Anticipatory repudiation occurs when a party, before performance is due, unequivocally indicates that it will not perform. The other side may then treat the contract as breached immediately rather than waiting.

Unequivocal is the operative word. Doubts, complaints, requests to renegotiate and expressions of difficulty are not repudiation. A statement that performance will not occur, or voluntary conduct making performance impossible, is.

The non-repudiating party has choices. Treat the contract as breached and sue at once; urge retraction and await performance for a commercially reasonable time; or suspend its own performance. What it may not do is continue running up costs and then claim them all — the duty to mitigate attaches.

Retraction. A repudiating party may generally retract until the other side has canceled, materially changed position in reliance, or indicated that it considers the repudiation final. Silence in the face of repudiation is dangerous.

Adequate assurance. Where reasonable grounds for insecurity arise short of outright repudiation, the UCC allows a written demand for adequate assurance of performance and permits suspension pending a response. Failure to respond within a reasonable time — thirty days at the outside — is itself repudiation. This is the disciplined move when a counterparty starts missing signals.

Getting it wrong is expensive. A party who wrongly declares repudiation and walks away has itself breached.