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25. Will the buyer likely prevail?
The buyer did not tender the purchase price for the first tract on July 1 but subsequently sued the seller for breach of contract.
On May 1, a seller and a buyer entered into a written contract, signed by both parties, for the sale of a tract of land for $100,000. Delivery of the deed and payment of the purchase price were scheduled for July 1. On June 1, the buyer received a letter from the seller repudiating the contract. On June 5, the buyer bought a second tract of land at a higher price as a substitute for the first tract. On June 10, the seller communicated a retraction of the repudiation to the buyer.
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A party that has repudiated may retract his repudiation UNTIL the other (aggrieved, non-repudiating) party has: (i) sued for breach; (ii) changed his position in material reliance on the repudiation; or (iii) stated that he is treating the repudiation as final. Rest. 2d. § 256(1). This applies to both anticipatory and ordinary repudiations. When a party retracts his previous repudiation, it will only be effective when it is actually communicated to the non-repudiating party.
D is correct. The buyer will prevail against the seller for breach of contract because the seller did not retract prior to the buyer's material reliance on the repudiation. The general rule is that a repudiating party may retract a repudiation, but it must be communicated to the non-repudiating party before he has materially relied on the repudiation by changing his position (or sued for breach or acknowledged that the repudiation is final). In other words, an attempted retraction is ineffective if it is communicated too late (i.e., after the injured party has taken one of these three actions). Here, after the seller repudiated the deal for the first tract of land, the buyer purchased a substitute tract, which was a change in position in material reliance on the repudiation. As such, the seller's attempted retraction was ineffective and the buyer will prevail.
A is incorrect. This answer choice misstates the rule for an effective retraction. A retraction must be communicated prior to the non-repudiating party's material reliance on the repudiation, not prior to the agreed time for performance. Here, the buyer's purchase of a substitute tract of land, prior to receiving notice of the retraction, renders that retraction ineffective.
B is incorrect. In a real estate transaction, generally, the tender of the purchase price and the property occur simultaneously. Here, however, the seller's repudiation and the buyer's subsequent action in material reliance on the repudiation discharged the buyer's original obligation to tender the purchase price on July 1.
C is incorrect. This answer reaches the correct answer with the wrong reasoning. The buyer will prevail, but not because the repudiation was non-retractable. A repudiation may be retracted if it is communicated to the injured party prior to a change in position in material reliance on the repudiation, a suit for breach, or an acknowledgment that the repudiation was final. Nevertheless, the seller's repudiation was not effectively retracted here because it came after the buyer had already materially relied on the repudiation.