Bar Exam (Uniform) Quiz: Anticipatory Repudiation
20 questions · exam conditions
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Anticipatory RepudiationQuestion 1 of 20

Goods seller says, 'I doubt I can deliver May 1.' Buyer sues now. Is the suit proper?

Yes; doubts are repudiation
No; demand adequate assurance
No; must wait until May 1
Yes; buyer may cover now
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Bar Exam (Uniform) Quiz

Bar Exam (Uniform) Quiz: Anticipatory Repudiation

Practice Anticipatory Repudiation in Bar Exam (Uniform) with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Anticipatory Repudiation, giving you a quick way to practice the rules, question types, and explanations that matter most for Bar Exam (Uniform).

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

Goods seller says, 'I doubt I can deliver May 1.' Buyer sues now. Is the suit proper?

  1. Yes; doubts are repudiation
  2. No; demand adequate assurance (correct answer)
  3. No; must wait until May 1
  4. Yes; buyer may cover now
Explanation: Seller's statement creates reasonable grounds for insecurity, but a mere doubt is not an unequivocal repudiation. Under UCC 2-609, you may demand adequate assurance and suspend your own performance while waiting; you cannot sue for breach yet. The tempting mistake is treating doubt as a repudiation, but repudiation requires a definite and unequivocal refusal to perform.

Question 2

Seller repudiates before delivery, then retracts before the due date. Buyer did nothing. Is retraction valid?

  1. Only if buyer consents first
  2. Yes, but damages still remain
  3. Yes, absent changed position (correct answer)
  4. No; repudiation is final now
Explanation: Under UCC 2-611, a repudiating seller can retract before the due date unless the buyer has canceled, materially changed position, or treated the repudiation as final. Buyer did nothing, so the retraction is valid and the contract stands. The tempting wrong answer is that buyer consent is required; consent isn't needed, only absence of reliance or finality.

Question 3

Painting contract: payment due on completion. Owner says 'I won't pay' after completion. This is?

  1. Anticipatory repudiation
  2. No breach until payment date
  3. Only a threat, not breach
  4. Actual breach not repudiation (correct answer)
Explanation: Because payment became due when the painting was completed, the owner's refusal to pay is a present failure to perform an existing obligation. That is an actual breach. Anticipatory repudiation is tempting, but it applies only when the promised performance is not yet due; here completion already triggered the duty to pay.

Question 4

Seller repudiates before delivery. Buyer urges performance; seller never delivers. Buyer sues. Valid?

  1. Suit barred by election rule
  2. Only if seller refuses again
  3. Buyer must first cover goods
  4. Suit allowed; no waiver found (correct answer)
Explanation: After an anticipatory repudiation, you may urge the seller to perform without giving up your right to sue. Calling on the seller to deliver isn't an election to waive the breach; if no delivery comes, you can bring suit. The tempting mistake is thinking your demand for performance bars the claim, but it does not. No cover or second refusal is required to preserve your remedy.

Question 5

Buyer sues immediately after seller's repudiation of a goods contract. Market price valued when?

  1. At repudiation, not due date (correct answer)
  2. At original delivery date
  3. At date the suit was filed
  4. At date buyer covered goods
Explanation: Under the majority rule tested on the MBE, when the seller anticipatorily repudiates and the buyer sues immediately, market price is measured at the time the buyer learned of the repudiation rather than at the original delivery date. Some courts instead use a commercially reasonable time after the buyer learns of the breach. The due date is tempting because that is when performance was owed, but UCC damages for repudiation look to the buyer's knowledge of the breach.

Question 6

A university hired a famous architect to design a new law library, with construction to begin on June 1. On March 1, the architect sent a letter to the university's president stating that she was taking a different, more lucrative project and would not be designing the library. On March 15, the university's board of trustees held an emergency meeting and voted to hire a different architectural firm. They signed a contract with the new firm on March 16. On March 20, the original architect called the president to retract her repudiation.

