By: Alexander A. Miuccio Published: June 2011

Court Rejects Concrete Supplier's Claim Against Contractor

There are circumstances when a party may unintentionally repudiate a contract. In legal terms, the repudiation constitutes an anticipatory breach of contract. Whether a repudiation has occurred is determined on a case-by-case basis, depending on the particular statements made or demonstrated by the conduct of the party.

In the recent case of Joseph P. Carrara & Sons, Inc. v. A.R. Mack Construction Company, Inc., an appellate court ruled on whether a concrete supplier’s breach of contract claim should be denied because he repudiated the contract.

Background

In May 2008 Joseph P. Carrara & Sons, Inc., a concrete supplier, entered into a purchase order agreement with A.R. Mack Construction Company, Inc., a general contractor, to supply the concrete needed for the construction of a project in Ticonderoga, New York. The agreement did not specify delivery dates, but indicated that deliveries would be as scheduled by the parties. The subcontractor made deliveries from August through November 2008, at which point all that remained to be delivered was the concrete for the interior floor slab. Due to colder weather, the supplier informed the contractor that it could not deliver on the five-day pour schedule that contractor sought. After discussions among the parties, the supplier sent a December 2, 2008 letter proposing a six-day pour schedule, and outlining the weather conditions that would be required in order to meet that schedule. The concluding paragraph of the letter required written acceptance of the terms by 3:00 P.M. that day or the supplier would "begin immediately shutting our New York operation down for the winter." The contractor did not reply to the letter, but instead obtained the concrete from another concrete supplier.

The supplier then sued the contractor, arguing that it was contractually entitled to supply concrete to the project, and that it was entitled to its lost profits. The contractor moved for summary judgment, arguing that the supplier’s December 2, 2008 letter was an anticipatory repudiation of the parties’ agreement, which excused the contractor from any further obligations under the agreement, and permitted the contractor to obtain concrete from another supplier. The court ruled in favor of the contractor, granting summary judgment and dismissing the supplier’s claims. The supplier appealed.

Decision

The appellate court affirmed the lower court’s decision. According to the court, the supplier’s December 2, 2008 correspondence was a clear refusal to deliver the concrete unless the supplier’s delivery terms were accepted by the contractor within a matter of hours. The supplier’s delivery terms were not part of the parties’ purchase order agreement. The court noted that the supplier’s New York operation was critical to its performance under the contract and that the supplier’s stated closure of its New York operation confirmed an intention not to perform unless its demanded terms were immediately agreed to. Under these circumstances, the court agreed that the supplier’s letter amounted to a repudiation of the contract, which permitted the contractor to obtain concrete from another supplier.

Comment

The repudiation or renunciation of a contract must be an unqualified or clear refusal to perform with respect to the entire contract. An intent to repudiate may be expressed by words or acts communicated to the other party. Here, the supplier stated that unless its delivery terms were immediately agreed to, it would close its plant operations, thereby making it impossible for the supplier to deliver the concrete. Since the court determined that this was a repudiation by the supplier of the parties’ agreement, the contractor was excused from the parties’ agreement, and was free to obtain concrete from any supplier.

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