Does everyone agree that Geis, the contracts/sales guy, never went into anticipatory breach this in depth? I know he discussed the exception where one party completely finishes performance and is waiting on the other side, but this question seems to take it a step further.
16. (Question ID#266)
A broker needed a certain rare coin to complete a set that he had contracted to assemble and sell to a collector. On February 1, the broker obtained such a coin from a third party in exchange for $1,000 and the broker's signed, written promise to re-deliver to the third party "not later than December 31 this year" a comparable specimen of the same kind of coin without charge to the third party. On February 2, the broker consummated sale of the complete set to the collector. On October 1, the market price of rare coins suddenly began a rapid, sustained rise; on October 15 the third party wrote the broker for assurance that the latter would timely meet his coin-replacement commitment. The broker replied, "In view of the surprising market, it seems unfair that I should have to replace your coin within the next few weeks." After receiving the broker's message on October 17, the third party telephoned the broker, who said, "I absolutely will not replace your coin until the market drops far below its present level." The third party then sued the broker on November 15 for the market value of a comparable replacement coin as promised by the broker in February. The trial began on December 1.
If the broker moves to dismiss the third party's complaint, which of the following is the third party's best argument in opposing the motion?
A. The third party's implied duty of good faith and fair dealing in enforcement of the contract required her to mitigate her losses on the rising market by suing promptly, as she did, after becoming reasonably apprehensive of a prospective breach by the broker.
B. Although the doctrine of anticipatory breach is not applicable under the prevailing view if, at the time of repudiation, the repudiatee owes the repudiator no remaining duty of performance, the doctrine applies in this case because the third party, the repudiatee, remains potentially liable under an implied warranty that the coin advanced to the broker was genuine.
C. When either party to a sale-of-goods contract repudiates with respect to a performance not yet due, the loss of which will substantially impair the value of the contract to the other, the aggrieved party may, in good faith, resort to any appropriate remedy for breach.
D. Anticipatory repudiation, as a deliberate disruption without legal excuse of an ongoing contractual relationship between the parties, may be treated by the repudiatee at her election as a present tort, actionable at once.
Incorrect: Answer choice C is correct. Upon repudiation, the promisee can treat the repudiation as a breach and resort to any appropriate remedies. Answer choice A is incorrect, as good faith, fair dealing, and mitigation are all used out of context here. What matters is that the broker repudiated, and the third party is entitled to treat that as a breach and seek any appropriate remedies. Answer choice B is incorrect, as the U.C.C. permits treatment as a breach under these circumstances if the prospective loss will substantially impair the value of the contract for the aggrieved party. Answer choice D is incorrect, as this is a repudiation of a contract under contract law and not an actionable tort.