  1. The architect's retraction is valid because it occurred before the original performance date of June 1.
  2. The architect's retraction is valid because the university had a duty to inform her before hiring a replacement.
  3. The architect's retraction is invalid because the university treated the repudiation as final by hiring a replacement firm. (correct answer)
  4. The architect's retraction is invalid because the university's vote on March 15 was sufficient to cut off the right to retract.
Explanation: The correct answer is C. A repudiating party's right to retract is terminated once the aggrieved party materially changes their position in reliance on the repudiation or otherwise indicates they consider the repudiation final. By signing a contract with a new firm, the university materially changed its position. Therefore, the architect's subsequent attempt to retract was ineffective. A is incorrect because the right to retract can be cut off long before the performance date. B is incorrect because the non-breaching party has no duty to notify the repudiator before acting in reliance on the repudiation. D is incorrect because while the vote shows intent, the signing of the new contract on March 16 is the definitive act of material reliance that makes the retraction invalid.

Question 7

A manufacturing company had a contract to purchase a custom-built industrial press from a supplier for $500,000, for delivery on October 1. The contract was governed by the UCC. On August 10, the company's CEO learned from a reliable trade publication that the supplier had accepted a new, larger order that would monopolize its production capacity through the end of the year. The CEO immediately sent a written demand for adequate assurances of performance. The supplier failed to respond.

  1. The company must wait until October 1 to see if the press is delivered before it has a claim for breach.
  2. The supplier's silence for a reasonable time not exceeding 30 days operates as a repudiation of the contract. (correct answer)
  3. The trade publication report, by itself, constituted a repudiation by the supplier, and no demand was necessary.
  4. The company's only remedy is to seek an injunction forcing the supplier to prioritize its order.
Explanation: The correct answer is B. Under UCC § 2-609, when reasonable grounds for insecurity arise, a party may demand in writing adequate assurances of due performance. The other party's failure to provide such assurance within a reasonable time, not to exceed 30 days, is a repudiation of the contract. The supplier's silence in response to a valid demand constitutes such a failure. A is incorrect because the failure to provide assurances is itself a breach by repudiation. C is incorrect because a third-party report, while creating grounds for insecurity, is not a direct and unequivocal repudiation from the supplier itself, making a demand for assurances the proper first step. D is incorrect because the company is entitled to treat the contract as breached and seek damages; specific performance or an injunction would only be available if the press were unique and damages were inadequate.

Question 8

A property owner hired a construction company to build a garage. The contract required the owner to make three progress payments. After making the first payment, the owner told the company's president, "I just lost my job. There's no way I'll be able to make the last two payments." The company immediately stopped work.

  1. The company's stoppage of work was a breach of contract because the owner's statement was not a repudiation.
  2. The company was required to demand adequate assurances from the owner before stopping work.
  3. The company must complete construction of the garage and then sue the owner for the unpaid amount.
  4. The owner's statement constituted an anticipatory repudiation, justifying the company's suspension of performance. (correct answer)
Explanation: This question tests anticipatory repudiation and when a party may suspend performance due to the other party's conduct. When one party clearly indicates they won't perform their contractual obligations, you need to determine whether this constitutes repudiation and what remedies are available. The owner's statement "There's no way I'll be able to make the last two payments" constitutes an unequivocal repudiation of his future obligations under the contract. An anticipatory repudiation occurs when a party clearly communicates, either through words or conduct, that they will not perform their contractual duties when the time comes. The owner's definitive statement about his inability to pay isn't merely expressing concern—it's a clear declaration that he cannot fulfill his payment obligations. This justifies the company's immediate suspension of performance under the doctrine of anticipatory repudiation. Choice A is incorrect because the owner's unambiguous statement about being unable to make payments clearly constitutes repudiation—it's not merely expressing doubt or concern. Choice B misapplies the law; while demanding adequate assurances is sometimes appropriate when there are reasonable grounds for insecurity, it's not required when there's already a clear repudiation. The owner has already stated definitively that he cannot pay. Choice C is wrong because once anticipatory repudiation occurs, the non-breaching party isn't required to continue performance and can treat the contract as breached immediately. Remember: Clear, unequivocal statements about inability to perform future obligations constitute anticipatory repudiation, allowing the other party to suspend performance immediately without demanding assurances or continuing work.

Question 9

A landlord and tenant signed a two-year commercial lease. One year into the lease, the tenant sent a letter to the landlord stating, "Our business has failed, and we will be vacating the premises at the end of the month and will not make any further rent payments." The tenant then vacated. The jurisdiction follows the majority rule regarding a landlord's duty to mitigate.

