## Facts

- National Farmers Organization (seller) and Bartlett & Co., Grain (buyer) entered into numerous grain-sale contracts; fourteen remained partially or wholly unperformed (one corn, thirteen wheat).
- Over late 1972 and early 1973, performance problems developed, including incomplete deliveries on some contracts.
- During this period, the buyer withheld part of the price on grain the seller did deliver, asserting the withholding as protection against losses from the seller’s nonperformance on other contracts.
- On January 26, 1973, the seller notified the buyer it would not deliver any additional grain on the fourteen outstanding contracts unless the buyer first paid a substantial amount allegedly due on past deliveries.
- After that communication, the seller suspended performance and never tendered further grain under any of the fourteen contracts.
- The buyer treated the January 26 communication and ensuing non-delivery as anticipatory repudiation, computed its damages, and withheld $18,441.62 from amounts otherwise payable to the seller.
- The seller sued in diversity to recover $18,441.62 as a balance allegedly due on grain delivered under four contracts; the buyer admitted withholding the sum but asserted a setoff for damages from breach/repudiation of all fourteen contracts.
- After a bench trial on largely stipulated facts, the district court found the seller breached or anticipatorily repudiated all fourteen contracts and entered judgment for the buyer.

## Issues

1. Whether the seller’s January 26, 1973 communication and subsequent cessation of deliveries constituted an anticipatory repudiation of the outstanding grain contracts.
2. Whether the buyer, upon repudiation, could treat the remaining executory portions of the contracts as breached, compute damages, and set off those damages against amounts otherwise owed for grain already delivered.

## Decision

- The Eighth Circuit affirmed the judgment for the buyer.
- The court held the seller’s January 26 demand—conditioning further deliveries on substantial payment beyond the agreed exchange—together with its suspension of all deliveries, amounted to anticipatory repudiation of the outstanding contracts under the UCC.
- The buyer was entitled to treat the repudiated contracts as breached, calculate resulting damages, and withhold (set off) $18,441.62 against sums otherwise due to the seller.

## Legal Principles

- Under UCC anticipatory repudiation doctrine, repudiation may be shown by conduct or statements that reasonably indicate a party will not perform its future obligations as promised.
- A party’s insistence on performance only upon new, noncontractual conditions can constitute anticipatory repudiation when it signals refusal to perform under existing terms.
- When repudiation substantially impairs the value of the contract, the aggrieved party may treat the repudiation as a present breach and pursue breach remedies, including damage recovery.
- Damages resulting from breach/repudiation may be asserted as a setoff against amounts otherwise owed arising out of related contractual transactions between the same parties.

## Conclusion

The court held that the seller’s conditional refusal to continue grain deliveries, followed by a complete halt in performance, was an anticipatory repudiation of the remaining contracts, permitting the buyer to treat the contracts as breached and to set off its resulting damages against the unpaid contract price.


Nat’l Farmers Org. v. Bartlett & Co., Grain, 560 F.2d 1350 (8th Cir. 1977)