Understanding anticipatory breaches of contracts

On Behalf of | May 10, 2021 | Uncategorized |

California businesses who enter into contracts will likely end up handling an anticipatory breach at some point in time. As a business owner, it is vital that you understand how to recognize this breach. This way, you can react accordingly to help ensure the financial stability of your business.

What is an anticipatory breach of contract?

Business law defines an anticipatory breach of contract as a failure to fulfill one’s obligations prior to the expiration date of a contract. Also referred to as an anticipatory repudiation, this type of violation must be stated by the breaching party for it to be an official breach. Once the non-breaching party is told by the breaching party that they will no longer be able to deliver on their contract, the non-breaching party may initiate legal action.

You do not have to wait for the contract to expire

Unfortunately, many business owners believe that they will need to wait until the contract expires to file a lawsuit for the breach of the contract. In reality, this is not the case. As soon as the non-breaching party is notified by the breaching party of the violation, they may initiate legal action. This is what makes the breach anticipatory, as it is an intention not to fulfill one’s obligation of a contract that expires in the future. As a non-breaching party, it is your legal duty to try and minimize any financial losses due to the unfulfillment of the breaching party’s obligations. An attorney can provide more information on this subject.