A supplier calls a week before the deadline and says it won’t ship the goods. A clear refusal to perform before the delivery date may amount to anticipatory repudiation under California law. When that happens, a business may have options before the delivery deadline passes, including finding another supplier and pursuing available remedies.
When a vendor backs out before delivery
Anticipatory repudiation can occur when a vendor clearly indicates that it will not perform an important contractual obligation before performance is due. In California, certain advance refusals to perform may allow the other party to respond without waiting for the original deadline.
The vendor’s words and actions matter. For example, a vendor might expressly refuse to deliver the goods or take action that makes the promised delivery impossible. Businesses should review the contract and the circumstances carefully to determine what the vendor’s conduct means for their rights.
Steps to take when delivery is uncertain
If a vendor has not clearly refused to perform but gives the business reasonable grounds to doubt that it will meet its obligations, California Commercial Code Section 2609 provides another option. The business may demand adequate assurance in writing that the vendor will perform as promised.
The vendor must provide adequate assurance within a reasonable time, which cannot exceed 30 days under the statute. While waiting, the business can review the contract, preserve emails and other communications and consider how it will address possible supply disruptions.
If the vendor clearly repudiates the contract, the business may not need to wait until the scheduled delivery date before considering its next steps. Depending on the circumstances, it may seek replacement goods and pursue remedies available under the contract and California law.
Addressing the costs of a vendor’s breach
A vendor’s refusal to deliver can leave a business paying more for replacement goods or facing other financial losses. The remedies available will depend on the contract, the nature of the breach and the losses the business can legally recover.
Keeping records of replacement purchases, communications with the vendor and other costs related to the breach can help document the business’s losses. Because contract terms and available remedies can affect how a business should respond, legal guidance can also help determine which options apply and how to protect the business’s interests.