Anticipatory repudiation and adequate assurance of performance

     Upon breach of contract, the aggrieved party is entitled to damages and, depending upon the nature of the breach, may also be discharged from performing its remaining obligations under the contract.  May these same remedies be invoked prior to the time that performance is due if a party obligated to perform states that it does not intend to perform or cannot perform or if it becomes apparent that the party obligated to perform cannot perform?  The doctrine of anticipatory repudiation responds to this question. 

     Hochster v. DeLaTour, involving a courier discharged by his employer prior to the time employment was to start, is the classic case on anticipatory repudiation.  Saewitz v. Epstein, resolving a dispute between two hotheads over a lease and contemplated purchase of some real estate in Woodstock, New York, elaborates on the requirements for a finding of anticipatory repudiation and considers an exception to the doctrine.  See R.2d Contracts 250, 251, 252, 253, 254, 255, 256, and 257 for a complete modern common law formulation of the doctrine.  U.C.C. 2-610 and 2-611 are the Article 2 provisions concerning anticipatory repudiation.  Note also RUCC 2-610.

     Short of an indication that one party does not intend to perform or will not be able to perform, the other party nevertheless may become insecure about the prospect of receiving the benefit of its promised performance.  For transactions in goods, where there are reasonable grounds for such insecurity, U.C.C. 2-609 provides a right of the insecure party to demand and receive adequate assurance of performance from the other.  Some courts have adopted that concept, reflected in R.2d Contracts 251, for contracts generally.  See, e.g. Magnet Resources, Inc. v. Summit MRI, Inc., 318 N.J. Super. 275, 723 A.2d 976 (Superior Ct. N.J. App. Div. 1998).  Hope's Architectural Products, Inc. v. Lundy's Construction, Inc., involving a contract to supply windows for a school remodeling project, applies U.C.C. 2-609 and suggests questions and exercises presented in Problem.Planning.Adequate assurance of performance.  

     Supplementary reading:  Farnsworth, 8.20-8.23.