In the course of doing business, entrepreneurs enter into contracts of various kinds. However, not all agreed-upon contracts end up as expected, which may result in disputes or breaches.
An anticipatory breach of contract is what happens when one party communicates, through words or actions, an intention not to fulfill their obligations before the actual performance is due.
What are the remedies to an anticipatory breach of contract?
If you are wondering how to approach an anticipatory breach of contract, there are several remedies available:
- Sue for damages: You can sue the breaching party for damages caused by the anticipatory breach. This might include compensatory damages to cover additional expenses incurred to secure alternative goods or services, costs related to mitigating the breach’s impact, and any other measurable economic harm suffered due to the breaching party’s failure to fulfill their contractual obligations.
- Seek specific performance: In some cases, especially if the subject matter of the contract is unique (e.g., rare goods or services), you can seek a court order requiring the breaching party to deliver as originally agreed.
- Terminate the contract: If the breach is significant and material, you may choose to terminate the contract immediately. This option typically requires clear communication of your intent to terminate due to the anticipatory breach.
- Agree on a settlement: Depending on the circumstances, you may negotiate with the breaching party to reach a mutually acceptable resolution, such as agreeing to new terms or a settlement amount.
It is important to consider getting knowledgeable legal guidance to help you understand the legal options available to you. As the non-breaching party, you have a duty to mitigate or minimize your losses resulting from the breach. Document your efforts to mitigate damages and strengthen your case.