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Contracts • Excuse of Non-Performance
K#121
Legal Definition
The non-breaching party has four options: (1) treat it as a total repudiation and sue immediately; (2) suspend their own performance and wait to sue until the performance date; (3) treat the repudiation as an offer to rescind and treat the contract as discharged; or (4) ignore the repudiation and urge the promisor to perform (which does not waive the repudiation).
Plain English Explanation
When one makes it clear that they have no intention to fulfill their obligations under the contract, the non-breaching party has 4 options: (1) go all-in and treat the situation as if there is no chance the other party will perform, which means sue immediately; (2) suspend their own performance and wait until the deadline in the contract to sue the breaching party; (3) walk away from the contract and don't sue; or (4) be in denial about the fact that the person looks like they are going to flake and try to convince them not to.
Hypothetical
Hypo 1: Bob owns a statue that Sam really likes. Sam asks Bob if he can buy the statue. Instead, Bob says, "If you paint my house within a week, I will give you the statue." Sam agrees. Bob and Sam now have a legally binding, bilateral agreement where Bob is obligated to give Sam his statue and Sam is obligated to paint Bob's house within a week. A few days later, Sam sees Amy walk down the street holding the statue. Sam asks where she got it, and she says, "Bob sold it to me!" Result: Bob selling Amy the statue, and Sam being aware of it, acts as unambiguous conduct that Bob will not perform his obligation under the contract. After all -- how can he? His obligation was to give Sam the statue, and the statue is no longer Bob's property to give. This acts as anticipatory repudiation.
Visual Aids
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