What does an anticipatory breach involve?

On Behalf of | Sep 7, 2021 | Business Law

When a party to a contract fails to deliver on the terms, the party might breach an agreement. If a Texas contractor must finish a project by a specific date and fails to do so, the contractor could face a breach of contract lawsuit. What if one party promises in a contract to deliver in 90 days and then notifies the other party that he or she won’t honor the agreement at the 45-day mark? The scenario could reflect an “anticipatory breach.”

An anticipatory breach occurs

An anticipatory breach involves one party notifying the other party that a contractual obligation won’t be met or honored. The notification comes in advance of the final promise date. The party affected negatively now anticipates the breach. An example of this would be a DJ hired to perform at an important function who announces three days in advance that he or she won’t show.

Sometimes, both parties may agree to cancel a contract. When the promisor gives the other party enough advance notice, the cancellation might not be too impacting. However, there could be complicated situations where someone relies heavily on the other party to deliver on contractual obligations. Any anticipatory breaches could lead to a lawsuit.

Dealing with an anticipatory breach

Business litigation may focus on damages derived from a breach. The party suffering from the breach may need to take steps to reduce the damage. If the promisee suffers harm by not taking action after realizing a breach will occur, seeking damages for such losses may be challenging. However, the promisee might have a better claim to unavoidable losses due to the violation, whether expected or not.

Acting quickly could be an appropriate response when an anticipatory breach appears unavoidable. Failing to act might make things worse depending on the nature of the agreement.