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Valparaiso Univ. Law School

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Friday, March 4, 2011

Finding a Diamond--and a Good Anticipatory Repudiation Case--in the Rough

Debeers Whenever possible, I like to point students toward a very recent case that illustrates a concept we addressed via older cases.  This week, a student pointed me to the UK case of De Beers v. Atos Origin to illustrate how anticipatory repudiation applied in a more modern context.  In this case, Atos Origin, a large European IT services company, agreed to assist De Beers, the famous diamond distributor, with its supply-side management system in Botswana.  Unfortunately, contracts are not forever.  Although the contract called for the parties to cooperate closely, the relationship later soured, and each side blamed the other for the break up (not-so-subtle pun intended).  More specifically...Atos argued that De Beers had repudiated by withholding a progress payment and by trying to expand the scope of the project.  De Beers argued that Atos had repudiated by refusing to continue to perform unless the contract was renegotiated.  According to this report, the Court found that De Beers's witholding of a payment was not repudiation but that Atos's refusal to continue was repudiation.  In the words of the case we often use in class, Atos's conduct was a "clear and unequivocal" refusal to perform while De Beers's conduct was not.  Or, in the words of UCC 2-610 comment 1 (should this contract have involved a sale of goods, which it did not), Atos's refusal "demonstrat[ed]...a clear determination not to continue with performance," while De Beers's conduct did not.  Sadly, the Court never directly declared that De Beers no longer was Atos's best friend. Nor did the Court conclude that damages amounted to approximately two months' salary.  But it would be a lot funnier if it did. 

[Heidi R. Anderson, hat tip to Zachary Ritz]

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