The Other Side Says They Will Not Perform. What Can I Do Now?

First question: was it really a repudiation?

Texas law has long required that an anticipatory breach be a positive and unconditional refusal to perform, communicated before the time for performance. The refusal can be in words ("we will not be delivering in March") or in conduct that makes performance impossible (selling the goods promised to you to someone else). What it cannot be is ambiguous. A statement that the other side is "having trouble," is "reconsidering," wants to "revisit the price," or "may not be able to" perform is not a repudiation, however alarming.

This distinction carries real risk. If you treat an ambiguous statement as a repudiation, stop performing and sue, and a court later finds the other side never unequivocally refused, you are the one in breach. The first step is to get the refusal in writing or to confirm it in writing yourself and ask for a response.

What Texas lets the injured party do

When a repudiation is clear, the non-repudiating party may:

• Treat the contract as breached now and sue for damages without waiting for the performance date. The repudiation itself is the breach.
• Suspend its own performance. A party does not have to keep delivering, paying or working toward a performance the other side has said it will not accept or reciprocate.
• Arrange substitute performance. Hire a replacement vendor, buy the goods elsewhere, or line up a new customer, and claim the difference as damages.
• Wait a commercially reasonable time to see if the other side retracts and performs, while preserving the right to sue if it does not.

These are choices, and some are inconsistent with others. A party that keeps insisting on performance and continues performing itself after a repudiation may be found to have elected to keep the contract alive, which can limit the damages it recovers and revive its own obligations. A party that immediately covers has committed to the breach remedy. The choice should be made deliberately, in writing, and quickly.

Sales of goods: the UCC's tools

If the contract is for goods, Chapter 2 of the Texas Business and Commerce Code gives both sides specific rights.

Section 2.610 provides that when a party repudiates with respect to a performance not yet due, and the loss will substantially impair the value of the contract to the other side, the aggrieved party may await performance for a commercially reasonable time, or resort to any remedy for breach even though it has told the repudiating party it would await performance, and in either case may suspend its own performance.

Section 2.609 addresses the situation short of a clear refusal. When reasonable grounds for insecurity arise about a party's performance, the other side may demand in writing adequate assurance of due performance and, until it receives that assurance, suspend any performance for which it has not already received the agreed return. Failure to provide adequate assurance within a reasonable time, not exceeding 30 days, is a repudiation. This is the UCC's answer to the ambiguous statement: it converts uncertainty into a clear position, one way or the other.

Section 2.611 allows the repudiating party to retract its repudiation until its next performance is due, unless the aggrieved party has since canceled, materially changed its position, or otherwise indicated it considers the repudiation final. A retraction reinstates the repudiating party's rights, with due excuse and allowance to the aggrieved party for any delay.

Services, construction and other contracts

The common law governs contracts that are not for goods. The repudiation rule is the same: a positive, unconditional refusal before performance is due is a breach the other side may act on immediately. What the common law lacks is the UCC's statutory demand-for-assurance procedure. A written letter asking the counterparty to confirm it will perform by a stated date is still a sound step, because the response (or silence) is evidence, but outside the UCC its legal effect depends on the contract's own terms rather than on a statute.

Many service and construction contracts supply their own process: notice-of-default and cure provisions, termination rights, and dispute escalation clauses. Those terms control. A party who skips a required notice and cure period and treats a repudiation as grounds for immediate termination can find that it, not the counterparty, breached the contract's procedure. The contract should be read before any letter is sent.

Example

Suppose a Dallas trade show organizer has a signed agreement with an exhibit builder to deliver and install a custom booth by the Monday before a November show, for a fixed price with half paid on signing. In early October the builder's owner emails: "We've taken on a bigger project and won't be able to do your booth. Sorry." That is a positive, unconditional refusal. The organizer replies the same day, confirming in writing that it is treating the email as a repudiation, that it will seek a replacement, and that it will hold the builder responsible for the additional cost and the return of the deposit. It obtains three quotes within the week and hires a replacement at a higher price. The organizer's damages are the premium paid for the replacement plus any documented costs of the rush, and the deposit. Had the builder instead written "we're stretched thin and may need to talk about the schedule," the organizer's correct move would have been a written request to confirm delivery by a stated date, not a replacement contract.

Common mistakes on both sides

• Treating a complaint or a renegotiation request as a refusal. It is not, and acting on it makes you the breaching party.
• Saying too much when you are the one in difficulty. A party that is struggling should avoid language that reads as a flat refusal; a request for an extension is not a repudiation, but "we're not doing this" is.
• Continuing to perform in full after a clear refusal without reserving rights, which can be read as keeping the contract alive and can waste money that will not be recovered.
• Waiting too long. The right to await performance lasts a commercially reasonable time, not indefinitely, and delay that increases the loss comes out of the damages.
• Skipping the contract's notice and cure steps. A procedural misstep can convert a strong position into a weak one.

Where this leads if it is not resolved

A repudiation case is a breach of contract case brought early. The elements are the usual four, with the repudiation standing in for the failure to perform, and the dispute at trial is usually whether the statement was unequivocal and whether the injured party mitigated. If the other side retracts in time, the contract continues and the only claim is for any loss the delay caused. If the repudiating party claims the other side breached first or that it was excused, the case turns into a question of who breached and how seriously, covered in material breach versus minor breach. A litigator's value at this stage is in the first letter: it fixes the record, chooses the remedy, and avoids the election problems described above. Tina Wysk represents Dallas businesses in contract disputes at every stage, including the days immediately after a counterparty announces it will not perform.