What Is Anticipatory Breach, and How Can I Respond to It?

What Is Anticipatory Breach?

Anticipatory breach occurs when one party indicates, either through words or actions, that they will not fulfill their contractual obligations before the performance is due. This can be evident through explicit statements, conduct suggesting non-performance, or a failure to meet conditions that are necessary for performance.

Indicators of Anticipatory Breach

1. Clear Statements: A party explicitly communicates that they will not perform their obligations, such as saying, I will not deliver the goods as agreed.
2. Inability to Perform: Signs that a party is unable to perform, such as financial difficulties or loss of necessary resources, can indicate an impending breach.
3. Failure to Meet Conditions: If a party fails to meet specific conditions outlined in the contract that are necessary for performance, it may suggest they are not committed to fulfilling their obligations.

Responding to Anticipatory Breach

1. Communicate Promptly:
   • Reach out to the party to discuss the situation. Clarifying their intentions may provide an opportunity for resolution or modification of the contract.
2. Document Everything:
   • Keep records of all communications and actions that indicate the anticipatory breach. This documentation will be crucial if you decide to take further action.
3. Evaluate Your Options:
   • Consider whether to wait for the breach to occur or take immediate action. Depending on the situation, you may have several options:
     • Terminate the Contract: You may choose to terminate the contract if you believe the anticipatory breach will prevent fulfillment of the agreement.
     • Seek Damages: You can file a claim for damages that you anticipate suffering as a result of the breach.
     • Pursue Specific Performance: In some cases, you might seek a court order requiring the other party to fulfill their contractual obligations.
4. Consult a Lawyer:
   • If the situation is complex or involves significant financial implications, consulting a lawyer can provide guidance on your rights and the best course of action.

Example

If a contractor informs you that they cannot complete a project by the agreed deadline due to unforeseen issues, this may constitute an anticipatory breach. In response:

• Document the contractor’s statement and any supporting evidence.
• Contact the contractor to confirm their inability to perform and discuss potential solutions.
• Decide whether to terminate the contract or pursue damages based on the anticipated breach.

Conclusion

In summary, anticipatory breach is when one party indicates they will not fulfill their contractual obligations before performance is due. Responding effectively involves communication, documentation, evaluating options, and possibly seeking legal advice.