23. If the seller sues the buyer on October 15 for breach of contract, the seller will probably

Anticipatory repudiation occurs if a promisor, prior to the time set for performance of his promise, indicates that he will not perform when the time comes. If the requirements of anticipatory repudiation are met, it can be treated as an immediate breach of contract (or an excuse of a condition).

Anticipatory repudiation requires:

(i) The existence of a bilateral contract with executory (unperformed) duties on both sides; and

(ii) Words or conduct by the promisor that unequivocally indicate that he cannot or will not perform when the time comes, and the statement must be positive. Doubts of doubt or fear will not suffice (i.e., it will not amount to anticipatory repudiation where one party says to another, «Business has been bad and I'm not sure whether I'll be able to perform under the contract.»)

The non-repudiating party has four options upon a showing of anticipatory repudiation:

(i) treat it as a total repudiation and sue immediately;

(ii) suspend his own performance and wait to sue until the performance date;

(iii) treat the repudiation as an offer to rescind and treat the contract as discharged; or

(iv) ignore the repudiation and urge the promisor to perform.

D is correct. Under the doctrine of anticipatory repudiation, an unequivocal statement of unwillingness or inability to perform a future contractual obligation, if material, may be treated as a total breach of that obligation and give rise to a right to immediately recover damages for that breach. In order to amount to a repudiation, however, the statement must be unequivocal and affirmative; a statement that merely expresses doubt over a party's ability or willingness to perform is not sufficient. The buyer's October 1 statement to the seller was, «I'm increasingly unhappy about our June 1 contract because of the current cattle market, and do not intend to buy your ranch unless I'm legally obligated to do so.» This may very well have given rise to insecurity over his willingness to perform under the contract, but it was not sufficiently unequivocal to give rise to repudiation. It was also not a breach because performance was not due until December 1, which means the buyer could still come through and perform on time.

A is incorrect. This is an incorrect application of the law to these facts. The buyer's October 1 statement was not a total breach via anticipatory repudiation because it was not a clear manifestation of a prospective unwillingness to close the contract on December 1. The statement certainly established insecurity around whether the buyer would perform, but it was not sufficiently unequivocal to constitute anticipatory repudiation, as explained above.

B is incorrect. Although it may be true that the buyer's October 1 statement created reasonable grounds for the seller's insecurity regarding the buyer's performance, this alone is not sufficient to be considered an anticipatory repudiation that would allow the seller to treat it as a total breach.

C is incorrect. This answer reaches the correct answer with the wrong reasoning. The seller will lose, but not solely because there was no breach. It is true that there was no breach by the buyer given that the time for performance had not yet passed. However, the seller may have been able to bring a suit if the alleged repudiation had been truly unequivocal, even if it had occurred prior to December 1.