The buyer sued for the return of its $3,000 deposit. Should the buyer prevail? Explain.

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The buyer sued for the return of its $3,000 deposit. Should the buyer prevail? Explain.

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Neptune Research & Development, Inc. (the buyer), which manufactured solar-operated valves used in scientific instruments, saw advertised in a trade journal a hole-drilling machine with a very high degree of accuracy, manufactured and sold by Teknics Industrial Systems, Inc. (the seller). As the machine’s specifications met the buyer’s needs, the buyer contacted the seller in late March and ordered one of the machines to be delivered in mid-June. There was no “time-of-the-essence” clause in the contract. Although the buyer made several calls to the seller throughout the month of June, the seller never delivered the machine and never gave the buyer any reasons for the nondelivery. By late August, the buyer desperately needed the machine. The buyer went to the seller’s place of business to examine the machine and discovered that the still-unbuilt machine had been redesigned, omitting a particular feature that the buyer had wanted. Nonetheless, the buyer agreed to take the machine, and the seller promised that it would be ready on September 5. The seller also agreed to call the buyer on September 3 to give the buyer two days to arrange for transportation of the machine. The seller failed to telephone the buyer on September 3 as agreed. On September 4, the buyer called the seller to find out the status of the machine and was told by the seller that “under no circumstances” could the seller have the machine ready by September 5. At this point, the buyer notified the seller that the order was canceled. One hour later, still on September 4, the seller called the buyer, retracted its earlier statement, and indicated that the machine would be ready by the agreed September 5 date. The buyer sued for the return of its $3,000 deposit. Should the buyer prevail? Explain.

Explanation & AnswerSolution by a verified expert

Verified Answer

It is a case of anticipatory repudiation as the seller repudiated the contract, and this repudiation impaired the value of the contract to the buyer because of the delay of an inordinate amount of time in delivery.
In this case, the buyer already communicated about the cancelation of the contract with the seller. Therefore, the cancellation of the buyer is an effective one.

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