t r n n h t " r ll r n bl " t t t p rf r n . rh p th t r n bl t n p r d n th l r t n b r f ld b th p r d p t nd n l d n th d t h n p rf r n d . h ll r h ld h v nt pl t d th t h l b l t n f br h ld b b d p n th r t pr t th t p f d f r p rf r n v n th h h n n v r f r pr l h t th t pr ll b . h ppr h n b j t f d n n th r r nd b xp n th ll r t x l b l t f r br h, h n r d t p rf r h ntr t l bl t n ." h b r h ld th h v t lt rn t v r n f pr p rf r n r p d t n b th ll r. r t, h n, n n br h t t n, " v r," . ., th n r n bl t ft r th br h "p r h . . . r ntr t t p r h d n b t t t n f r th d fr th ll r,"" nd n th n r v r th t f v r nd th d ff r n b t n th v r pr nd th ntr t pr . Alt rn t v l , h n, n t th n r n bl t ft r th r p d t n, l t t tr t th r p d t n br h nd r v r fr th ll r th d ff r n b t n th r t pr t th t t nd th ntr t pr ." h b r fr t l t rb tr r l th r th r f r v r nd, f r , t h ld b r b r d th t n ppr pr t p f p rf r n r r pl v n ht b v l bl t th b r." If n nt p t r br h t tr l pr r t th d t p f d n th ntr t f r p rf r n , t n 2 2 ( b
42 In h r th ppl t n f h r l ld pp r t b t h r h, ppl t n f U.C.C. 2 6 ld r v r th r lt. 4 U.C.C. § 2 2. 44 t r ll , h f th r d n l d r ht t n d nt l d nd nv lv t ff f xp n v d n n n f th br h. A t th ff t f h n th r t pr r d r th r th n th v r r d , 2 (2 ( . 4 U.C.C. § 2 6 pr v d : ( Sp f p rf r n b d r d h r th d r n r n th r pr p r r t n . . . . . ( • h b r h r ht f r pl v n f r d d nt f d t th ntr t f ft r r n bl ff rt h n bl t ff t v r f r h d r th r t n r n bl nd t th t h ff rt ll b n v l n r f th d h v b n h pp d nd r r rv t n nd t f t n f th r t nt r t n th h b n d r t nd r d. 0 A ICI A O Y E U IA IO
p r t v nd, th h t t ll l v th b r h h b t n v r nd rd n r d , th r f d r l h t d ff r nt fr th n j t d d. An d b d n r t pr r t b r d " rd n t th pr f h d pr v l n t th t h n th r v d p rt l rn d f th r p d t n."" h f th b r br n h t n pr r t th ntr t d t f p rf r n nd r t pr , r th r th n v r pr , d t f x d , r t pr f r d f th d t f r p d t n. If, h v r, th r v d b r t nt l ft r th ntr t d t f r p rf r n t , nd r t pr d t f x d , r t pr f r d f th d t f th b r pt n f th r p d t n bj t t th r ll r n bl l t t n. h h th p r f r l d f n t l rth h l n th t t th r th pr d rt nt t th r t l d t f r d t r n n r t pr , th v r d t n t n b t n pr p rf r n nd p tp rf r n t n p n t bj t n. r n t n , f th r t pr fl t t b t n v rth l f rl pr d t bl , th d t n t n v r t t t l n p l t n n d t n th tr l. h n b p d v r r r rr n , b t th r n th r bj t n: If t th b r xp t t n nt r t h h b n p n t d, th n th r l ht t b tr t r d t br n th r f d n rl l p bl t th t h h ld bt n n th " xp t t n d t ," . ., th d t p f d n th ntr t f r p rf r n . In t d, th C d t l z pl t l nb r n d f r p rf r n d t —th d t f r p d t n. h C d ht h v ff rd d th rt nt b f r n r t pr rd n t th r t pr t th t th t n n t t t d r t th t th t n t tr l r th r th n t th t f r p d t n. S