  1. The landlord can let the property sit vacant for the remainder of the lease term and sue the tenant for the entire remaining rent.
  2. The landlord can treat the tenant's letter as an anticipatory repudiation and must make reasonable efforts to re-let the premises. (correct answer)
  3. The landlord's only remedy is to sue for the one month of rent that will be due immediately after the tenant vacates.
  4. The lease is automatically terminated by the tenant's repudiation, and the landlord has no further claim for rent.
Explanation: The correct answer is B. The tenant's letter is a clear anticipatory repudiation of the lease agreement. This is a total breach. Under the majority rule, when a tenant abandons a property in breach of the lease, the landlord has a duty to mitigate damages by making reasonable efforts to re-let the premises to another suitable tenant. The landlord can then sue the original tenant for the difference between the original rent and the rent received from the new tenant, plus costs of re-letting. A is incorrect because it ignores the landlord's duty to mitigate. C is incorrect because anticipatory repudiation allows the landlord to sue for damages for the entire breach, not just one month at a time. D is incorrect because repudiation is a breach; it does not automatically terminate the contract or the landlord's right to damages.

Question 10

An author granted a publisher the exclusive right to publish her next novel, with the manuscript to be delivered on October 1. On August 1, the author sold the exclusive rights to the same novel to a different, more prestigious publisher. The first publisher learned of this second contract on August 5.

  1. The author's act of signing the second contract is an anticipatory repudiation, allowing the first publisher to sue immediately. (correct answer)
  2. The first publisher must wait until October 1 to see if the author delivers the manuscript before it can sue.
  3. The author has not repudiated the contract because it is still possible for her to breach the second contract and honor the first.
  4. The first publisher's only remedy is to demand adequate assurances that the author will not deliver the manuscript to the second publisher.
Explanation: This question tests your understanding of anticipatory repudiation in contract law. When you encounter scenarios where one party acts in a way that makes performance impossible or highly unlikely before the performance date, consider whether their conduct constitutes anticipatory breach. Anticipatory repudiation occurs when a party's words or conduct clearly indicate they will not or cannot perform their contractual obligations. Here, the author granted exclusive rights to the same novel to two different publishers. Since she cannot deliver exclusive rights to both parties, her second contract makes it impossible to fully perform the first contract. This constitutes anticipatory repudiation, allowing the first publisher to sue immediately without waiting for the October 1 deadline. Choice B is incorrect because the non-breaching party doesn't need to wait until the performance date when anticipatory repudiation has occurred. The law allows immediate action to protect the injured party's interests. Choice C misses the key point about exclusivity. Even if the author could theoretically breach the second contract, she has already demonstrated her intent not to honor the exclusivity provision of the first contract by granting the same exclusive rights elsewhere. Choice D incorrectly suggests that demanding adequate assurances is the only remedy. While requesting assurances is one option when there are reasonable grounds for insecurity about performance, the author's conduct here goes beyond mere insecurity—it's a clear repudiation that justifies immediate legal action. Study tip: Remember that anticipatory repudiation focuses on conduct that makes performance impossible or clearly indicates non-performance, not just expressions of doubt about future performance.

Question 11

A developer had a contract to buy a parcel of land from a landowner for $1 million, with the closing set for June 1. The contract required the landowner to deliver marketable title. On May 1, the developer discovered that the land was subject to a substantial, undisclosed easement that made it unsuitable for development. The developer informed the landowner that he considered this a breach. The landowner replied, "The easement is a mistake on the title report, and I will have it cleared by closing."

