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3 strategies for dealing with anticipatory contract breaches

On Behalf of | Apr 4, 2024 | Business Law

When you enter into a contract with another party, you expect them to fulfill their obligations as agreed upon in the contract. Yet, sometimes, another party may indicate through words or actions that they are unwilling or unable to fulfill their obligations before the specified deadline or in accordance with the agreed-upon terms and conditions.

When this happens, it is referred to as anticipatory breach of contract. This may lead to uncertainty and potential disruptions in the contractual relationship as well as financial losses or damages for the non-breaching party. The following strategies can help you effectively address and mitigate the consequences of anticipatory breach.

Specific performance

As the non-breaching party, you can pursue specific performance through legal action, compelling the breaching party to fulfill their contractual obligations as originally agreed upon. This remedy allows you to seek a court order requiring the breaching party to perform their promised duties under the contract. Specific performance is particularly advantageous when the subject matter of the contract is unique or when monetary damages alone would not adequately compensate for the breach.

Legal injunctions

You can also seek legal injunctions to address an anticipatory breach of contract. With a legal injunction, you can request the court to issue an order prohibiting the breaching party from taking certain actions that would further harm your interests or prevent them from carrying out actions that would worsen the breach. Injunctions can serve as a preventative measure to stop the breaching party from causing irreparable harm while the contractual dispute is being resolved.

Liquidated damages

Sometimes the contract may include provisions for liquidated damages, which are predetermined monetary amounts agreed upon by the parties to be payable in the event of a breach. As the non-breaching party, you can enforce these liquidated damages clauses to recover financial compensation for the harm caused by the anticipatory breach. Liquidated damages provide a clear and predetermined measure of compensation, making it easier to quantify losses resulting from the breach.

If you are dealing with an anticipatory breach of contract situation, seeking legal counsel can help to ensure that your rights are protected and that you pursue the most appropriate course of action to address the breach effectively.