h d l n th d t r n t n f r t pr ld n r ll b tt r pr t t th n nr p d t n p rt xp t t n nt r t n th ntr t n th r t pr t th l t r d t ld n r ll t nd t b l r t th r t pr t th d t n h h th r v d p rt b r n d t r v p rf r n . h bj t n ht b f t l x pt f r th f t th t th r v d b r, h b n ll d n pp rt n t t nv rt h ntr t nt d r t n t r n pr r t th ntr t d t , h ld p pr f r th nb r n d f r pp rt n t . h pr p d f r th pr t r r l z t n th r r nt f d t r n n r t pr t n rl r d t . h , t ld th t th C d r l t j t f bl . tt r h h f th p bl t f r d t r n n r t pr h d b n h n, th bj t n ld bt n, nd th C d r l , th h t n t
48 U.C.C. 4 2 2 ( . BOSTON COLLEGE INDUSTRIAL AND COMMERCIAL LAW REVIEW d n tr bl b tt r th n n th r, l n t d n tr bl l d r bl . Wh n t th b r h r p d t , th ll r r d r n l t th j t d d. A th h n th ll r br h , th r f d v r d p nd n p n h th r th t n t tr l b f r r ft r th p rf r n d t . In p t p rf r n tr l , th r v d ll r h p n t h th nt r p rt f th b r v r r d . 4 In dd t n t th r d , t n 2 08( p th pr C d r f d : "th d ff r n b t n th r t pr t th t nd pl f r t nd r nd th np d ntr t pr ." r n l t t n , t n 2 08(2 p pl nt t n 2 08( , pr v d n : "If th r f d pr v d d n b t n ( n d t t p t th ll r n d p t n p rf r n ld h v d n th n th r f d th pr f t ( n l d n r n bl v rh d h h th ll r ld h v d fr f ll p rf r n f th b r . . . ." h r v d ll r th ll d t r v r l t pr f t n nv lv n th l f f x d pr d r n th r h r th ntr t pr nd th r t pr r th , l n b nt l f th d b th ll r nn t b tr t d d r t n n f th br h. If h r l f th bj t tt r f th ntr t d r t n n f th br h, nd f t n 2 08(2 r v r p r d, d r d t t b d f r th p nt r pr d f th r l ." r x pl , A, n t b l d l r, ntr t t ll t B f r $ 000 n t b l h h A p r h d t h l l pr f $2 00. If B r p d t nd th t tr l ft r th d t p f d n th ntr t f r p rf r n , r v r nd r t n 2 08( ld n t nl f th d ff r n b t n ntr t pr ($ 000 nd r t pr ( h h ld n r ll b th ntr t pr pl n d nt l d . In d nt l d h ld n l d t f t r f th r ft r br h, xp n n rr d n r d t h n th b nt p r h r nd n p d b A t h l n n th nd l ," th f h h ll t b $ 0. h , A ld r v r nl $ 0. If, h v r, A v l d l r, th n th b nt r l ll
4 § 2 06( pr v d th t "th ll r r ll th d n rn d r th nd l v r d b l n th r f ..... nd th t "( h r th r l d n d f th nd n r ll r n bl nn r th ll r r v r th d ff r n b t n th r l pr nd th ntr t pr t th r th n n d nt l d . . . l xp n v d n n n f th b r br th." 48 U.C.C. 2 08(2 . 48 § 2 0 pr v d : "In d nt l d t n r v d ll r n l d n r ll r n bl h r , xp n r n n rr d n t pp n d l v r , n th tr n p rt t n, r nd t d f d ft r th b r br h, n nn t n th r t rn r r l f th d r th r r lt n fr th br h." 2 A ICI A O Y E U IA IO