  1. The landowner's promise to cure the defect before closing prevents the developer from treating the contract as repudiated. (correct answer)
  2. The developer can treat the existence of the easement as an anticipatory repudiation and terminate the contract immediately.
  3. The developer must close on June 1 and then sue the landowner for damages resulting from the easement.
  4. The developer's only remedy is to request a price reduction to account for the easement's impact on value.
Explanation: This question tests your understanding of anticipatory repudiation in real estate contracts and the seller's right to cure title defects before closing. When a buyer discovers a title defect before closing, the key issue is whether the seller has repudiated the contract or is merely facing a curable defect. In real estate transactions, sellers typically have until the closing date to deliver marketable title, and courts generally allow reasonable attempts to cure defects when the seller promises to do so and closing hasn't yet occurred. Answer A is correct because the landowner's promise to cure the easement defect before the June 1 closing prevents this from being treated as a repudiation. Since there's still time before closing and the landowner has committed to resolving the issue, the developer cannot immediately terminate the contract. Answer B is wrong because anticipatory repudiation requires a clear, unequivocal refusal to perform. Here, the landowner didn't refuse to perform but instead promised to cure the defect, which is the opposite of repudiation. Answer C is incorrect because the developer isn't required to close if the title defect isn't cured by closing. The developer can refuse to close if marketable title isn't delivered as promised. Answer D is wrong because price reduction isn't the developer's only remedy. If the landowner fails to cure the defect by closing, the developer can terminate the contract and seek other remedies including return of any deposits. Study tip: Remember that in real estate contracts, sellers generally have until closing to cure title defects, and a promise to cure prevents finding anticipatory repudiation.

Question 12

A distributor had a contract to sell 1,000 cases of wine to a retailer, for delivery on March 1. On February 1, the distributor sent a fax stating, "We will not be able to deliver the wine as per our agreement." The retailer immediately responded by fax, "We consider your refusal to perform to be a final breach of contract." On February 3, before the retailer had entered a substitute contract, the distributor sent another fax stating, "Disregard our previous message. We have resolved our supply issues and will deliver on March 1 as promised."

  1. The distributor's retraction is ineffective because the retailer stated that it considered the repudiation final. (correct answer)
  2. The distributor's retraction is effective because the retailer did not materially change its position.
  3. The distributor's retraction is effective because it occurred before the original contract performance date.
  4. The distributor's retraction is ineffective because any repudiation communicated in writing must be retracted in a formal, signed letter.
Explanation: This question tests your understanding of anticipatory repudiation and retraction under contract law. When a party clearly communicates they won't perform before the performance date, the non-breaching party can either treat it as a breach immediately or wait to see if performance occurs. The key principle is that a repudiating party can retract their repudiation, but only if the other party hasn't materially changed position in reliance on the repudiation. However, there's an important exception: if the non-breaching party communicates that they're treating the repudiation as final, the repudiating party loses the right to retract. Here, the retailer's immediate response stating "We consider your refusal to perform to be a final breach of contract" was a clear communication treating the repudiation as definitive. This cuts off the distributor's ability to retract, making the distributor's February 3 message ineffective. Looking at the wrong answers: B) misses the critical fact that the retailer communicated finality—even without material change of position, retraction was barred by the retailer's response. C) incorrectly suggests timing before the performance date is the only factor, ignoring the retailer's communication. D) creates a non-existent formal requirement—contract law doesn't mandate signed letters for retraction. Study tip: Remember the two ways retraction becomes impossible: (1) the non-breaching party materially changes position, or (2) they communicate that they're treating the repudiation as final. Either one alone prevents retraction, regardless of timing or formalities.

Question 13

A supplier contracted to sell 10,000 pounds of coffee beans to a roaster, with delivery on May 1. On April 1, the supplier repudiated the contract. The roaster immediately filed suit for breach. On April 15, while the lawsuit was pending, the supplier attempted to retract the repudiation. The roaster had not yet purchased replacement beans.

  1. The retraction is effective because the roaster had not yet purchased cover or otherwise materially changed its position.
  2. The retraction is effective because it was made before the original date of performance.
  3. The retraction is ineffective because the roaster had already filed a lawsuit for total breach. (correct answer)
  4. The retraction is ineffective unless the supplier pays the roaster's attorney's fees for the lawsuit.
Explanation: The correct answer is C. The right to retract a repudiation ends once the aggrieved party has materially changed their position in reliance on it OR has indicated that they consider the repudiation to be final. Filing a lawsuit for total breach is considered a definitive indication that the aggrieved party is treating the repudiation as final. Therefore, the supplier's right to retract was cut off when the roaster filed suit. A is incorrect because filing suit is a sufficient indication of finality, even without a material change in position like covering. B is incorrect because the performance date is not the dispositive factor. D is incorrect because there is no rule conditioning the effectiveness of a retraction on the payment of attorney's fees.

