Anticipatory Breach Of Contract Cases: Everything You Need to Know
Anticipatory breach of contract cases refer to legal cases that involve the breaching of contracts before the due dates for performance. 3 min read
Anticipatory breach of contract cases refer to legal cases that involve the breaching of contracts before the due dates for performance. This type of contract breach occurs when one party to a contract indicates to the other party that he or she cannot or does not wish to fulfill the contract. When faced with an anticipatory breach of contract, a nondefaulting party can terminate the contract and seek compensation by filing a lawsuit against the breaching party. There are several ways to obtain fair compensation in an anticipatory breach case.
What Is an Anticipatory Breach of Contract?
Also known as anticipatory repudiation, anticipatory contract breach happens when one contracting party stops performing his or her contractual obligations, causing the other party to assume he or she does not intend to fulfill his or her part of the agreement. The defaulting party might express this intention through his or her actions or inability or refusal to act, such as:
- Unwillingness to accept payment.
- Failure to produce a certain item.
- Obvious indication of his or her intent not to fulfill the agreement's terms.
An anticipatory breach of contract is more than a mere delay; it must amount to a rejection or repudiation of the contract. When this type of breach occurs, the innocent party can end the contract and take legal action without waiting for the contract to be broken.
If the contract is repudiated, the nondefaulting party can choose how he or she wants to proceed. If it is beneficial to do so, he or she can consider the contract abandoned and sue the offending party for anticipatory contract breach. Alternatively, he or she can wait until the deadline for performance has expired before remedying the contract breach.
What Constitutes an Anticipatory Contract Breach?
An anticipatory breach of contract occurs when:
- The defaulting party expresses unconditional and positive refusal to the other party: This is known as express repudiation. The refusal must be straightforward, clear, and directed at the innocent party. Making an ambiguous or qualified refusal is not enough. Nonetheless, an expression of doubt might indicate a prospective failure to fulfill the contract, in which case the nonbreaching party might suspend his or her performance and request an assurance of performance from the offending party.
- The breaching party is unable to perform because of a certain action. Actions are as important as words when it comes to contract repudiation. If the defaulting party's voluntary actions make it impossible for him or her to fulfill the contractual obligations, it is considered a repudiation of the contract.
- The subject of the contract is transferred to another person. If the contract involves the sale of property, it will be repudiated when the property is transferred to a third party.
Remedies for Breach of Contract
In the event of a breach of contract, the court will use one or more of the following remedies to help an innocent party recover his or her losses.
Also known as compensatory damages, actual damages refer to monetary damages awarded to compensate an innocent party for his or her financial or property losses. The amount of damages awarded will be based on the plaintiff's loss or injury.
Punitive damages are monetary damages granted to the nondefaulting party above his or her actual damages. The court might award these damages in cases where the offending party has committed acts that are so reckless and malicious they give a reasonable person pause. Also called exemplary damages, punitive damages are granted to punish the guilty party for outrageous misconduct.
Specific performance is an equitable remedy the court uses to force a contracting party to perform his or her contractual obligations. In some cases, a nonbreaching party might not be compensated adequately through monetary damages. He or she might request the court to award specific performance instead.
Specific performance can be any action the court orders to compel the defaulting party to provide or perform the exact duties specified in the contract. It is most often awarded in cases involving unique or rare items or something with a value that is hard to determine.
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