t l l n t b n d r d d r t n n f br h. It pl n th r n A t t l v l f l nd ld h v rr d h th r r n t B br h d. ° In th t t n, A h ld r v r th ntr t pr ($ 000 l t ($2 00 pl n d nt l d ($ 0 , h h r lt n t t l f $6 0. h d h t b t n th d l r th l t d ppl nd th "v l d l r" ll th d nd r t n 2 08(2 t b v rt ll th nd r t n 2 08( . A n r l t $ 000 th ll r ld b nt tl d t r v r $ 000 ( ntr t pr l $2 00 t pl $ 0 n d nt l d l $ 00 pr f t n th r l , r pl $ 0. Und r b t n ( th f r ld b rr v d t b d t r n n th d ff r n b t n th ntr t pr nd r t pr pl n d nt l xp n . Wh l th r lt ll ll b th nd r th r b t n, ll r h ld b h r f n h r d nd r b t n (2 h r th b nt l t pr h h r th n th pr p f d n th br h d n tr t, f t t ll p bl f r th b nt l t b v d n n f th pr r br h. r x pl , nd r b t n (2 , f th b nt l t $ 00 nd th l h ld t b n n f br h, A ld b nt tl d t $ 000 ( ntr t pr l $2 00 ( t pl $ 0 ( n d nt l d l $600 (pr f t r l z d r lt f br h , r pl $ 0. On th th r h nd, n t n b d n b t n ( ld nt tl th ll r t $ 0. h r h ld r v r th d ff r n b t n r t pr ($ 000 nd ntr t pr ($ 000 pl n d nt l d ($ 0 , r $ 0. An th r n l r d th pr r d nt n d n t n 2 0 : ( Wh n th b r f l t p th pr t b d th ll r r v r, t th r th n n d nt l d . . . th pr ( f d pt d r f nf r n d l t r d d th n r ll r n bl t ft r r f th r l h p d t th b r nd
0 In th b n f n th r t n th t n, t n rt n h th r th r n th r ll tr t n ll ll n t th d t n t n b t n l th t r n n n f th b r br h nd th th t r n t. It p bl t nt nd th t b nt l ll n t b n d r d n n f th b r br h nl f th r ld d h d n t b n d nt f d t th ntr t t th t f th br h, r nl f th ntr t nv lv d d h h ld n t b tr d d r tl t n p rt l r r l , . ., h t ld b v l r f h t . h , f r , th t pr f t "pr d f r l " nd r U.C.C. § 2 08(2 . OS O CO EGE I US IA A COMME CIA AW E IEW
(b f d d nt f d t th ntr t f th ll r n bl ft r r n bl ff rt t r ll th t r n bl pr r th r t n r n bl nd t th t h ff rt ll b n v l n . h , f th ll r nn t r ll f r r n bl pr th n r n bl t ft r th r p d t n, h ll b nt tl d t r v r th n tr t pr . h ll r t, h v r, pr d n rd n th t n 2 0 (2 h h pr v d : Wh r th ll r f r th pr h t h ld f r th b r n d h h h v b n d nt f d t th n tr t nd r t ll n h ntr l x pt th t f r l b p bl h r ll th t n t pr r t th ll t n f th j d nt. h n t pr d f n h r l t b r d t d t th b r nd p nt f th j d nt nt tl h t n d n t r ld. Wh r th t n t tr l b f r th d t p f d n th ntr t f r p rf r n , th r d d d b v r v l bl . h nl d f t n f th d t r n t n f th r t pr . S t n 2 2 ( r h v rt ll th r lt h r d d t n 2 06 n th f th b r br h: If n t n b d n nt p t r r p d t n t tr l b f r th t f r p rf r n th r p t t r ll f th d , n d b d n r t pr .. . h ll b d t r n d rd n t th pr f h d pr v l n t th t h n th r v d p rt l rn d f th r p d t n 2 h r pr bl h h r n th f b r nt p t r r p d t n h h d n t r n h r l —th t t n n h h ll r, h n h l rn f th br h, t ll n th pr f n d p f ll f r th p rt l r b r. S t n 2 04(2 th v rn n t n. It pr v d : Wh r th d r nf n h d n r v d ll r n th x r f r n bl r l j d nt f r th p rp f v d n l nd f ff t v r l z t n th r pl t th n f t r nd h ll d nt f th d t th ntr t r n f t r , nd r ll f r r p r lv v l r pr d n n th r r n bl nn r.