Question 14

A property owner hired a construction company to build a garage. The contract required the owner to make three progress payments. After making the first payment, the owner told the company's president, "I just lost my job. There's no way I'll be able to make the last two payments." The company immediately stopped work.

  1. The company's stoppage of work was a breach of contract because the owner's statement was not a repudiation.
  2. The company was required to demand adequate assurances from the owner before stopping work.
  3. The company must complete construction of the garage and then sue the owner for the unpaid amount.
  4. The owner's statement constituted an anticipatory repudiation, justifying the company's suspension of performance. (correct answer)
Explanation: This question tests anticipatory repudiation and when a party may suspend performance due to the other party's conduct. When one party clearly indicates they won't perform their contractual obligations, you need to determine whether this constitutes repudiation and what remedies are available. The owner's statement "There's no way I'll be able to make the last two payments" constitutes an unequivocal repudiation of his future obligations under the contract. An anticipatory repudiation occurs when a party clearly communicates, either through words or conduct, that they will not perform their contractual duties when the time comes. The owner's definitive statement about his inability to pay isn't merely expressing concern—it's a clear declaration that he cannot fulfill his payment obligations. This justifies the company's immediate suspension of performance under the doctrine of anticipatory repudiation. Choice A is incorrect because the owner's unambiguous statement about being unable to make payments clearly constitutes repudiation—it's not merely expressing doubt or concern. Choice B misapplies the law; while demanding adequate assurances is sometimes appropriate when there are reasonable grounds for insecurity, it's not required when there's already a clear repudiation. The owner has already stated definitively that he cannot pay. Choice C is wrong because once anticipatory repudiation occurs, the non-breaching party isn't required to continue performance and can treat the contract as breached immediately. Remember: Clear, unequivocal statements about inability to perform future obligations constitute anticipatory repudiation, allowing the other party to suspend performance immediately without demanding assurances or continuing work.

Question 15

A distributor had a contract to sell 1,000 cases of wine to a retailer, for delivery on March 1. On February 1, the distributor sent a fax stating, "We will not be able to deliver the wine as per our agreement." The retailer immediately responded by fax, "We consider your refusal to perform to be a final breach of contract." On February 3, before the retailer had entered a substitute contract, the distributor sent another fax stating, "Disregard our previous message. We have resolved our supply issues and will deliver on March 1 as promised."

  1. The distributor's retraction is ineffective because the retailer stated that it considered the repudiation final. (correct answer)
  2. The distributor's retraction is effective because the retailer did not materially change its position.
  3. The distributor's retraction is effective because it occurred before the original contract performance date.
  4. The distributor's retraction is ineffective because any repudiation communicated in writing must be retracted in a formal, signed letter.
Explanation: This question tests your understanding of anticipatory repudiation and retraction under contract law. When a party clearly communicates they won't perform before the performance date, the non-breaching party can either treat it as a breach immediately or wait to see if performance occurs. The key principle is that a repudiating party can retract their repudiation, but only if the other party hasn't materially changed position in reliance on the repudiation. However, there's an important exception: if the non-breaching party communicates that they're treating the repudiation as final, the repudiating party loses the right to retract. Here, the retailer's immediate response stating "We consider your refusal to perform to be a final breach of contract" was a clear communication treating the repudiation as definitive. This cuts off the distributor's ability to retract, making the distributor's February 3 message ineffective. Looking at the wrong answers: B) misses the critical fact that the retailer communicated finality—even without material change of position, retraction was barred by the retailer's response. C) incorrectly suggests timing before the performance date is the only factor, ignoring the retailer's communication. D) creates a non-existent formal requirement—contract law doesn't mandate signed letters for retraction. Study tip: Remember the two ways retraction becomes impossible: (1) the non-breaching party materially changes position, or (2) they communicate that they're treating the repudiation as final. Either one alone prevents retraction, regardless of timing or formalities.

Question 16

An author granted a publisher the exclusive right to publish her next novel, with the manuscript to be delivered on October 1. On August 1, the author sold the exclusive rights to the same novel to a different, more prestigious publisher. The first publisher learned of this second contract on August 5.

