On May 1, a seller repudiates a contract for the sale of land. On June 5, the buyer buys a second tract as a substitute. On June 10, the seller retracts the repudiation. Will the buyer likely prevail?

• A. Yes, because the buyer bought the substitute before the seller’s retraction.
• B. No, because substitution before retraction is irrelevant.
• C. Yes, but only if the substitute is more expensive.
• D. No, because repudiation must be irrevocable to sustain damages.

Answer: (A)

Anticipatory repudiation allows the non-repudiating party to treat a contract as breached and to pursue cover by obtaining substitute performance. If the party covers in response to the anticipatory breach, damages are based on the cost of that substitute (plus any incidental damages) compared to the contract price.

In this scenario, the seller repudiates on May 1. The buyer buys a substitute tract on June 5, before the seller’s withdrawal of the repudiation on June 10. Because the buyer acted in reliance on the repudiation by obtaining substitute land prior to the withdrawal, the buyer is entitled to damages measured by the difference between the contract price and the cost of the substitute (plus any reasonable incidental costs). The seller’s later retraction does not erase the buyer’s damages already incurred due to the anticipatory breach. So the buyer will likely prevail.

The other options aren’t correct because the remedy does not require the substitute to be purchased after withdrawal, nor does it depend on the substitute being more expensive, and repudiation need not be irrevocable to sustain damages—the act of covering before withdrawal supports the damages claim.