2 h d n f th d t n t n n th nt xt f ll r br h, pp. 2 0 pr , ppl bl h r . Wh n th t tr l b f r th t t f r p rf r n , th ll r r n nb r n d f r n n, th pr f r h h dh r n t th rb tr r r l f § 2 2 ( . 4 ANTICIPATORY REPUDIATION
C nt 2 nt n n xpl n t n f th dr ft r nt nt: Und r th Art l th ll r v n xpr p r t pl t n f t r r pr r nt f d f r th ntr t nl th x r f r n bl r l j d nt t th f t th pp r t th t h l rn f th br h t l r th t h t n ll r lt n t r l n r n d . h b rd n n th b r t h th r ll nr n bl n t r f th ll r t n n pl t n n f t r ." h r v d ll r th v n v r l pt n , bj t nl t th r r nt f t n 2 04(2 th t th pt n l t d n t b pr l d d b r n bl r l j d nt. h pt n v n th ll r n b d v d d nt t br d t r : ( lv nd (2 pl t n f n f t r n r pr n pl d nt f t n f th d t th br h d ntr t. If th r v d ll r h t lv h n r ll h h b t n t r f d . r t, h p r h t n 2 06 r l r d . h d l r b t n 2 04( (b h h d l r th t " n r v d ll r . . . . . . tr t th bj t f r l d h h h v d n tr bl b n nt nd d f r th p r t l r ntr t v n th h th d r nf n h d." h ll r th r ll r ntr t t ll th nf n h d d , th n r v r fr th r p d t n b r th d ff r n b t n th ntr t pr nd th r l pr pl n d nt l d l xp n v d— h h n th n t n ld b th t f pl t n f n f t r n r pr n . In rd r t r v r, th ll r t t f th r t p d b t n 2 06: ( " h r l t b r n bl d nt f d r f rr n t th br n ntr t, b t t n t n r th t th d b n x t n r th t n r ll f th h v b n d nt f d t th n tr t b f r th br h."" (2 If nf n h d d r lv d th r l nn t b h v d thr h p bl l ."
h ld pp r t l v p r t v th r l f d nl ll d th " v d bl n n r l ." h nj r d p rt h n bl t n t t t d . v d n t h v n b n d d t th xt nt th t h n t n r n t n ntr b t t h l . S A. C rb n, C ntr t § 04 ( 64 . It n t, f r , r r d th t h n r r r nt r nt th r ntr t t t t d , x pt U.C.C. § 2 (2 ( lt r th t r l . S A. C rb n, C ntr t 042 4 ( 64 . 4 U.C.C. § 2 06(2 . U.C.C. § 2 706(4)(a) pr v d : "Wh r th r l t p bl l . . . nl d nt f d d n b ld x pt h r th r r n z d r t f r p bl l f f t r n d f th nd . ." h pr v n t f t r nt pl t r nt l f d n t t n t f n l f r . h pl t n f th d nt t f n l f r nt pl t d b th rd " d nt f d d ." 935 OS O CO EGE I US IA A COMME CIA AW E IEW
(3) "Where the resale is at private sale the seller must give the buyer reasonable notification of his intention to resell!" 66 (4) "[E]very aspect of the sale including the method, manner, time, place and terms must be commercialy reasonable?s 6 ' The second possible measure of damages in salvage is recovery of the difference between "market price at the time and place for tender and the unpaid contract price ....” 8 This measure is of course altered if the seller's suit goes to trial prior to the performance date. Section 2-723(1) then becomes operative: If an action based on anticipatory repudiation comes to trial before the time for performance with respect to some or all of the goods, any damages based on market price .. . shall be determined according to the price of such goods prevailing at the time when the aggrieved party learned of the repudiation. This market price remedy may be most attractive even if the unfinished goods are sold for salvage. This will be particularly true where the aggrieved seller is able to obtain a favorable resale con- tract, particularly one for a price better than the market price. For example, assume a contract between A and B, in which A agrees to sell and B to buy stated goods for $100 per unit to be delivered on April 1. B repudiates after A has invested $35 per unit in cost of manufacture. The remainder of manufacture would cost $35 per unit. The market price at the time of repudiation is $75 per unit. The market price on April 1 is $50 per unit. The unfinished goods are not completed but instead are sold for salvage at a price of $65 per unit. If the resale remedy were pursued, this would entitle A to recover $100 per unit, the contract price, less $65, the resale price, less $35, the cost of completion saved as a consequence of the breach, leaving a total of $0. On the other hand, A could use the market-price remedy to recover $100 per unit less $50, the market price, less $35, the cost of completion saved as a consequence of the breach, leaving a total of $15. The seller may resell the goods concerned or the undelivered balance thereof. That he has unbridled choice in the matter is made clear by the permissive language of section 2-706(1), which declares: Where the resale is made in good faith and in a commer- cially reasonable manner the seller recover the difference between the resale price and the contract price together with any incidental damages . . . less expenses saved in conse- quence of the buyer's breach. (Emphasis added.)
