Anticipatory Breach of Contract

Atlanta Business Litigation Attorneys

A business contract is only as good as the word of the people who agree to follow it. If one party has promised that they will not perform their duties as described in a binding contract, or if they have made it clear through words or actions that they will be unable to complete their duties despite their want to, other parties may become understandably concerned for their own businesses’ wellbeing. If that concern is great enough, the other parties may wish to cite an anticipatory breach of contract, also called a repudiation of contract.

Is your business possibly facing an anticipatory breach of contract? Even if you are not sure, it is always wise to consult with a professional before any more time elapses. Contact Buckley Bala Wilson Mew LLP and talk to our Atlanta business litigation lawyers today. With our guidance, we may be able to resolve your breach of contract concerns without causing any further damage to your business or your reputation.

Three Causes of Anticipatory Breaches

An anticipatory breach or repudiation may seem unlikely by its legal definition but such breaches of contract occur more often than you may realize. Throughout all the different business models, types, and purposes in the professional world, innumerable contracts bind them together. If the slightest, crucial factor changes, an anticipatory breach could be the result.

The three most common reasons an anticipatory breach occurs are:

1. Unconditional refusal: A business partner explicitly tells you that they will not perform their duties as described in the agreed upon business contract. Even if they have not caused the breach yet, you have been given ample reason to believe they will and can claim they have already breached it, anticipatorily so. Example: A third-party vendor that supplies your company with paper sends you an invoice that states they will not be delivering your next two requested shipments due to manufacturing constraints. They have stated clearly – not ambiguously or presumptively – that they intend to breach the contract, even if it does not benefit themselves to do so.
2. Impossibility: Specific circumstances can make fulfilling a business contract impossible. When you know that another party in a contract cannot complete their duties due to any reason, internal or external, you may claim that they have used repudiation to break the contract. Example: You lend someone several thousand dollars to start a small business under the agreement that they will repay you over time with their profits. After less than a year, they have mismanaged the new company so poorly, it is rendered bankrupt and they have incurred additional debts. Due to their inability to repay you as the contract outlined, and due to the mishandling of the business, you could cite an anticipatory breach of contract.
3. Deception: Contracts are often broken through anticipatory means when they have to do with the sale and purchase of real property. Put simply, repudiation will occur if one party is allowed to purchase something you have either already bought or had made a deal to buy. For example: If you agreed to buy a home from a seller only to later learn that they sold it to someone else without notifying you, they have deceptively repudiated on their contract. You could technically still be given the opportunity to buy the home yourself but it would likely be in your best interest to cite an anticipatory breach and distance yourself from that seller.