Harrell v. Sea Colony, Inc.
35 Md. App. 300, 370 A.2d 119 (1977)
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Rule of Law:
To constitute an anticipatory breach of contract, there must be a definite and unequivocal manifestation of intention by the repudiator that they will not render performance when the time fixed for it arrives; a mere request to cancel the contract is not sufficient.
Facts:
- Sam L. Harrell entered into a written contract with Sea Colony, Inc. to purchase a condominium unit, providing a cash deposit and a promissory note.
- The contract stipulated that it was not assignable without Sea Colony's consent and that Sea Colony could retain the deposit upon Harrell's default.
- Harrell inquired about assigning the contract and was refused permission by Sea Colony's agent.
- Following the refusal, Harrell told the agent he was interested in 'getting out of the contract' due to his personal financial situation and asked if Sea Colony would take the contract back.
- In response, Sea Colony's agent sent Harrell a 'cancellation request' form.
- Harrell returned the form, indicating his request to rescind was 'contingent upon refund of deposit by July 25, 1974.'
- Without responding to Harrell's conditional offer, Sea Colony entered into a contract to sell the same condominium unit to a third party for a higher price.
- After selling the unit, Sea Colony informed Harrell it was accepting his 'request to cancel' but would retain his deposit as liquidated damages, returning an altered release form with Harrell's contingency for the deposit refund crossed out.
Procedural Posture:
- Sam L. Harrell (plaintiff) filed a lawsuit against Sea Colony, Inc. and its agent, Carl M. Freeman Associates, Inc. (defendants), in the Circuit Court for Montgomery County, a state trial court.
- Harrell alleged that the defendants had committed an anticipatory breach of their contract.
- The case was tried before a judge without a jury.
- The trial court entered a judgment in favor of both defendants, finding that Harrell had breached the contract by unilaterally cancelling it.
- Harrell (appellant) appealed the trial court's judgment to the Court of Special Appeals of Maryland, an intermediate appellate court, with Sea Colony, Inc. and Carl M. Freeman Associates, Inc. as appellees.
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Issue:
Does a party's request to be released from a contract, coupled with an expression of financial difficulty in performing, constitute a definite and unequivocal manifestation of intent not to perform sufficient to be an anticipatory breach?
Opinions:
Majority - Melvin, J.
No. A party's expression of difficulty in performing or a request for cancellation does not amount to an anticipatory breach of contract. For an anticipatory breach to occur, there must be a definite and unequivocal manifestation of intent not to perform when performance is due. Harrell's statements and correspondence were inquiries and offers to negotiate a mutual rescission, not a positive and unconditional refusal to perform his obligations under the contract. Sea Colony improperly attempted to unilaterally convert Harrell's request for a mutual rescission into a repudiation by him. The court also dismissed the argument that Harrell breached by failing to reply to requests about a settlement location, as the contractual condition for scheduling settlement—written notice of the unit's substantial completion—had not yet occurred.
Analysis:
This case clarifies the high threshold required to establish an anticipatory repudiation of a contract. It distinguishes between mere inquiries or negotiations to exit a contract and a clear, unconditional refusal to perform. The decision protects parties who express financial concerns or seek a mutual release from being immediately deemed in breach, thereby encouraging communication and negotiation between contracting parties. The ruling reinforces the principle that a repudiation cannot be ambiguous and that one party cannot unilaterally transform the other's request for modification or cancellation into a breach.
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