8 U.C.C. § 2-706(3). U.C.C. § 2 706 (2). U.C.C. § 2 08( . 936 A ICI A O Y E U IA IO
Wh r th nf n h d d r f x d pr d , th n d ff r n b t n ntr t pr nd r t pr , r h r th r b n p ll n f t r d nd th l r t, r v r nd r 2 08( ld n t b d t . In th f r t t t n, r l ht b t f t r , b t n th nd, t ld n t. S t n 2 08(2 r v r h ld b ll d n b th n t n nd t ld t b th nl p bl r d n th nd n t n . h t n pr v d th t f th r f d n 2 08( d n t r lt n th ll r b n p t n d p t n f b r h d p rf r d "th n th r f d th pr f t ( n l d n r n bl v rh d h h th ll r ld h v d fr f ll p rf r n b th b r, t th r th n n d nt l d ... d ll n f r t r n bl n rr d nd d r d t f r p nt r pr d f r l ." h , n th x pl , f th d b n n f t r d r pr d r f x d pr d r p ll n f t r d d , th r v d ll r ld, nd r t n 2 08(2 , pl r v r h l t pr f t, r $ 0. h r v r h ld b p bl v n f th nf n h d d r b ntl ld l n th t l n t d r t n n f th b r br h. If th ll r nl ll d f th t p th nf n h d d , th n th b nt l ld pr b bl n t b n d r d d r t n n f th b r br h b t pl l n th r l r r f th ll r b n . h nd lt rn t v pr v d d th r v d ll r n f r p d t n pr r t pl t n f n f t r , n bj t t th r r nt th t t b " n th x r f r n bl r l j d nt f r th p rp f v d n l nd f ff t v r l z t n," t " pl t th n f t r nd h ll d nt f th d t th ntr t . . . ." ° Wh r th lt rn t v l t d, th r v d ll r, p n pl t n f n f t r , h th r d r v l bl t n ll r f r br h f ntr t h n th d h v b n d nt f d." h ll r n t rb tr r l x r h pt n t l t n f th r d , f r t n 2 04(2 r r th t h " x r . . . r n bl r l j d nt f r th p rp f v d n l nd f ff t v r l z t n . . . ." h t nd rd xpl n d t xt nt n ff l nt 2 t t n 2 04. h nt l r th f t th t th dr ft r nt nd r n bl n t b d t r n d rd n t th f t t th t th r v d p rt l rn f th br h. It nd t d th t n r f nd t r n bl nl r t n t " l r th t h t n ll r lt n t r l n r n d ," th b rd n b n n th
159 U.C.C. 2-704(2). G §§ 2-703, Comment I, -704, Comment 1, -706, Comment 1, -708, Com- ment 1, -709, Comment 1. 937 OS O CO EGE I US IA A COMME CIA AW E IEW b r t h n nr n bl n . If th b r bl t t bl h th nr n bl n , th ll r r v r t b b d p n n t t f th d h h ld h v b n ff r d h d r n bl r f nd t b n l t d. In r , th n, nd r th pr v n f t n 2 08( th ll r ld, f h t n f r br h r br ht ft r th d t p f d n th ntr t f r p rf r n , r v r n t r d b d p n th d ff r n b t n ntr t pr nd r t pr d t r n d n th b f th r t pr t th t nd pl f r t nd r. If, n th th r h nd, th t n r t t tr l pr r t th ntr t d t f r p rf r n , t n 2 2 ( r r th t r t pr b f r d f th d t f r p d t n. Wh r r v r b d p n th r t pr r " n d t t p t th ll r n d p t n p rf r n ld h v d n ," l t pr f t n b r v r d nd r t n 2 08(2 . In dd t n t th r t pr r d nd th lt rn t v , l t pr f t r d , th ll r ld x r h r ht t ll nd r t n 2 06, nd th n r v r th d ff r n b t n ntr t pr nd r l pr . n ll , n n ppr pr t , h r th ll r n bl ft r r n bl ff rt t r ll th f n h d d t r n bl pr r h r th r t n r n bl nd t th t n tt pt t d ll b n v l n , th ll r nt tl d nd r t n 2 0 ( t r v r th pr f th d fr th r p d t n b r. C pl t n f n f t r , f l l