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Understanding an Anticipatory Breach of Contract

Contracts are an essential element of running an efficient and profitable business. However, eventually, contractual agreements often lead to issues, disagreements, and even legal action. If you’ve become aware that another party is planning to break their contract, you have an anticipatory breach of contract on your hands. 

A breach of contract can have major implications for your company’s reputation and economic success. When you find out that a business partner is planning to break their contract, it’s a good idea to consult a business attorney right away.

A Look at Anticipatory Breach of Contract

In contract law, a regular breach of contract occurs when one party somehow violates the terms of a legally binding contract. 

Sometimes, you find out about a breach of contract before it actually happens. Maybe your business partner directly informed you that they can’t or won’t fulfill their obligations. Other times, they don’t give direct notice, but you somehow find out they won’t be willing or able to hold up their side of the agreement. 

When you find out about a breach of contract ahead of time, it’s an anticipatory breach of contract. In other words, you’re anticipating a breach, but the other party hasn’t broken the agreement yet. 

Proving Anticipatory Breach of Contract

Anticipatory breach of contract can do serious damage to a company. Often, you can pursue legal action against the other party. The goal of this is either to enforce the terms of the contract or seek some form of compensation for how you’ll be impacted by the breach. 

You need to meet two main criteria to successfully prove an anticipatory breach. These are: 

  • Intent: The party shows clear intention not to fulfill the contract
  • Communication: This intent was communicated to you 

Anticipatory breaches can happen in a variety of ways, from outright statements to actions that make it impossible to fulfill the contract. For example, if your distributor shuts down, it’s pretty clear they won’t be able to distribute your products per your contractual agreement. 

The Importance of Proving Damages

Proving that a breach of contract will occur isn’t enough to give you grounds for legal action. For that, you need to be able to demonstrate how the breach will cause harm to your company. 

Most of the time, proving damages involves showing some sort of financial cost or loss your business will incur as a direct result of the broken contract. However, a lawyer can help you explore additional avenues that might constitute damages, such as harm to your reputation.

Once an anticipatory breach and damages are established, you can try to recover compensation with the help of a lawyer. This usually involves recovering payment for the losses incurred as a result of the breach. Seeking legal advice promptly is essential to understanding your options.

Time Limits for Recovering Anticipatory Breach Damages

Just like personal injury claims, contracts have time limits for legal action. The time limit is called the statute of limitations, and if you miss it, you’ll likely be out of options. 

It’s important to contact a lawyer right away to ensure you don’t miss any deadlines for recovering the compensation your case qualifies for.

Consult a Long Island Business Lawyer Today

Whether you’re a business owner, contractor, or individual navigating contractual disputes, knowing your rights is essential. A lawyer can help in many ways, such as gathering evidence, identifying damages, and representing you in court.  

The experienced business lawyers at Kohan Law Group help clients in Nassau County navigate the challenges that arise when dealing with an anticipatory breach of contract. Contact our firm today to learn how we can help.

The information provided in this blog post is for educational purposes only and is not intended to constitute legal advice. It is essential to consult with a qualified attorney regarding your specific situation and circumstances.