Reliance Cooperage v. Treat

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Reliance Cooperage v. Treat
Court 8th Circuit
Citation 195 F.2d 977
Date decided April 22, 1952

Facts

  • Reliance Cooperage Corp. = maker of whiskey barrels = plaintiff = "Reliance"
  • (a cooper is a professional maker of barrels)
  • (a stave is the wooden length with a bevelled (sloped) edge bound by metal hoop to form a barrel)
  • Mr. Treat = "Treat" = wooden stave producer = defendant
  • The 2 parties signed a contract for 300,000 white oak staves for delivery to Reliance by December 31st 1950 for $450/(1,000 staves)
  • In August 1950, Treat sent a letter to Reliance repudiating the contract due to an uptick in market prices
  • Moreover, Treat confirmed the repudiation over the phone in September 1950
  • Reliance replied that it had make commitments based on the contracted price & demanded delivery
  • Treat delivered nothing as December 31st 1950 went by.

Procedural History

Reliance sued Treat seeking to recover $90,000

$90,000 = (the contracted price of staves) - (the market price of staves at the time of breach)

The judge instructed the jury that if Treat had definitively breached the contract in August, then Reliance had a duty to mitigate his damages

The jury decided in favor of Reliance albeit with a damages of only $500 (basically, Reliance lost)

Issues

Does a party to a contract have a duty to mitigate damages after learning that the other party intends to repudiate the contract?

Arguments

  • Treat argued that it had repudiated the contract in August &, again, in September; therefore, Reliance was supposed to mitigate its damages instead of waiting around for prices to shoot up further by the end of December 1950.
  • Additionally, Treat argued that the damages should be the difference in price as of the date of repudiation.

Holding

No. The injured party has no duty to mitigate damages upon learning of anticipatory repudiation & can wait until the time of performance to seek damages.

Judge Sanborn: The damages of Reliance must be set to December 31st 1952

Judgment

Reversed

Rule

In spite of this case, the modern view in the 2020s is that a party shouldn't be allowed to recover for losses that could reasonably have been avoided (mitigated).

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