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Understanding what an anticipatory breach of contract is

| May 20, 2021 | Business & Commercial Litigation

Contracts are made every day between different businesses in Massachusetts. While contracts may seem pretty simple at first, there are times when it gets more complicated. When one party to the contract is unable to fulfill their obligations, it’s important that you understand what your options are for remedying the situation.

A look at anticipatory breach of contract

One scenario is an anticipatory breach of contract. For this type of breach to occur, one party to the contract must be unable to fulfill their contractual obligations. What makes this anticipatory is that the breaching party states their inability to fulfill their obligations prior to the contract expiration date.

For example, let’s say that you contract to purchase 500 shirts from one of your vendors. The vendor’s facility undergoes a massive fire, and they’re unable to produce your shirts. The supervisor of the vendor calls you prior to the expiration of your contract and tells you that they’re unable to fulfill the contract. This is considered an anticipatory breach of contract and you may respond to it with business and commercial litigation.

What are your options?

The first option you have is to simply do nothing and let the contract expire. In the event that you didn’t pay any money, this might be a good option for a long-standing relationship. Your next option is to take action against the offending party. It’s crucial to note that you may initiate legal action prior to the expiration of the contract as long as an anticipatory breach is present.

While you might not have to deal with it often, an anticipatory breach of contract is something that you should understand. Unfortunately, many business owners don’t quite understand what this type of breach is, and they falsely believed that they have to wait to take legal action until the contract expires.