The Doctrine of Anticipatory Repudiation

In Nevada, anticipatory repudiation is a statement by an obligor to an obligee indicating that the obligor will commit a breach that would of itself give the obligee claim for damage for total breach of the contract, or a voluntary affirmative act which renders the obligor unable or apparently unable to perform. Restatement (Second) of Contracts § 250. Concerning anticipatory repudiation, the Uniform Commercial Code first defines the term and then provides the remedies. Repudiation occurs when either party repudiates the contract with respect to a performance not yet due which will substantially impair the value of the contract to the other. NRS 104.2610. For its remedies, the non-breaching party may (1) wait for a commercially reasonable time for a performance, or (2) resort to any remedy for breach, or (3) suspend his own performance. Id.

The Doctrine of Anticipatory Repudiation applies only before the breacher has received all of his performance. Restatement (Second) of Contracts § 253(1); 11 S. Williston, Contracts §§ 1300, 1326 (3d Ed. 1968); 4 A. Corbin, Contracts § 963 (1951). Strangely, the major exception to the Doctrine illustrates the doctrine’s rationale. An anticipatory repudiation can only exist when both parties have not fully performed their duties. Therefore, anticipatory repudiation does not apply when the non-­breaching party has fully performed and the breaching party owes only installment payments. Restatement of Contracts (Second) § 243. The only remedy, therefore, to the injured party in this situation is to wait for the time of performance to sue for damages. Farnsworth, Contracts § 8.20, 630 (1982). In Brown Papermill Co. v. Irvin, the Eighth Circuit declared that the doctrine of anticipatory breach does not apply to a bilateral contract which has become unilateral by complete performance on one side, leaving only an obligation to pay money one day in the future on the other. Brown, 146 F.2d 232 (8th Cir. 1944).

In Nevada, anticipatory repudiation exists where a party demonstrates a definite unequivocal and absolute intent not to perform a substantial portion of a contract.  Kahle v. Kostiner, 85 Nev. 355, 345, 455 P.2d 42, 44 (1969); NRS 104A.2402; NRS 104.2610.

In a famous rationalization of the rule and its exception, the Sixth Circuit explained as follows:

In the ordinary case of . . . executory contracts, the plaintiff may say . . . (now, by your repudiation, you have put it out of my power further to perform, and hence you cannot be permitted to say that you have not received . . . consideration for your future act . , ,) [But if] his part of the contract has been executed by the plaintiff, he has nothing to do but wait, . . . and hence he will have no estoppel to rely upon to precipitate the defendant’s obligation.

Federal Life Ins. Co. v. Rascoe, 12 F.2d 693 (6th Cir. 1926).



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