KII-AnticipatoryRepudiation-HopesArchitecturalProducts_v_LundysConstruction

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Hope’s Architectural Products v. Lundy’s Construction, US District Court, District of KS, 1991 Can a breaching party demanded assurances of performance from the other party? Issue Reasoning
If Hope’s demands for assurances were proper, then they would be justified in suspending performance and not delivering – but they were not justified and therefore, they breached the K by withholding delivery. Delivery Date: Windows should’ve been there no later than 10/24 – but they had not arrived in KS until 11/4. (1) Even if delay is immaterial, ∆ was not obligated to perform until windows were delivered. (2) Reason for delay seems to have been under ∏’s control. ∏ testified that delays were not due to ∆. ∆’s first letter would’ve been reasonable grounds for insecurity but ∏ just ignored it! To suspend its performance pursuant to Kan. Stat. Ann. § 84-2-609, a defendant must (1) have had reasonable grounds for insecurity regarding the plaintiff's performance under the contract, etc.. A party already in breach is not entitled to 2-609 by demanding assurances. 2-609 does not apply after a breach has already occurred. (2) have demanded in writing adequate assurance of the plaintiff's future performance Demanding payment in full under 2-609 before it was due is unreasonable and amounts to anticipatory breach. 2-711 - Where the seller fails to make delivery or repudiates, the buyer may cancel

Rule

Facts
∆ subcontracted with ∏ for the cost, labor and installation of custom windows for a construction site for $55K. The Windows were to be delivered, at best interpretations before 01/24/88. However, the windows were late partially because of internal production problems that didn’t seem not be to outside ∏’s control. ∆ made a written request for early installation of the windows. The letter went unanswered. He again wrote but this time threatening liquidated damages (but there was no such provisions in K) if ∏ did not comply with deadlines. Letter went unanswered. He called customer service who claimed that ∆ threatened to withhold $11K for late delivery. At this time, ∏’s president demanded assurances that ∆ agree no $ would be withheld. Later ∏ demanded full payment before the windows are delivered. But by that time, the windows were about 3 weeks late. And since ∏ refused to deliver the windows, ∆ found an alternate supplier. ∏ demanded payment from ∆’s public works bond, but the bank refused to pay.

But Hope’s made it’s first demand of assurances after it was in breach. If this was allowed then any breaching party would be able to avoid liability and get concessions out of party in need who will give in to get the requested performance. ∏’s demand is quite excessive – it is it not adequate. What is adequate is based on fact and good faith and not arbitrary. There was no indication at all that ∆ was unable or unwilling to perform – the bond stood as security. ∏ says that they threatened to withhold $11K, but we don’t believe it. Futhermore, ∆ is entitled to withhold damages from price.

7bc22aef-64a3-4968-bae5-c82c5c0a4609.doc Held Procedure P argues D argues

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Hope’s breached! ∏’s claim for relief is denied. Judgment for ∆. Demand for repayment was unreasonable and excessive when there was no indication that ∆ would not pay ∏ when performance was due. On Quantum Meruit – No benefit conferred – on site visit and advise was unusable when another supplier selected. ∏ sued for K price. But trial court found ∏ to be in breach of K. ∏ appeals 1. The delay in delivery is immaterial. 2. K clause says ∏ not responsible for delays due to “labor strikes, fires, accidents, causes beyond control” – they asked for design changes. 3. Quantum Meruit. Hope’s demand for assurances was overly broad and unreasonable. That was not the end of the delays – something could be wrong with the windows which would require more delays.


				
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