In re Beeche Systems
United States District Court for the Northern District of New York
164 B.R. 12 (1994)
Beeche Systems (plaintiff) agreed to supply scaffolding to D.A. Elia Construction (defendant) under a contract giving Elia the right, after final payment, to require Beeche to buy back the scaffolding at half price. Beeche filed for Chapter 11 bankruptcy but, after delays, still completed delivery. When Elia learned of the bankruptcy filing only after delivery, it withheld final payment and instead demanded Beeche honor the buy-back provision, fearing Beeche might not fulfill its remaining obligations. Beeche sued for the final payment and return of the equipment; Elia counterclaimed under the buy-back provision, arguing Beeche had anticipatorily repudiated by filing bankruptcy and by failing to disclose it or provide assurances of performance.
Whether a party must have a reasonable basis for believing the other party is unable or unwilling to perform before suspending its own performance based on anticipatory repudiation.