On March 1, a company contracts with a singer to perform at a company picnic for $10,000. On March 17 the singer signs a movie contract. On April 1 the company hires a replacement for $15,000. On April 25 the singer withdraws from the movie deal but remains available. The company lets the replacement perform. Is the company likely to prevail in a breach claim against the original singer?

• A. Yes, because the company hired the replacement before the original repudiated.
• B. No, because repudiation terminates the contract immediately.
• C. Yes, but only if the replacement was cheaper.
• D. Yes, because the company hired the replacement before she retracted her repudiation.

Answer: (D)

Anticipatory repudiation allows the non-breaching party to treat the contract as breached and to cover by obtaining a substitute. Damages are measured by the cost to cover relative to the contract price, plus incidental damages, as of the time of cover. Here, the singer signaled she wouldn’t perform by entering another contract on March 17. The company hired a replacement on April 1, before she retracted the repudiation on April 25. Because the cover occurred before the repudiation was cured, the company may recover the difference between the replacement’s cost and the contract price (15,000 − 10,000 = 5,000) plus any incidental damages. The later retraction does not erase the breach that was already acted upon, so the company is likely to prevail.