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What are anticipatory breaches of contract?

On Behalf of | Oct 19, 2021 | Blog |

When two parties sign a valid contractual agreement, both bind themselves to the terms. A breach may occur when one party fails to deliver or abide by the contract, and the breaching party might face a lawsuit. Litigation in a Minnesota court could involve an anticipatory breach, which precedes an actual violation of terms.

Examining an anticipatory breach

Anticipatory breaches involve the intention to breach a contract. If someone signs a contract for marketing-related work for a company and does not deliver by the due date, that might be a direct breach. When the party relying on the contractual work discovers that the other entity intends not to hold up its side of the deal, legal action may commence regarding the anticipated breach of contract.

Sending text messages stating that work won’t finish by the due date may prove a breach. However, direct statements about intentions to breach are not legally necessary. Perhaps the one party must perform several steps leading up to the date of delivered work but fails to do anything. That could reflect an intention to breach the contract.

Damages related to anticipatory breaches

Contract disputes over anticipatory breaches would likely focus on damages caused by the party not living up to the arrangement. However, the aggrieved party faces requirements to mitigate losses. That is, the party claiming the anticipatory breach could face conditions to stop payments to a party that appears ready to breach and otherwise reduce potential losses.

Another point worth mentioning is that the breaching party must clearly and definitely intend to breach. Assuming that someone will not live up to the terms is not enough because the assumptions might be incorrect. Proof of losses and anticipated losses would likely become vital to the case as well.

It’s understandable that not all contracts will be carried out as planned because circumstances can be unpredictable. However, the law provides recourse against parties that deliberately don’t fulfill a contract.