In HIFN, Inc. v. Intel Corp., 2007 WL 1309376 (Del. Ch., May 1, 2007), read opinion here, the Delaware Chancery Court decided an issue of first impression in Delaware regarding the rights and remedies available to a repudiating and non-repudiating party to a contract. Relying on the Restatement (Second) of Contracts, the court reasoned that the better rule is to:
"allow a party to repudiate without prejudice to its right later to contend that it was excused from performing because it turned out the non-repudiating party could not have performed anyway."
Thus, a non-repudiating party cannot recover from a repudiating party if the non-repudiating party was not able to perform its side of the bargain. This is similar to the doctrine of excuse by supervening event. See footnote 130 in the opinion. Repudiation occurs, for example, when a party expresses its intent not to perform unless terms different from the original contract are met.
The court also observed, moreover, that when a party commits a material breach by failing to perform within a reasonable time, it excuses the other party’s performance–even if there was no clause specifying an exact deadline and even if, as here, there is no clause providing that "time is of the essence."