Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 21

FACTS In February 1997, Chrysler Corporation introduced a new promotional vehicle called the Plymouth Prowler but did not reveal whether it would manufacture any of the vehicles. Donald Hessler (the plaintiff), aware of the vehicle and of its uncertain production, contacted several dealerships to inquire about purchasing a Prowler. On February 5, 1997, plaintiff met with Gary Rosenberg, co-owner of Crystal Lake Chrysler-Plymouth, Inc. (defendant) and signed a ''Retail Order for a Motor Vehicle'' (Agreement). The Agreement, which was filled out primarily by Rosenberg, stated that the order was for a 1997, V6, two-door, purple Plymouth Prowler and provided ''Customer to pay $5,000 00/100 over list price by manufacturer. Money refundable if can not [deliver] by 12/30/97. Dealer to keep car 2 weeks.''
The order noted that plaintiff had deposited $5,000 for the car. The Agreement contained a box labeled ''TO BE DELIVERED ON OR ABOUT.'' Inside the box was written ''ASAP,'' which term Rosenberg stated is used in his business ''in lieu of a stock number. Just line it up in order. As soon as you can get it done, do it.'' Rosenberg testified that Hessler was the first person to place an order for a Prowler and that Rosenberg was ''pretty sure'' that plaintiff's order was the first order on which he received a deposit. On May 11, 1997, Rosenberg and Hessler agreed that the information they had received was that the manufacturer's list price would be $39,000.
On May 23, 1997, Salvatore Palandri entered into a contract with defendant to purchase a 1997 Plymouth Prowler. His contract reflected a purchase price of ''50,000 þ tax þ lic þ doc'' and a $10,000 deposit. It also stated that Palandri would receive the ''first one delivered to [the] dealership.''
Plaintiff testified that on August 11, 1997, Rosenberg informed plaintiff that no Prowlers would be delivered to the Midwest and that he would be returning plaintiff's check. Defendant, according to the plaintiff, nevertheless, stated that should defendant receive a vehicle, it would be plaintiff's. Defendant denies having stated this.
Plaintiff testified that he attended a Chrysler customer appreciation event at Great America on September 19 and spoke to a company representative about the Prowler. Two days later, the representative sent him a fax that contained a tentative list of dealers who were to receive Prowlers. Defendant's name was on the list. Plaintiff testified that he called Rosenberg on September 22 to notify him that his dealership was on a list of dealers due to receive Prowlers. Rosenberg informed plaintiff that he would not sell plaintiff a car because plaintiff had gone behind Rosenberg's back and that contacting Chrysler would cause Rosenberg problems. Rosenberg also stated that plaintiff was not the first person with whom he contracted to sell a Prowler. Plaintiff protested, and Rosenberg informed him that he would not sell plaintiff the car.
Beginning on September 23, 1997, plaintiff contacted thirty-eight Chrysler-Plymouth dealerships to inquire about purchasing a 1997 Prowler, but did not obtain one. On October 24, 1997, plaintiff attended a Prowler coming-out party at the Hard Rock Cafe and saw a purple Prowler in the parking lot with a sign in its window that had defendant's name written on it. On October 25, plaintiff went to defendant's showroom and saw a Prowler parked there. He found Rosenberg and informed him that he was there to pick up his car. Rosenberg stated that he was not going to sell plaintiff the car and that he did not want to do business with him. Later that day, plaintiff purchased a Prowler from another dealer for $77,706. On October 27, 1997, defendant sold the only Prowler it received in that year to Palandri for a total sale price of $54,859, including his $10,000 deposit.
On April 23, 1998, plaintiff sued defendant for breach of contract. The trial court entered judgment for plaintiff and awarded him $29,853 in damages. It concluded that defendant breached the Agreement and that plaintiff properly covered by purchasing a replacement vehicle for $29,853 more than the contract price. The trial court also concluded that defendant repudiated its contract in September and October of 1997 when Rosenberg told plaintiff that he would not sell him a car. It found plaintiff ''ready, willing, and able to perform the contract.'' The court found that the price plaintiff paid for the car at another dealership was the best price he could receive for a Prowler after Rosenberg's refusal to sell to him a car.
DECISION The judgment of the trial court is affirmed.
OPINION Callum, J. Under the UCC, certain actions by a party to a contract may constitute an anticipatory repudiation of the contract if the actions are sufficiently clear manifestations of an intent not to perform under the contract. [UCC §] 2-610; [citation.]
***
Comment 1 to section 2-610 provides, in relevant part:
Anticipatory repudiation centers upon an overt communication of intention or an action which renders performance impossible or demonstrates a clear determination not to continue with performance.
*** When such a repudiation substantially impairs the value of the contract, the aggrieved party may at any time resort to his remedies for breach ***.
[UCC §] 2-610, Comment.
Comment 2 to Section 2-610 provides, in relevant part: ''It is not necessary for repudiation that performance be made literally and utterly impossible. Repudiation can result from action which reasonably indicates a rejection of the continuing obligation.''
[UCC §] 2-610, Comment.
***
Upon learning that defendant was on a tentative list to receive a Prowler, plaintiff testified that he called Rosenberg to relate the information and that Rosenberg responded that plaintiff was not the first person to contract to purchase a Prowler. Rosenberg also stated that he would not do business with plaintiff. Further, Rosenberg's testimony about this conversation corroborated plaintiff's, in that Rosenberg stated that he told plaintiff that the vehicle was already ''committed.'' The trial court also heard both plaintiff and Rosenberg testify that, when plaintiff went to defendant's showroom on October 25 and informed Rosenberg that he was there to pick up his car, Rosenberg told plaintiff that he did not want to do business with him.
We conclude that the trial court did not err in finding that defendant's foregoing actions reasonably indicated to plaintiff that defendant would not deliver to him a Prowler under the Agreement. As we determined above, defendant contracted to deliver a Prowler to plaintiff as soon as possible. It was not against the manifest weight of the evidence for the trial court to find that defendant repudiated the Agreement when it repeatedly informed plaintiff that it would not deliver to him the first Prowler it received. Such actions made it sufficiently clear to plaintiff that defendant would not perform under the Agreement. [Citation.]
*** With respect to plaintiff's actions, section 2-610(b) of the UCC provides that an aggrieved party may ''resort to any remedy for breach'' of the contract ''even though he has notified the repudiating party that he would await the latter's performance.'' [UCC §] 2-610(b). One such remedy is to cover. [UCC §] 2-711(1)(a) (buyer may effect cover, upon seller's repudiation, whether or not buyer cancels the contract).
Defendant next asserts that, even if there was a repudiation in September or October of 1997, plaintiff did nothing to indicate that he thought this was the case. He took no self-help measures such as: terminating the contract; seeking to enjoin the sale to Palandri; requesting a retraction; or suspending his performance obligations. Again, we disagree. The UCC does not require a party to request assurances as a condition precedent to recovery. [Citation.]
For the foregoing reasons, we conclude that the trial court's finding of repudiation was not against the manifest weight of the evidence.
INTERPRETATION If an anticipatory repudiation substantially impairs the value of the contract, the injured party may await performance for a commercially reasonable time or resort to any remedy for breach.
CRITICAL THINKING QUESTION At what point should a buyer have a reasonable basis for believing the seller had repudiated? Explain.