Ratliff v. Hardison – 11/26/2008

December 9, 2008

Arizona Court of Appeals Division Two Holds That Retraction of Anticipatory Repudiation of Contract Must Be Clear and Unequivocal to Be Effective.

Ratliff contracted to purchase a tract of land from Hardison.  Prior to the close of escrow, Ratliff informed Hardison that he would not fulfill his obligations under the contract, but was possibly interested in purchasing the land under different terms.   Hardison sued for breach.  The trial court entered summary judgment against Ratliff, finding there was no genuine issue of material fact as to whether he anticipatorily repudiated the contract, and that no reasonable person could conclude he had subsequently retracted his repudiation. 

The Arizona Court of Appeals affirmed, explaining that a party anticipatorily repudiates a contract when he or she provides a “positive and unequivocal manifestation” that the party will not perform when his or her duty to perform arises.  Adopting reasoning from other jurisdictions and authorities, the Court held that a retraction of a repudiation must be clear and unequivocal to be effective.  The Court reasoned that a vague retraction that does not bind the repudiator to the original terms of the contract would deny finality to the injured party, because he or she could then be bound by yet unknown contract terms.  Further, injured parties could mistakenly believe that anticipatory repudiators who express remorse for their prospective breaches are actually retracting their repudiations.  

In this case, Ratliff had not clearly and unequivocally retracted his repudiation, but had merely expressed a continuing interest in purchasing the land under terms different from the original contract.

Judge Espinosa authored the opinion, with Presiding Judge Eckerstrom and Judge Vasquez concurring.