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Reliance Cooperage Corp. v. Treat - 195 F.2d 977 (8th Cir. 1952)

Rule:

The general rule in the United States is that a buyer who refuses to accept a seller's anticipatory refusal to deliver the commodities contracted for, and who insists upon performance by the latter, is not required to go upon the open market and purchase upon receipt of notice that the seller does not intend to perform. He has a right to treat the notice as inoperative, to wait until the time for performance has passed, and then buy on the open market, charging the seller with the difference between the contract price of the goods and the market price which prevailed at the time that performance should have been forthcoming.

Facts:

The cooperage and the supplier entered into an agreement where the supplier agreed to provide to the cooperage 300,000 staves at a fixed price and agreed to complete the contract by no later than December 31, 1950. Sometime in September, the supplier told the cooperage that it would not be providing the staves as agreed to under the contract. On appeal from the litigation for breach of contract, the cooperage challenged the district court's instructions that the cooperage had a duty to mitigate its damages upon first learning of the supplier's intent to breach the contract.

Issue:

Did the cooperage have the duty to mitigate its damages upon learning of the supplier’s intent to breach the contract?

Answer:

No.

Conclusion:

The court reversed the decision and remanded the action for a new trial on the issue of damages. The court held that the cooperage did not have a duty to mitigate its damages upon learning of the breach, but under the doctrine of anticipatory repudiation had the option to wait until the time for performance had expired and then recover for non-performance. As such, the court held that the cooperage was entitled to recover the difference between the contract price for the staves and the price of the staves as of December 31, 1950.

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