  1. The author's act of signing the second contract is an anticipatory repudiation, allowing the first publisher to sue immediately. (correct answer)
  2. The first publisher must wait until October 1 to see if the author delivers the manuscript before it can sue.
  3. The author has not repudiated the contract because it is still possible for her to breach the second contract and honor the first.
  4. The first publisher's only remedy is to demand adequate assurances that the author will not deliver the manuscript to the second publisher.
Explanation: This question tests your understanding of anticipatory repudiation in contract law. When you encounter scenarios where one party acts in a way that makes performance impossible or highly unlikely before the performance date, consider whether their conduct constitutes anticipatory breach. Anticipatory repudiation occurs when a party's words or conduct clearly indicate they will not or cannot perform their contractual obligations. Here, the author granted exclusive rights to the same novel to two different publishers. Since she cannot deliver exclusive rights to both parties, her second contract makes it impossible to fully perform the first contract. This constitutes anticipatory repudiation, allowing the first publisher to sue immediately without waiting for the October 1 deadline. Choice B is incorrect because the non-breaching party doesn't need to wait until the performance date when anticipatory repudiation has occurred. The law allows immediate action to protect the injured party's interests. Choice C misses the key point about exclusivity. Even if the author could theoretically breach the second contract, she has already demonstrated her intent not to honor the exclusivity provision of the first contract by granting the same exclusive rights elsewhere. Choice D incorrectly suggests that demanding adequate assurances is the only remedy. While requesting assurances is one option when there are reasonable grounds for insecurity about performance, the author's conduct here goes beyond mere insecurity—it's a clear repudiation that justifies immediate legal action. Study tip: Remember that anticipatory repudiation focuses on conduct that makes performance impossible or clearly indicates non-performance, not just expressions of doubt about future performance.

Question 17

A concert promoter had a contract with a famous singer for a performance on New Year's Eve. On December 1, the singer was seriously injured in a car accident and was hospitalized. The singer's agent immediately informed the promoter that the singer would be unable to perform. The promoter wants to sue the singer for breach of contract.

  1. The agent's statement is not a repudiation because the singer's performance has been discharged by impossibility. (correct answer)
  2. The agent's statement is an anticipatory repudiation, and the promoter can immediately sue for full expectation damages.
  3. The promoter must wait until New Year's Eve before suing, because the singer might make a miraculous recovery.
  4. The promoter can sue for repudiation but can only recover the deposit paid, not lost profits.
Explanation: This question tests the distinction between anticipatory repudiation and discharge by impossibility in contract law. When performance becomes impossible due to circumstances beyond a party's control, you need to determine whether the contract is discharged or breached. Here, the singer's hospitalization from a car accident created objective impossibility - the singer literally cannot perform due to physical incapacity. When performance becomes impossible through no fault of the promisor, the contract is discharged by operation of law, not breached. The agent's communication is simply informing the promoter of this impossibility, not repudiating the contract. Answer A is correct because the singer's performance has been discharged by impossibility, so the agent's statement merely communicates this legal discharge rather than constituting a repudiation. Answer B incorrectly treats this as anticipatory repudiation. Anticipatory repudiation requires a clear indication that a party will not perform when performance is still possible. Since performance is impossible here, there can be no repudiation. Answer C misunderstands both impossibility and repudiation. The promoter doesn't need to wait because the legal issue is already resolved - the contract is discharged. The possibility of recovery doesn't restore the contractual obligation once impossibility occurs. Answer D wrongly assumes this is a breach requiring damages. Since the contract is discharged, not breached, no damages are recoverable at all. Remember: impossibility discharges contracts, while repudiation breaches them. When you see physical incapacity or other objective impossibility, think discharge first, not breach.

Question 18

A vineyard owner has a written contract with a barrel maker to purchase 100 custom-toasted oak barrels for $800 each, to be delivered on August 1. On June 1, the barrel maker sends a letter to the vineyard owner stating, "Due to a massive surge in lumber costs, we will be unable to produce the barrels at the agreed-upon price. We will not be delivering the barrels on August 1." The vineyard owner immediately contracts with another supplier to purchase similar barrels for $950 each.