d b n t n n t th r p d t n b r f r th pr ll b n d r d n t t b th x r f "r n bl r l j d nt" f r th p rp f v d n l . C pl t n f n f t r ld ppr pr t nl h n th f n h d d r r n bl r l bl t th t f th d n t pl t . If t h ld h pp n th t th ll r l l t f t r d nd n th r t, th , f r , n nd t n f th r n bl n f h r n l d n. . E AC IO O E U IA IO S t n 2 6 ( nd 2 6 ( pr v d th r p d t n p rt th l t d r ht t r tr t h r p d t n nd th r b r n t t th pr v l r p d t d ntr t. At n t b f r h n xt p rf r n d h n r tr t nl th r v d p rt h " n ll d r t r ll h n d h p t n r th r nd t d th t h n d r th r p d t n f n l."" h , pr r t th n xt p rf r n d nd r th ntr t, th r p d t n p rt l t t thdr h r p d t n nl : ( th n nr p d t n p rt t r ll h n h p t n n r l n p n th r p d t n, h h ld n r ll
r U.C.C. § 2 6 ( . 8 ANTICIPATORY REPUDIATION b th r b th n t t t n f l l t n n t th r p d t n p rt r b th r l f th bj t tt r f th ntr t f th r v d p rt th ll r r b th p r h f b t t t d f th r v d p rt th b r (2 th n nr p d t n p rt h nn n d d n t n l th ntr t, h h ld b t p l d n t n t n f r r t t t n r ( th n nr p d t n p rt h " th r nd t d th t h n d r th r p d t n f n l." h n n f th th rd l t t n n t lt th r l r. Wh n th l t t r r d t th r th th rd r l n xt n n f th nd. "C n ll t n" t pr pp f r l n t t th r p d t n p rt th t th n nr p d t n p rt tr t n th ntr t h v n nd d b f th r p d t n: 3 On th th r h nd, th rd " th r nd t d th t h n d r th r p d t n f n l" t nt pl t l f r l t n. r x pl , d l r t n, "I n d r th ntr t t b t r n t d b f r r p d t n" ld b n x pl f n ll t n, h l t t nt, "I n d r r r p d t n f n l" ht n t b n ll t n b t ld b th n th th rd l t t n 8 4 Und r pr C d ntr t l , th r p d t n p rt p r t r tr t ld n t b d f t d l 6 h C d ppr h d t v n n n t th b r n t n f th xp t t n nt r t nh r nt n ll l n tr t , th r n t n th t d ff nt t pr l d r n t t nt f th ntr t fl fr th pr p rf r n r p d t n f ntr t f r th l f d . h C d r l xt nd x pr t t n t th xp t t n nt r t nh r nt n v r x t r n tr t nd t th t thr h th d r nt r l t t d t rr nt n t nt p t r br h . In rd r f r r tr t n h h t f th t n 2 6 ( r r nt t b ff t v n f r l r t n d b t f d. All th t r r d th t th r tr t n b n v l nd th t t b n t d t th n nr p d t n p rt b f r n f th thr t p d d b v h v b n t n. S t n 2 6 (2 pr v d th t: " tr t n b b n th d h h l rl nd t t th r v d p rt th t th r p d t n p rt nt nd t p rf r , b t t n l d n r n j t f bl d nd d nd r th pr v n f th Art l (S t n 2 60 ." h , pr t l tt r,
62 h f r t f th l t t n n t nt th th r l f n r l ntr t l . h nd nd th rd r t t ll d ff r nt fr th pr C d l . 6 S U.C.C. 2 06(4 . 64 Al t p bl th t n r v d p rt h v " th r nd t d th t h n d r th r p d t n f n l" b n t n h d n t p r n th r th n th r p d t n p rt r n t n f r h . h nt rpr t t n f 2 6 ( pp rt bl b th t t n d n t p f t h th d n t b " nd t d," b t v n , nf r l n f pr l d n r tr t n t n bl . S t t nt f C ntr t ( 2 . OS O CO EGE I US IA A COMME CIA AW E IEW
effective retraction of a repudiation may often require something more than a simple oral withdrawal of it.
