Anticipatory breach of contract: What can be done?

What is anticipatory breach of contract?

An anticipatory breach of contract occurs when one party to a contract indicates, either explicitly or implicitly, that they will not fulfil their obligations and liabilities under the contract before the performance is due. This type of breach occurs before the actual performance of the contract and can be seen as a repudiation of the contract.

For example, if Party A agrees to sell a product to Party B on a certain date, but before the date arrives, Party A informs Party B that they will not deliver the product as agreed, this would be an anticipatory breach of contract.

Under UK contract law, the innocent party may choose to treat the anticipatory breach as a repudiation of the contract, which means they can terminate the contract and claim damages for any losses suffered as a result of the breach. The non-breaching party must act reasonably in treating the anticipatory breach as a repudiatory breach and must communicate their intention to the breaching party.

It is important to note that determining whether an anticipatory breach has occurred can be complex, and it is recommended to seek the advice of a qualified contract lawyer to understand your rights and obligations under the contract.

Has an anticipatory breach of contract occurred?

Determining whether an anticipatory breach of contract has occurred can be a complex legal issue that requires careful analysis of the circumstances surrounding the contract and the alleged breach. Here are some general steps to consider:

• Review the contract: Review the terms of the contract and determine the precise obligations of each party and the time for performance of contractual obligations. This will help to identify whether the alleged breach is a material breach, which may give rise to a right to terminate the contract.
• Look for indications of breach: Next, you should look for any indications, words or conduct that may constitute an anticipatory breach. This may include direct statements indicating their refusal to perform, or actions that give subjective belief that they are not going to perform.
• Assess the impact of the breach: You should consider the potential impact of the breach on your ability to perform your side of the contract. If the breach is significant enough, it may make it impossible or impractical to perform your obligations, which may give rise to a right to terminate the commercial contract.
• Determine if the breach is fundamental: If you believe that the other party has committed an anticipatory breach of contract, you should assess whether the breach is fundamental, which means that it goes to the root of the contract and deprives you of the substantial benefit of the bargain. If so, you may be entitled to terminate the contract and claim damages.
• Communicate your intention: If you decide to treat the anticipatory breach as a repudiation, you must communicate your intention to the other party. This may involve sending a letter or email outlining your position and giving the other party a chance to cure the breach.

It is important to note that determining whether an action amounting to an anticipatory breach has occurred can be complex, and it is recommended to seek the advice of a qualified contract solicitor to understand your rights and obligations under the contract.

Remedies to an anticipatory breach

If one party will breach the contract through their intention not to perform, the non-breaching party may be entitled to certain remedies under UK law. Listed below are some of the remedies that may be available:

• Termination of the contract: The non-breaching party may choose to terminate the contract if they have reasonable grounds to believe that the other party will not perform their obligations under the contract. However, it is important to note that the decision to terminate the contract must be made carefully and in accordance with the terms of the contract and applicable law.
• Damages: If the non-breaching party has suffered financial losses as a result of the anticipatory breach, they may be entitled to claim damages from the breaching party. The amount of damages will depend on the nature and extent of the losses suffered.
• Specific performance: In some cases, the non-breaching party may seek an order of specific performance, which requires the breaching party to fulfill their obligations under the contract. This remedy is only available in certain circumstances, such as when damages are not an adequate remedy.
• Injunction: The non-breaching party may seek an injunction to prevent the breaching party from taking actions that would further breach the contract. This remedy is typically only available in exceptional circumstances.

It is important to note that the choice of remedy will depend on the specific circumstances of the case and the nature of the breach. It is recommended to seek the advice of a qualified contract law solicitor to determine the best course of action.

How can Expert Commercial Law assist?

Our panel of contract solicitors can assist parties in taking legal action against companies for anticipatory breach of contract amounting to treat the contract as repudiated.

Our panel firms provide guidance throughout the process, and can help protect their client’s rights and interests. They can also help evaluate the strength of the case and advise on the best course of action. If you need help with a non performance of contract case, speak to us today. Unfortunately, we are unable to assist with employment law contracts.

Our solicitors also help with commercial claims, such as partnership disputes, fraud claims and CCJ removal.

Please note, we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case onto a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.