Franconia Associates v. United States, 536 U.S. 129, 15 (2002)

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Cite as: 536 U. S. 129 (2002)

Opinion of the Court

breach. See Restatement (Second) of Contracts 235(2) (1979) (hereinafter Restatement) ("When performance of a duty under a contract is due[,] any non-performance is a breach."); Murray, supra, 206, at 417. But the promisor's renunciation of a "contractual duty before the time fixed in the contract for . . . performance" is a repudiation. 4 A. Corbin, Contracts 959, p. 855 (1951) (emphasis added); Restatement 250 (repudiation entails a statement or "voluntary affirmative act" indicating that the promisor "will commit a breach" when performance becomes due). Such a repudiation ripens into a breach prior to the time for performance only if the promisee "elects to treat it as such." See Roehm v. Horst, 178 U. S. 1, 13 (1900) (repudiation "give[s] the promisee the right of electing either to . . . wait till the time for [the promisor's] performance has arrived, or to act upon [the renunciation] and treat it as a final assertion by the promisor that he is no longer bound by the contract").

Viewed in this light, ELIHPA effected a repudiation of the FmHA loan contracts, not an immediate breach. The Act conveyed an announcement by the Government that it would not perform as represented in the promissory notes if and when, at some point in the future, petitioners attempted to prepay their mortgages. See Restatement 250, Comment b ("[A] statement of intention not to perform except on conditions which go beyond the contract constitutes a repudiation." (internal quotation marks omitted)); Murray, supra, 208, at 421. Unless petitioners treated ELIHPA as a present breach by filing suit prior to the date indicated for performance, breach would occur when a borrower attempted to prepay, for only at that time would the Government's responsive performance become due.8

8 The record indicates that at least one petitioner has attempted to prepay, see App. to Pet. for Cert. A157-A158, but contains no information about how many others have done so or when any such attempts took place, see 43 Fed. Cl., at 707. Application of our holding to each petitioner in light of such determinations is a task for the lower courts on remand.


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