ON ANTICIPATORY BREACH OF CONTRACT

No. 92, Princes Point LLC  v. Muss Development L.L.C., October 19, 2017, New York Court of Appeals:

“An anticipatory breach of a contract by a promisor is a repudiation of [a] contractual duty before the time fixed in the contract for . . . performance has arrived” (10-54 Corbin on Contracts § 54.1 [2017]; see 13 Williston on Contracts § 39:37 [4th ed]). An anticipatory breach of a contract -- also known as an anticipatory repudiation “can be either a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach or a voluntary affirmative act which renders the obligor unable or apparently unable to perform without such a breach” (Norcon Power Partners v Niagara Mohawk Power Corp., 92 NY2d 458, 463 [1998] [internal quotation marks omitted]; see 2B NY PJI2d 4:1 at 35 36 [2017]).

For an anticipatory repudiation to be deemed to have occurred, the expression of intent not to perform by the repudiator must be “positive and unequivocal” (Tenavision, Inc. v Neuman, 45 NY2d 145, 150 [1978]; see Ga Nun v Palmer, 202 NY 483, 489 [1911]). We have taught that the party harmed by the repudiation must make a choice either to pursue damages for the breach or to proceed as if the contract is valid (see Strasbourger v Leerburger, 233 NY 55, 59 [1922]; see also American List Corp. v U.S. News & World Report, 75 NY2d 38, 44 [1989]). We have also clarified that “a wrongful repudiation of the contract by one party before the time for performance entitles the nonrepudiating party to immediately claim damages for a total breach” (id.).

On this record -- and particularly in view of the repeated movement of the new outside closing date -- we cannot conclude that the commencement of this action reflects a repudiation of the contract. At the core of this appeal is the unsettled question whether “the commencement of an action, particularly one seeking rescission, is an anticipatory breach” (Princes Point, 138 AD3d at 117, citing Auten v Auten, 308 NY 155, 159 [1954] [addressing whether an action for separation constituted a repudiation of a prior separation agreement, but declining to answer that question given that English law controlled that matter]). The Appellate Division correctly observes that the commencement of a declaratory judgment action “does not constitute an anticipatory breach . . . because a declaratory judgment action merely seeks to define the rights and obligations of the parties” (Princes Point, 138 AD3d at 117). "