A party's bona fide belief in the correctness of its contractual interpretation is irrelevant to the objective test of repudiation. Merely asserting or arguing for a wrong interpretation will usually not constitute repudiation, but acting unilaterally on a clearly untenable interpretation, or persisting in it despite being shown the error, will more readily support an inference of repudiation. Under AS 2124-1992, a principal who deducts liquidated damages from amounts certified under clause 42.1 acts contrary to settled authority, and persistence in that position despite being shown the error can constitute repudiatory conduct.
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