Question

Daily Bread Bakeries, Inc., contracts to buy all of its ingredient requirements for bread making, at a certain minimum per year, from Enriched Flour & Grain Corporation for six years. After three years, Daily Bread tells Enriched that it plans to sell its assets to Flat Bread Shops, Inc. Flat Bread refuses to assure Enriched that it will continue Daily Bread’s contract. Flat Bread’s refusal is a:_________
a) a justified response based on Flat Bread’s relation to the contract.
b) an assignment of Daily Bread’s rights under the contract.
c) a reasonable suspension of performance under the contract.
d) a repudiation of the contract.

Answer 1

Answer:

D) a repudiation of the contract.

Explanation:

In contract law, the repudiation of a contract refers to refusal to perform the duties required by the contract. Anticipatory repudiation refers to notifying in advance that one party will not perform. Repudiation is generally considered a contract breach, since one party is refusing to perform.  

In this case, Daily Bread Bakeries signed a contact with Enriched Flour, and even though Daily Bread was sold, the company that purchased it must continue with the contract. The repudiation made by Flat Bread's will most likely result in a lawsuit from Enriched Flour.