VI. CONCLUSION The Uniform Commercial Code through its treatment of the doctrine of anticipatory repudiation should contribute greatly to over- coming some of the basic weaknesses in the application of the doctrine under general contract law. To begin with, section 2-609 and its doctrine of adequate assurance of performance should help alleviate the problems which have existed in determining the existence of suffi- cient definiteness for a repudiation and the presence of sufficient completeness for a repudiation. Now, through application of section 2-609, a rather mechanical means of determining what constitutes a repudiation is offered. On the other hand, the section 2-609 approach creates a new and virtually unsolvable problem: When is there cause for insecurity, and when is an assurance of performance adequate? A second major contribution of Article 2 is its aim toward pro- tection of the expectation-interest inherent in every contract calling for future performance. The application of this principle should lead to the conclusion that the Code provides a remedy for anticipatory repudiation of contracts which have been wholly performed by the nonrepudiating party. Even if this result is not directly arrived at, it will be achieved indirectly, for section 2-609 and its provisions re- garding adequate assurance of performance apply both to partially executed and wholly executory contracts. Thus a repudiation of a unilateral obligation could, if necessary, be turned into an effective anticipatory breach through an unheeded demand for adequate assur- ance of performance. A final contribution made by Article 2 to the application of the doctrine of anticipatory repudiation is the clarification and simplifica- tion of measure-of-damage rules in cases which go to trial before the date specified in the contract for performance. Where recovery based upon the difference in market price and contract price is sought, the applicable market price depends upon the time at which the case goes to trial. If it goes to trial prior to the performance date then the applicable market price is the price at the time of the repudiation. The difficulties inherent in proving market price will often be avoided, for the Code allows the aggrieved buyer to recover the difference in contract price and "cover" price, and the aggrieved seller to recover the difference in contract price and resale price. The Code's treatment of the doctrine is not without weaknesses, weaknesses which lie primarily in a lack of clarity. One of these is the failure to state the date for determining market price in ascer- 40 ANTICIPATORY REPUDIATION taming damages when an action is brought by a buyer after the contract date for performance. In such cases, section 2-713(1) re- quires that market price be computed at the time the buyer "learn [s] of the breach;" it is not clear whether repudiation is synonymous with breach. Another is lack of explanation of the concept of "sub- stantial impairment" of the value of an installment or a contract, which is the guideline for determining when a defective installment performance can be rejected and when a defective installment amounts to a breach of the whole contract." Even though not without weaknesses, the Code's approach to anticipatory repudiation should be considered a sound one. Recog- nition and express announcement of the logical basis for the doctrine will at least result in a greater predictability as to its application by the courts.
66 S U.C.C. 2 6 2.
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E IEW S A IC A A. A O GE A J. OE IG MA I . S U KI CA E. A E O S E E . O SO M. AMES S IIMA E AW E CE . E C A I J. E E SO E EY M. SIGE O E S. OOM EO . I MI C E J. SIKO A WI IAM . U OUG AS K. MAGA Y WI IAM S EI SO E E W. OW E E J. MO E MA Y A ICE S E E S OMAS OWA OW OMAS . MU AG OSE . SU I A , . A I M. CO I MIC AE A. A IS O E . O I GA Y S. E I O E . EE A Y . WEISMA O E J. G E O , JR. WI IAM A. YA , . A I M. WI E O . r n nn OMAS J. SE O O . WOO A
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