Truman L. Flatt & Sons Co. v. Schupf

Appellate Court of Illinois, Fourth District
649 N.E.2d 990 (1995)

ELI5:

Rule of Law:

A party's mere suggestion or request to modify contract terms does not constitute a clear and unequivocal anticipatory repudiation. A party who has anticipatorily repudiated a contract may retract that repudiation at any time before the aggrieved party has materially changed its position in reliance on the repudiation or has indicated that it considers the repudiation to be final.

Facts:

Truman L. Flatt & Sons Co., Inc. (Flatt) entered into a contract to purchase a parcel of land from Sara Lee Schupf and others (Schupf) for $160,000.
The contract was contingent on Flatt's ability to obtain rezoning for the property to permit the operation of an asphalt plant.
After encountering substantial public opposition to the rezoning, Flatt's attorney sent a letter to Schupf's attorney stating that their chances for success were 'zero to none' and they were withdrawing the rezoning request.
In the same letter, Flatt stated it was 'still interested in the property' but offered a reduced purchase price of $142,500 to reflect the land's current zoning.
Schupf's attorney replied in a letter rejecting the $142,500 offer.
Five days after the rejection, Flatt's attorney sent a letter stating that Flatt 'elected to proceed with the purchase of the property as provided in the contract' at the original price.
Schupf subsequently declared the contract voided by Flatt's offer of a lower price and arranged to return Flatt's earnest money.

Procedural Posture:

Truman L. Flatt & Sons Co., Inc. filed a complaint for specific performance against Sara Lee Schupf and others in the trial court.
Defendants filed a motion for summary judgment, asserting that the plaintiff had repudiated the contract.
The trial court granted the defendants' motion for summary judgment.
Plaintiff's post-trial motion to vacate the judgment was denied by the trial court, which clarified its ruling was based on a finding of repudiation.
Plaintiff, as appellant, appealed the trial court's grant of summary judgment to the Illinois Appellate Court.

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Issue:

Does a buyer's letter requesting a lower purchase price, after encountering difficulty with a zoning contingency, constitute a definitive anticipatory repudiation that cannot be retracted after the seller rejects the new price but before the seller materially changes their position or otherwise indicates the contract is terminated?

Opinions:

Majority - Presiding Justice Knecht

No. A request to modify a contract is not a definite and unequivocal repudiation, and even if it were, it may be retracted before the other party materially changes position or indicates the repudiation is final. First, the buyer's May 21 letter did not constitute an anticipatory repudiation. The doctrine requires a 'definite and unequivocal manifestation' of intent not to perform. Flatt's letter, which stated they were 'still interested in the property' but proposed a new price, was at most ambiguous and did not clearly state an intention not to perform the original contract; a mere suggestion for modification is not a repudiation. Second, even if the letter had been a repudiation, Flatt effectively retracted it. A repudiating party can nullify their repudiation by retracting it before the aggrieved party materially changes position or indicates they consider the repudiation final. Here, Schupf did not materially change position, as admitted in interrogatories. Furthermore, Schupf's June 9 letter merely rejected the modified offer; it did not state that the contract was terminated. Schupf did not indicate an intent to treat the contract as rescinded until July 8, which was well after Flatt's clear and unambiguous retraction on June 14.

Analysis:

This decision reinforces the high standard required for a statement to be considered an anticipatory repudiation, distinguishing a mere inquiry or proposal for modification from an unequivocal refusal to perform. It clarifies that contract negotiations are not automatically destroyed by one party's attempt to renegotiate a term. Furthermore, the case solidifies the common-law and UCC principle that a repudiation is not irrevocable, establishing that the aggrieved party must take affirmative steps—either by materially changing their position or by communicating that they consider the contract terminated—to cut off the repudiating party's right to retract. This prevents the aggrieved party from waiting to see which outcome is more advantageous before deciding whether the contract is still in force.

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