United States v. Seacoast Gas Co.

Seacoast Gas Co. (Seacoast) (defendant) contracted with the United States (U.S.) (plaintiff) to provide gas for a federal housing project. During performance of the contract, Seacoast contacted the U.S. claiming that the U.S. had breached and therefore Seacoast was cancelling the remainder of the contract. On November 6, the U.S. opened bids for a new gas provider and received a low bid from Trion. Zell, the president of both Seacoast and Trion, was present at the bidding. After the bid from Trion, the U.S. sent a registered letter to Zell stating that if Seacoast did not withdraw its notice of cancellation within three days, the U.S. would accept Trion’s bid and hold Seacoast liable for breach of contract. Seacoast did not retract its repudiation within the three days. On November 10, the U.S. again asked Zell if Seacoast would retract its repudiation and Zell declined. However, between November 10 and November 17, when the U.S. signed the contract with Trion, Seacoast retracted its notice of cancellation, but the U.S. moved ahead and signed the contract with Trion for a price exceeding its contract with Seacoast and brought an action to recover the difference. The parties agreed that Seacoast’s notice of cancellation was an anticipatory breach, but differed as to whether the notice was timely withdrawn. The U.S. District Court for the Southern District of Georgia found the retraction to be timely and ruled in favor of Seacoast. The U.S. appealed.