An anticipatory breach is a form of breach of contract in which one party makes it unequivocally clear that he or she will not be fulfilling the contract. By law, the other party is released from the contract, since failure to uphold the contract makes the contract void. In addition, the performing party who is not breaching the contract may be able to sue for damages under breach of contract laws, even though the contract may not have officially been breached yet.
There are a number of ways in which an anticipatory breach can occur. One way is for one party to explicitly state that he or she will not be fulfilling the contract, as for example when a grocery store supplier states that it will no longer make deliveries. Notification can also occur through actions. For example, if a contractor sells off his or her tools, this renders the contractor unable to work, and could be considered a breach of any outstanding building contracts because it is clear that the contractor does not intend to fulfill them. Nonpayment can also constitute an anticipatory breach.
Under the law, the person doing the breaching cannot turn around and sue the other party for failing to meet the contract. In the example with the contractor above, for example, once the anticipatory breach has occurred, the contractor cannot then go to a homeowner and sue for non-payment, because the contractor breached the contract and therefore the homeowner is no longer required to meet his or her end of the deal.
This concept is also known as anticipatory repudiation. People should be careful, as it is possible to run afoul of an anticipatory breach. For example, if someone asks for assurances that a contract will be fulfilled and those assurances are not provided, this could be treated as an anticipatory breach, under the argument that failing to provide proof is akin to indicating that the contract will be broken.
If a contract does need to broken, it is advisable to consult a lawyer. The lawyer can review the terms of the contract and provide information on the best way to break it. Sometimes, the other party may be willing to renegotiate the terms to address a change in situation, especially if the party doing the breaching makes it clear that he or she is involved in a good faith effort to fulfill as many of the terms as possible.
