Reliance Cooperage Corp. v. Treat

United States Court of Appeals for the Eighth Circuit · 1952 · Contracts

Contractsanticipatory repudiationexecutory sales contractmeasure of damagesmarket price at time delivery duemitigationbuyer's damagesnonperformance

Facts

Reliance Cooperage contracted on July 12, 1950 to buy 300,000 white oak bourbon staves from Treat at $450 per thousand, with production to be completed by December 31, 1950. Treat delivered no staves. The evidence showed Treat communicated before December 31, 1950 that he would not perform at the contract price, while Reliance insisted on strict compliance and did not accept the repudiation. Evidence also showed the market price of staves rose between the contract date and December 31, 1950.

Issue

When a seller anticipatorily repudiates an executory contract for the sale of goods and the buyer does not accept that repudiation but insists on performance, is the buyer's general damage measure changed from the difference between the contract price and the market price on the date performance was due? Relatedly, did the buyer have a duty to mitigate by purchasing substitute goods immediately after repudiation?

Rule

A seller's unaccepted anticipatory repudiation of an executory sales contract does not impair the seller's obligation, does not accelerate the time fixed for performance, and does not change the buyer's general measure of damages for nonperformance. Where the buyer rejects the repudiation and insists on performance, damages are measured by the difference between the contract price and the market price at the time delivery was due, and the buyer is not required to purchase substitute goods before that date in order to mitigate.

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In March, Cedar Hollow Packaging, a distributor in Kansas City, Missouri, agreed to buy 20,000 custom wooden crates from Mason Pike of Springfield, Missouri, at $18 each, with all delivery due by September 30. In May, Mason told Cedar Hollow he would not deliver at that price, but Cedar Hollow immediately replied that it expected full performance and remained ready to accept the crates. By September 30, no crates were delivered, and the market price had risen to $27 each.

If Cedar Hollow sues for general damages after September 30, which measure is most consistent with the governing rule?

Explanation. When a seller anticipatorily repudiates but the buyer does not accept the repudiation and instead insists on performance, the contract remains binding until the time fixed for performance. The seller's unaccepted repudiation does not accelerate the performance date and does not alter the buyer's general measure of damages. The proper measure is the difference between the contract price and the market price at the time delivery was due.