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The term ‘repudiate’ is used specifically in the area of contract law to refer to the formal acts or statements by a party to a contract expressing a refusal to accept performance or honor obligations under a contract.

Repudiation occurs before performance under the contract is due. This amounts to an ‘anticipatory breach’ if the other party treats the repudiation as a breach of contract and brings a suit for damages.

The term ‘repudiate’ should not be confused with the term ‘rescind’. Rescission refers to the act of one party nullifying a contract. It is the act of cancelling a contract such that the parties are placed in the same position they were before the contract was entered into. However, repudiation assumes that the parties cannot be placed in the same position as they were before the contract was entered into because the non-breaching party has in some way changed its position and has suffered loss due to the repudiation.

So, why would a party ever provide notice of repudiation? Would it not be better to wait until the date of performance and simply fail to perform? There is a good reason why a party should repudiate as soon as it realizes it cannot perform. This is because if the party fails to provide notice, the damages against it for breach might be much higher. In other words, a breaching party always has the obligation to mitigate its damages (=to keep the damages as low as possible).