Legal Definitions - anticipatory breach

Anticipatory breach occurs in contract law when one party to an agreement clearly and unequivocally communicates their intention not to fulfill their contractual obligations before the agreed-upon date for performance. This early declaration of non-performance is also known as "anticipatory repudiation."

When an anticipatory breach happens, the other party (the non-breaching party) is generally excused from performing their own part of the contract. They may also immediately pursue legal remedies for breach of contract, even though the original performance date has not yet arrived. It's important to note that the party who made the anticipatory breach can sometimes withdraw their repudiation, but only if the other party has not yet acted in reliance on that repudiation (for example, by securing an alternative service or canceling their own related commitments).

• Example 1: Construction Project

  A homeowner hires a contractor to build an extension, with work scheduled to begin on June 1st. In mid-May, the contractor sends an email stating, "Due to unforeseen staffing issues, we will not be able to start your project on June 1st, nor will we be able to complete it at all this year."

  This is an anticipatory breach because the contractor has clearly stated their inability to perform their contractual duty (building the extension) *before* the agreed-upon start date of June 1st. The homeowner can now immediately seek a new contractor and potentially sue the original contractor for damages, without waiting for June 1st to pass.

• Example 2: Software Development

  A small business contracts with a software company to develop a custom inventory management system, with a delivery deadline of September 30th. On August 15th, the software company's CEO publicly announces that they are pivoting their entire business strategy to focus solely on AI research and will no longer be developing custom software for clients.

  This constitutes an anticipatory breach. The software company has unequivocally communicated, through a public statement, that they will not perform their obligation to deliver the custom software system, even though the September 30th deadline is still over a month away. The small business can now terminate the contract and seek another developer, as well as pursue remedies for the breach.

• Example 3: Event Venue Rental

  A couple books a wedding venue for a specific date next year, paying a significant deposit. Six months before the wedding, the venue owner calls the couple and informs them that they have decided to sell the property and it will be converted into residential apartments, making it impossible to host their wedding.

  This is an anticipatory breach. The venue owner has clearly stated that they will not be able to provide the contracted service (the wedding venue) *well in advance* of the scheduled event date. The couple does not have to wait until the wedding date to confirm the breach; they can immediately seek an alternative venue and demand the return of their deposit, along with any other damages incurred due to the breach.