Anticipatory Repudiation Cause of Action Stated;Four-Year UCC Statute of Limitations Applied

In a full-fledged opinion by Justice Leventhal, the Second Department determined that the plaintiff had pled a valid “anticipatory repudiation” cause of action and that the four-year UCC statute of limitations applied.  The case concerned the return (for a refund) of drugs when the expiration date is close or has passed.  The plaintiff brought the action when it learned the refund would not be offered in full. Regarding the anticipatory repudiation and statute of limitations issues, Justice Leventhal wrote:

Here, the complaint alleges that, when the defendants refused to accept the plaintiff’s attempt to return the unsold merchandise, the defendants anticipatorily repudiated their respective return policies by unambiguously stating that they would not accept the returns. The complaint asserts that the defendants’ anticipatory repudiation occurred before the plaintiff tendered the unsold merchandise to the defendants and before the plaintiff attempted to return the merchandise to the manufacturer in accordance with standard industry practice. When a party repudiates a contract prior to the time designated for performance and before all of the consideration has been fulfilled, the nonrepudiating party can seek to recover damages …. * * *

The general rule applicable to actions to recover damages for breach of contract is that a six-year statute of limitations begins to run when a contract is breached or when one party fails to perform a contractual obligation …. However, UCC 2-725(1) provides that “[a]n action for breach of any contract for sale [of goods] must be commenced within four years after the cause of action has accrued” (see CPLR 203[a]). QK Healthcare, Inc v InSource, Inc, 2013 NY Slip Op 03312, 2nd Dept, 5-8-13