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distributor affirmed its commitments to achieving financial stability and honoring all its contractual obligations. On similar facts, a federal district court held that the letter could be interpreted as a retraction of the repudiation. The letter clearly indicated the distributor’s commitment to righting its affairs and honoring its contracts, including its contract with the producer. [ Adapted from Cary Oil Co., Inc. v. MG Refining and Marketing, Inc. , 90 F.Supp.2d 401 (S.D.N.Y. 2000).] (2) A buyer contracted to purchase natural gas from a seller for one year after the contract date. The seller supplied gas per the contract for several months, after which the seller repudiated. But within the time for an effective retraction, the seller resumed supplying gas as the contract required and offered to continue doing so for the remainder of the contractual term. Here, the seller effectively retracted her prior repudiation. By resuming to supply gas and offering to continue doing so, the seller clearly indicated her intent to perform under the contract. [ Adapted from Restatement (Second) of Contracts § 256, Illustration 1.] 2. Time to Retract Repudiation For a retraction to be effective, the repudiating party must retract the repudiation before her next performance is due. After all, once the time for performance passes, what was a repudiation becomes a full-on breach, which cannot be retracted. Additionally, the retraction must occur before the nonrepudiating party has (1) cancelled the contract, (2) materially changed position in reliance on the repudiation, or (3) otherwise indicated that the nonrepudiating party considers the repudiation final ( e.g. , by exercising remedies for breach or filing suit for total breach of contract). As for material change of position, some authority indicates that the change must be for the worse. An example may include entering a different contract to obtain substitute performance. Also, if the repudiation has damaged the parties’ relationship beyond repair, that alone may constitute a material change of position. [U.C.C. § 2-611(1) (1951); Neptune Research & Dev., Inc. v. Teknics Indus. Systems, Inc. , 563 A.2d 465 (N.J. App. Div. 1989); Restatement (Second) of Contracts § 256, cmt. c; Hawkland UCC Series § 2-611:1, Westlaw (database updated June 2021).] 3. Result of Effective Retraction An effective retraction reinstates the repudiating party’s contractual rights. This result, of course, cuts off the nonrepudiating party’s remedies for the repudiation. However, Article 2 requires that the nonrepudiating party receive due allowance and excuse for any delay that the repudiation caused. Thus, for instance, the nonrepudiating party cannot be liable for breach of contract for delaying performance beyond the due date when she was justifiably suspending performance due to the repudiation. [U.C.C. § 2-611(3) (1951); 2 Hawkland UCC Series § 2-611:1, Westlaw (database updated June 2021).]
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