  1. The vineyard owner must wait until August 1 before filing a lawsuit for breach of contract.
  2. The vineyard owner's immediate contracting with another supplier was an improper failure to mitigate damages.
  3. The barrel maker's letter constituted an anticipatory repudiation, giving the owner the right to sue immediately. (correct answer)
  4. The barrel maker's performance is excused under the doctrine of commercial impracticability due to the rise in lumber costs.
Explanation: The correct answer is C. The barrel maker's letter was a clear and unequivocal statement that he would not perform under the contract. This constitutes an anticipatory repudiation. Upon repudiation, the non-breaching party may (1) treat the repudiation as a total breach and sue immediately, (2) suspend their own performance and wait to sue until the performance date, (3) treat the contract as discharged, or (4) urge the repudiator to perform. Here, the owner was entitled to treat the contract as breached and sue immediately. A is incorrect because the doctrine of anticipatory repudiation allows the non-breaching party to sue before the performance date. B is incorrect because securing a substitute contract ('cover') is a proper and required form of mitigation. D is incorrect because a mere increase in cost, even a massive one, is a foreseeable business risk and does not typically rise to the level of commercial impracticability, which requires an unforeseen event that makes performance vitally different from what was contemplated.

Question 19

A vineyard owner has a written contract with a barrel maker to purchase 100 custom-toasted oak barrels for $800 each, to be delivered on August 1. On June 1, the barrel maker sends a letter to the vineyard owner stating, "Due to a massive surge in lumber costs, we will be unable to produce the barrels at the agreed-upon price. We will not be delivering the barrels on August 1." The vineyard owner immediately contracts with another supplier to purchase similar barrels for $950 each.

  1. The vineyard owner must wait until August 1 before filing a lawsuit for breach of contract.
  2. The vineyard owner's immediate contracting with another supplier was an improper failure to mitigate damages.
  3. The barrel maker's letter constituted an anticipatory repudiation, giving the owner the right to sue immediately. (correct answer)
  4. The barrel maker's performance is excused under the doctrine of commercial impracticability due to the rise in lumber costs.
Explanation: The correct answer is C. The barrel maker's letter was a clear and unequivocal statement that he would not perform under the contract. This constitutes an anticipatory repudiation. Upon repudiation, the non-breaching party may (1) treat the repudiation as a total breach and sue immediately, (2) suspend their own performance and wait to sue until the performance date, (3) treat the contract as discharged, or (4) urge the repudiator to perform. Here, the owner was entitled to treat the contract as breached and sue immediately. A is incorrect because the doctrine of anticipatory repudiation allows the non-breaching party to sue before the performance date. B is incorrect because securing a substitute contract ('cover') is a proper and required form of mitigation. D is incorrect because a mere increase in cost, even a massive one, is a foreseeable business risk and does not typically rise to the level of commercial impracticability, which requires an unforeseen event that makes performance vitally different from what was contemplated.

Question 20

A buyer contracted to purchase a commercial property, with the closing scheduled in 90 days. The contract was contingent on the buyer obtaining financing. Thirty days after signing, the buyer sent a letter to the seller stating, "I repudiate the contract. My financing was denied." In fact, the buyer never applied for financing. The seller wishes to sue for breach.

  1. The buyer did not repudiate the contract because his duty to perform was discharged by the failure of a condition.
  2. The buyer repudiated the contract because he had an implied duty to use good faith efforts to obtain financing. (correct answer)
  3. The seller cannot sue until the 90-day closing date has passed.
  4. The seller's only remedy is to demand adequate assurance that the buyer will attempt to secure financing.
Explanation: The correct answer is B. When a party's duty is subject to a condition, there is an implied promise that the party will use good faith efforts to cause the condition to occur. Here, the financing contingency imposed a duty on the buyer to seek financing in good faith. By failing to even apply, the buyer breached this duty. His statement of repudiation, based on a condition that failed due to his own fault, is therefore a wrongful repudiation and a breach of contract. A is incorrect because the condition did not simply fail; its failure was caused by the buyer's breach of his duty of good faith. C is incorrect because the buyer's statement was a clear repudiation, allowing the seller to sue immediately. D is incorrect because the buyer's statement was an outright repudiation, not just a cause for insecurity.