How do anticipatory breaches occur?

On Behalf of | Aug 17, 2021 | Business Law

Parties enter into a contractual agreement with the expectation that everyone performs as stipulated. Regrettably, contract breaches are not uncommon, and one party might attempt to address its losses in a Washington court. Breaches could come without warning, such as when a contracted entertainment does not show up at a performance or when a builder fails to start a project. Other times, the warning signs appear long in advance. Parties anticipating a breach might benefit from acting in a way that minimizes the negative impact.

Anticipating a contract breach

An “anticipatory breach” refers to instances where it becomes apparent that one party has no intention to meet its obligations. In such situations, the other party may no longer have any duty to fulfill their obligations. For example, if a supplier or contractor fails to deliver products to another business, the customer business could become free of any future agreed-upon payments.

Professionals who choose to breach a contract may find themselves facing legal actions for the decision. Business disputes and litigation following an anticipatory breach might be more complex than a soon-to-be plaintiff realizes, however.

Matters concerning anticipatory breaches

Attempts to reduce damages and losses might be necessary before taking legal action. When a business owner knows that the company will suffer damages from a breach that appears likely to occur in several months, the owner should take every step possible to deal with the breach before it occurs. Hiring another contractor or supplier is one way to do so. Not taking such steps could hurt the cause of seeking compensation in court.

Assumptions and beliefs are not violations of contracts, either. Assuming that someone will breach a contract in three weeks might be understandable, but the other party must fail to perform a duty for a breach to actually happen. Legal action may then follow once the contract is breached.