## Facts

- Reliance Cooperage Corp. contracted in St. Louis, Missouri (July 12, 1950) to buy from A. R. Treat 300,000 white oak bourbon staves to be produced or acquired in Arkansas, Missouri, or Oklahoma.
- The contract required that shipped staves be at least 90% bourbon grade, with production to begin promptly and be completed no later than December 31, 1950.
- Price terms were $450 per thousand for bourbon-grade staves (and $40 per thousand for oil-grade), f.o.b. freight cars nearest the millsite.
- The contract provided that Missouri law governed.
- Treat delivered no staves and, in August–September 1950, informed Reliance by letter and telephone that he would not perform.
- In October 1950, Reliance expressed doubt about Treat’s performance but stated it still expected performance and would hold Treat to the contract.
- Treat did not respond and did not perform by December 31, 1950.
- The market price for comparable staves increased materially between contract formation and December 31, 1950, with evidence supporting a December 31 market price above the contract price and up to $750 per thousand.

## Issues

1. Under Missouri law, does an unaccepted anticipatory repudiation by the seller change the buyer’s general damages measure for non-delivery under an executory goods contract?
2. If the buyer refuses to accept the repudiation and treats the contract as continuing, must the buyer “cover” or otherwise mitigate before the contractual delivery date, limiting damages to an earlier market differential?

## Decision

- The Eighth Circuit reversed and remanded.
- The court held that a buyer is not required to accept an anticipatory repudiation of an executory contract for the sale of goods.
- Because Reliance did not accept Treat’s repudiation and continued to insist on performance, the contract remained in effect until the time for performance expired.
- The proper damages measure was the difference between the contract price and the market price at the time performance was due (December 31, 1950), not at the earlier repudiation date.
- The district court’s instruction imposing an October mitigation-based damages measure was erroneous and led to an inadequate verdict.

## Legal Principles

- Upon anticipatory repudiation, the non-breaching party may elect either to treat the contract as ended and sue immediately or to keep the contract in force until the performance date.
- If the repudiation is not accepted, the contract continues to bind both parties until the agreed time for performance.
- For a seller’s failure to deliver goods, general damages are the difference between the contract price and the market price at the time and place fixed for delivery.
- An unaccepted anticipatory repudiation does not shift the date for measuring market-price damages and does not impose a requirement that the buyer purchase substitutes before performance is due.

## Conclusion

The court held that, under Missouri law, Reliance could refuse to accept Treat’s anticipatory repudiation and measure damages by the market-contract differential on the contractual deadline for performance; the trial court’s contrary mitigation instruction required reversal and remand.


Reliance Cooperage Corp. v. Treat, 195 F.2d 977 (8th Cir. 1952)