Answer :
The scenario described involves Beene Engineering, Inc. and Detail Design Company, where Beene has informed Detail that it will not be able to fulfill the contract for the sale of technical instruments before the performance is due. The type of notification sent by Beene is called 'anticipatory repudiation.'
Anticipatory Repudiation:
Definition: Anticipatory repudiation occurs when one party to a contract informs the other party before the performance is due that they will not be able to fulfill their contractual obligations.
Why is it used? This notification allows the non-breaching party to take necessary steps to mitigate damages, such as seeking alternatives or cancelling the contract without waiting for the actual breach to occur.
Legal Consequences: When anticipatory repudiation is declared, the non-breaching party has the right to terminate the contract and seek damages for any losses incurred. It essentially gives the non-breaching party the option to treat the contract as breached even before the performance date.
Example: In this case, Beene Engineering's notification to Detail Design Company that they cannot perform as agreed would allow Detail to pursue other suppliers or seek legal remedies for any potential losses without waiting for the original contract deadline.
The other options mentioned:
- Perfect Tender: Relates to the exact performance of the contract terms, typically in sales of goods under the Uniform Commercial Code, where goods delivered must precisely meet the terms agreed upon.
- Rejection of Performance: Involves one party not accepting the tendered performance or goods, often because they do not meet the contract specifications.
- Revocation of Acceptance: Occurs when a party initially accepts goods or performance but later revokes that acceptance due to a defect or some breach connected to the acceptance.
The correct answer is (a) anticipatory repudiation.
