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40. If the buyer sues the seller for breach of contract, will the buyer be likely to prevail?
A buyer agreed in writing to purchase a car from a seller for $15,000, with the price to be paid on a specified date at the seller's home. The contract provided, and both parties intended, that time was of the essence. Before the specified date, however, the seller sold the car to a third party for $18,000. On the specified date, the buyer arrived at the seller's home prepared to tender payment. The seller was not there, so the buyer called the seller to ask where he was. The seller then told the buyer that he had sold the car to the third party.
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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.
An anticipatory repudiation can be either express or implied. It is express if the repudiating party informs the other party of his intention not to perform. It is implied if the repudiating party puts it out of his power to perform.
Modern courts have held that a repudiation does not have to be expressly stated or clear-cut 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 obligor that he intends not to perform; (ii) an action by the obligor making his performance under the contract impossible; or (iii) an indication by the obligor or via some other means that he will be unable to perform, although he desires to perform.
A seller's tender of delivery of goods and a buyer's tender of payment are concurrent conditions of exchange, meaning they are obligated to simultaneously tender their respective performances.
D is correct. The buyer and the seller entered into an enforceable contract that required concurrent conditions of exchange or simultaneous performances. The seller was to perform by tendering the car at the same time that the buyer was to perform by tendering the $15,000. However, when the seller sold the car to a third party for $18,000 prior to the specified date for this exchange, he rendered his performance of the contract with the buyer impossible (i.e., he could no longer tender the car because it had been sold to someone else). This amounted to a breach of the contract by anticipatory repudiation, and the buyer has a claim against the seller for breach.
A is incorrect. An impossibility defense may be raised when an unexpected event or occurrence renders a party's performance impossible, which did not happen here. In this case, the role of impossibility is that the seller made his own performance impossible by selling the car, which will satisfy the buyer's need to show that the seller anticipatorily repudiated the contract.
B is incorrect. Although the original contract called for performances by way of concurrent conditions of exchange (i.e., simultaneous performances), when the seller sold the car to the third party and anticipatorily repudiated, this discharged the buyer's duty to perform under the contract.
C is incorrect. This answer reaches the correct answer with the wrong reasoning. The buyer will prevail, but not because the seller failed to inform the buyer of the repudiation. In fact, the seller's failure to inform the buyer is irrelevant because by selling the car to the third party, this constituted an implied repudiation of the contract.