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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 honour obligations under a contract. A party repudiates a contract before performance under the contract is due. This amounts to an anticipatory breach where the other party may treat the repudiation as a breach of contract and bring a suit for damages caused by the breach.

The term repudiate should not be confused with the term rescind. Rescind refers to the act of nullifying a contract. It is the act of cancelling a contract so that the parties are put in the same position they were before the contract was entered into. However, to repudiate a contract assumes that the parties cannot be put 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 such that it has incurred damage due to the repudiation.

The question might arise, “Why would a party ever provide notice of repudiation?” Isn’t it smarter and easier to wait until the date of performance and simply fail to perform? The reason that a party should repudiate as soon as it realizes it can’t perform is due to the fact that if it fails to do so, the damages for breach might be much higher because the breaching party always has a duty to mitigate its damages.