In order to give rise to a renunciation amounting to a breach of contract, there must be an absolute and unequivocal refusal to perform or a distinct and positive statement of an inability to do so.
A subcontractor entered into an agreement with a general contractor and agreed to furnish and erect all of the steel required for two buildings. The subcontractor did not state a performance date. However, the general contractor later sought assurances that the steel could be delivered within 30 days. Later on, the subcontractor replied that due to the steel crisis during the Korean War, it was having difficulty obtaining steel from manufacturers and requested the general contractor's help in doing so. The general contractor treated the subcontractor's response as a repudiation and hired new subcontractors to replace the subcontractor. The general contractor also sued the subcontractor for anticipatorily breaching three construction contracts. The trial court ruled in the subcontractor's favor, which was appealed to the United States Court of Appeals for the Third Circuit.
Did an anticipatory breach occur?
The court held that the subcontractor's letter indicating the difficulty in obtaining steel, and its failure to take preparatory action before performance was due, was not an anticipatory breach. Moreover, the subcontractor had not abandoned hope of acquiring the steel. In fact, the general contractor was able to acquire the steel directly from manufacturers shortly after the subcontractor's letter.