16. If the broker moves to dismiss the hoarder's complaint, which of the following is the hoarder's best argument in opposing the motion?

After receiving the broker's message on October 17, the hoarder telephoned the broker, who said, «I absolutely will not replace your coin until the market drops far below its present level.» The hoarder then sued the broker on November 15 for the market value of a comparable replacement-coin as promised by the broker in February. The trial began on December 1.

On October 1, the market price of rare coins suddenly began a rapid, sustained rise; on October 15 the hoarder wrote the broker for assurance that the latter would timely meet his coin-replacement commitment. The broker replied, «In view of the surprising market, it seems unfair that I should have to replace your coin within the next few weeks.»

A broker needed a certain rare coin to complete a set that he had contracted to assemble and sell to a collector. On February 1, the broker obtained such a coin from a hoarder in exchange for $1,000 and the broker's signed, written promise to re-deliver to the hoarder «not later than December 31 this year» a comparable specimen of the same kind of coin without charge to the hoarder. On February 2, the broker consummated sale of the complete set to the collector.

The hoarder's implied duty of good faith and fair dealing in enforcement of the contract required her to mitigate her losses on the rising market by suing promptly, as she did, after becoming reasonably apprehensive of a prospective breach by the broker
Although the doctrine of anticipatory breach is not applicable under the prevailing view if, at the time of repudiation, the repudiatee owes the repudiator no remaining duty of performance, the doctrine applies in this case because the hoarder, the repudiatee, remains potentially liable under an implied warranty that the coin advanced to the broker was genuine
When either party to a sale-of-goods contract repudiates with respect to a performance not yet due, the loss of which will substantially impair the value of the contract to the other, the aggrieved party may in good faith resort to any appropriate remedy for breach
Anticipatory repudiation, as a deliberate disruption without legal excuse of an ongoing contractual relationship between the parties, may be treated by the repudiatee at her election as a present tort, actionable at once

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A party may make it unmistakably clear, even before his performance under a contract is due, that he does not intend to perform. When he does so, he is said to have anticipatorily repudiated the contract. Such a repudiation allows the other party to suspend and perhaps cancel his own performance.

Modern courts have held that a repudiation does not have to be expressly stated or clear to qualify as an effective repudiation. A repudiation is any possible statement by the obligor to mean that he will not or cannot perform his contractual duty. This can be through: (i) a statement by the promisor that he intends not to perform; (ii) an action by the promisor making his performance under the contract impossible; or (iii) an indication by the promisor or via some other means that the promisor will be unable to perform, although he desires to perform.

Under the Uniform Commercial Code (UCC), when either party to a contract for the sale of goods repudiates the contract with respect to a future performance that will substantially affect the value of that performance, the non-repudiating party may resort to any appropriate remedy for breach.

UCC § 2-601 technically gives a buyer the right to reject goods that are defective in any respect, no matter how immaterial. However, courts have not interpreted this provision liberally. Buyers may only reject goods when the defect is substantial. To determine the substantiality of the defect, courts look to trade usage, course of dealing, and the course of performance between the parties. Rejection of goods must be made within a reasonable amount of time after the delivery or tender. However, this right to reject is limited by the seller's right to cure the non-conformity. See UCC § 2-508.

C is correct. The broker's October 17 statement that he «absolutely will not» replace the hoarder's coin until the market drops manifested an intent to repudiate. Therefore, the hoarder is entitled to treat his statement as a total breach of contract, even though performance is not due until December 31.

A is incorrect. Under the mitigation of damages doctrine, a person who has suffered an injury or loss should take reasonable action, where possible, to avoid additional injury or loss. The failure of a plaintiff to take protective steps after suffering an injury or loss can reduce the amount of the plaintiff's recovery. An injured party must act reasonably to mitigate damages only after the other party commits a material breach or repudiates the contract.

B is incorrect. Although the common law recognizes an exception where the non-repudiating party owes no remaining duty of performance, the UCC rule (which governs the hoarder-broker contract because it is for the sale of a good) provides for no such exception.

D is incorrect. In general, one cannot recover punitive damages under contract law. Such damages generally are recoverable under tort law. Repudiation typically does not entitle the non-repudiating party to bring a tort action.

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16. If the broker moves to dismiss the hoarder's complaint, which of the following is the hoarder's best argument in opposing the motion?

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