Anticipatory Breach
A breach of contract that occurs before performance is due, when one party clearly indicates by word or conduct that they will not fulfill their obligations.
What Is Anticipatory Breach?
Anticipatory breach (also called anticipatory repudiation) occurs when a party to a contract communicates, before the time for performance arrives, that they will not perform their contractual duties. The non-breaching party may treat the contract as breached immediately and pursue remedies without waiting for the actual performance date to pass.
How Anticipatory Breach Is Established
- An unequivocal, voluntary statement of intent not to perform - Conduct that makes performance impossible (selling the only subject matter to a third party) - A demand for terms materially different from the contract - Failure to provide adequate assurance of performance after a reasonable request
Available Responses
The non-breaching party may (1) treat the repudiation as a present breach and sue immediately for damages, (2) suspend their own performance and await the time for performance, or (3) urge the repudiating party to retract. The Uniform Commercial Code § 2-609 expressly permits a party with reasonable grounds for insecurity to demand written assurance and treat failure to provide it within 30 days as repudiation. The non-breaching party also has a duty to mitigate damages by ceasing performance and seeking substitute arrangements.