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A is corrent because Nugent Manufacturing notified Costello of its intent not to perform prior to the date it was obligated to perform and thus engaged in anticipatory repudiation. Anticipatory repudiation discharges the nonrepudiating party (Costello) from the contract and allows this party to sue for breach immediately. However, if commercially reasonable, the nonrepudiating party can ignore the repudiation and await performance at the appointed time. If the nonrepudiating party chooses this latter course of action, the repudiating party may retract the renunciation and perform as promised.
B is incorrect because anticipatory repudiation allows the nonrepudiating party (Costello) to be discharged from the contract and sue for breach of contract immediately rather than waiting for the latest performance date.
C is incorrect because anticipatory repudiation occurs when a party renounces the duty to perform the contract before the party’s obligation to perform arises. In this situation, Nugent notified Costello of its intention not to perform prior to the date agreed upon for performance and thus anticipatory repudiation has occurred.
D is incorrect because the repudiating party (Nugent) may retract the renunciation and perform as promised if the nonrepudiating party has ignored the repudiation and waited for performance to occur at the appointed time.