## Facts

- Sam L. Harrell contracted to purchase a Delaware condominium unit from Sea Colony, Inc. for $74,900 and paid a $5,000 cash deposit plus a $6,235 promissory note payable at settlement.
- The agreement required settlement within 30 days after Sea Colony posted written notice of “substantial completion”; Sea Colony did not provide Harrell that written notice.
- The contract allowed Harrell to terminate and obtain a deposit refund if the unit was not delivered by a stated date; the parties later extended the outside delivery date to December 31, 1974.
- The contract provided that upon purchaser default, Sea Colony could retain the cash deposit and enforce the note.
- In spring 1974, Sea Colony’s sales agent, Carl M. Freeman Associates, Inc., contacted Harrell about selecting a settlement location; Harrell did not respond.
- Harrell asked about assigning or cancelling; Freeman later sent a cancellation-request form stating Harrell wished to rescind.
- Harrell returned the form with handwritten language making cancellation contingent on a refund of his deposit.
- Sea Colony entered into a contract to sell the same unit to another buyer for more than Harrell’s contract price.
- After the resale, Freeman informed Harrell that Sea Colony accepted the cancellation but would keep the cash deposit as liquidated damages; Sea Colony returned Harrell’s promissory note and crossed out Harrell’s deposit-contingency language on the cancellation form.
- Harrell sued Sea Colony and Freeman in Maryland state court before the extended delivery date, alleging anticipatory breach/repudiation and seeking compensatory and punitive damages.
- After a bench trial, the court found Harrell had unjustifiably cancelled and entered judgment for both defendants.

## Issues

1. Whether Harrell anticipatorily repudiated or otherwise unilaterally cancelled the contract, entitling Sea Colony to retain the deposit under the purchaser-default clause.
2. Whether Sea Colony’s resale of the unit and its “acceptance” of Harrell’s conditional cancellation constituted breach or supported a finding of mutual rescission rather than purchaser default.
3. Whether Freeman, as Sea Colony’s sales agent, could be held liable on the contract or for the alleged breach.

## Decision

- The appellate court held the evidence did not support the trial court’s finding that Harrell anticipatorily breached or unjustifiably cancelled the contract.
- The judgment for Sea Colony was vacated, and the case was remanded for further proceedings to determine whether Sea Colony breached the contract or whether the parties mutually rescinded.
- The judgment for Freeman was affirmed because Freeman acted as a disclosed agent and was not liable on Sea Colony’s contract on the record presented.

## Legal Principles

- Anticipatory repudiation requires a clear, definite, and unequivocal refusal to perform; conditional statements or proposals to cancel do not, by themselves, constitute repudiation.
- A party’s silence or nonresponse does not establish anticipatory breach when the other party has not satisfied contractual conditions precedent triggering performance (here, written notice of substantial completion starting the settlement period).
- Conduct by the seller after a buyer’s conditional cancellation request (including resale and unilateral alteration of cancellation terms) may require analysis as potential seller breach or mutual rescission rather than purchaser default.
- A disclosed agent acting within the scope of authority for a known principal is generally not personally liable on the principal’s contract absent special circumstances.

## Conclusion

The court rejected treating a buyer’s conditional cancellation request and nonresponse—where the seller never provided required written notice—as an anticipatory repudiation, vacated judgment for the developer and remanded to assess breach or mutual rescission, while affirming dismissal of claims against the disclosed sales agent.


Harrell v. Sea Colony, Inc., 35 Md. App. 300, 370 A.2d 119 (Md. Ct. Spec. App. 1977)