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I Will Not Perform Under the Contract Unless. . . .

Stop! If you are uttering these words, you may be at risk for committing an anticipatory repudiation of your contract, which relieves the non-breaching party of its duty to perform further and creates an immediate cause of action against you for breach of contract.

An anticipatory repudiation of a contract occurs where one party to the contract makes additional demands not included in the contract and couples this demand with a refusal to perform unless the demand is met. The Third District Court of Appeal recently addressed this issue of anticipatory repudiation in the case of 24 Hr. Air Service, Inc. v. Hosanna Community Baptist, Inc., concerning a dispute between a licensed air conditioning company and a church.

In 24 Hr. Air Service, the church agreed to pay the company a fee in the amount of $1,687.30 and, the company agreed to repair the church’s AC unit. When the company’s employees entered the church’s attic to start the repairs, the wooden platform they were standing on began to cave in, and they ran out before the ceiling collapsed. Thereafter, the company refused to perform the agreed-upon repairs unless the church provided proof of ceiling repairs. The church then sued the company for anticipatory repudiation of their contract and hired a replacement contractor who replaced the church’s AC unit.

The trial court found, and the Third District Court of Appeal affirmed, that the company’s demand for safety assurances, even under these circumstances, coupled with its refusal to complete the agreed-upon repairs until such assurances were provided, was an anticipatory breach of the contract. However, the Third District Court of Appeal did reverse the trial court’s calculation of the church’s damages. The trial court calculated the church’s damages based on the difference of the agreed cost of repairs between the church and the company (i.e., $1,687.30) and the cost the church ultimately spent to replace the AC unit (i.e., 11,398.00), totaling $9,710.07. The Third District disagreed with the trial court’s damage calculation, holding that the church was entitled to damages measured by the cost of repairing the existing AC system rather than by the cost of installation of a new system. The church could not be put in a better position than it would have been had the contract been performed, and the contractor was not to bear the cost of the church’s installation of a new AC unit.

Consultation with legal counsel is important before you make any affirmative statement or take action that unequivocally shows that you do not intend to comply with a contract, as well as if you believe the other party to your contract intends not to perform. If the other party unequivocally intends to cancel the contract before fully performing, you may not only be relieved from your own obligations of performance, but you may also be able to recover money damages. Rosenthal Law Group is here to assist you with all your contract questions.