لخّصلي

You have requested advice regarding your possibilities for collecting damages in a lawsuit
regarding an agreement with Pat Turner Breweries Ltd to supply the breweries with hops. I
will outline the law in this jurisdiction as it applies to the facts in the instant case.
According to the information my firm has received, you entered into several independent
contracts for the sale of hops with Pat Turner Breweries Ltd. Pursuant to these contracts,
the breweries would purchase a certain amount each crop year. The price of the hops went
down and the buyer used the occasion of your firm’s recent financial difficulties to
repudiate the contract.
However, your firm still attempted to make the deliveries under the present contract. The
buyer refused to accept them. You are enquiring as to whether you can bring an action for
anticipatory breach of the contracts for the remaining years.
It appears that the issue in the instant case is whether a seller of goods may bring an action
to recover damages for anticipatory breach of contract when the buyer states that he will
refuse to accept the goods under the contract, even though the date for delivery has not yet
arrived.
The law in this jurisdiction is quite clear. When a party announces his intention not to fulfill
the contract, the non-breaching party has two options. Firstly, he may take the other party
at his word and treat the notification of repudiation as releasing him from his contractual
obligation to perform. He may then immediately bring an action for damages, subject to the
requirement that he must take good-faith efforts to mitigate the damages. The second
option would be for the non-breaching side to wait until the time when the performance
was to take place, still holding the contract as prospectively binding, so long as such waiting
is not harmful to the breaching side.
The courts here have reasoned that, under the reliance principle, an unqualified refusal by
one side to perform should be treated as being in the same category of cases where the
breaching party has to put it beyond his power to perform. The breaching party, once
absolutely having declared that it plans to breach, should not be permitted to object to the
non-breaching side taking him at his word. Furthermore, why should the non-breaching
party be required to wait until the day of performance, making futile preparations, and
always keeping himself ready to perform, if the breaching side has left for more lucrative
prospects? To require the non-breaching party to wait would be to violate the reliance
principle.
Admittedly, there is a precedent stating that “to allow action before the date of
performance is to expand the scope of the contract beyond the parties’ consideration: A
promise to perform in June does not preclude changing position in May.” In Wohl V.
Wadman, the defense argued that the announcement of intent to breach should be treated
as an offer to rescind, not as a breach. Thus, the parties would keep the option to rescind
until the date of performance, when it would become a breach. But the breaching side could
revoke the offer to rescind at any time before them, if it is not acted upon by the other
party. However, this would mean that the plaintiff, to recover anything, would have to
remain ready and willing to perform, because if it accepted the offer to rescind, that would
prevent any recovery. In a leading case on this point, Judge Hand stated that “a promise to
perform in the future by implication includes an engagement not deliberately to
compromise the probability of performance. A promise is a verbal act designed as a reliance
to the promise.” In other words, if a party promises that he will do something in the future,
he also commits himself to refrain from doing anything that might make it difficult for him
to fulfill his promise. This seems to be the majority position in this jurisdiction.
Therefore, we feel that you have solid grounds on which to pursue an action to recover
damages for anticipatory breach of contract. I suggest that you contact my secretary in
order to schedule an appointment with me at your convenience in order to discuss out
future course of action.