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What is an anticipatory breach?

On Behalf of | Mar 25, 2022 | Uncategorized

If there is an agreement between two parties in South Carolina and one of the parties shows intent to not fulfill their obligation, this is an anticipatory breach of contract or an anticipatory repudiation. The demonstration to breach gives the second party grounds to take legal action.

The anticipatory breach

A declaration to break a contract is an anticipatory breach. The breach is not defined by a written or vocal agreement. The counterparty, at that time, can begin civil litigation proceedings immediately. The law does not require them to wait until the contract is broken.

Resolving an anticipatory breach

If claiming an anticipatory breach, the law requires both parties to do their best to negotiate the damages before taking any civil action. Resolutions can include agreeing on a third party to take over the abandoned duties in the contract. There may be ways to minimize the damage that satisfies both sides.

The anticipated breach may not have a basis in an assumption. Breaking the contract must include a definite refusal to complete the terms and conditions as agreed upon.

Elements of an anticipatory breach

Breaches must be straightforward and clear. It has to include an unconditional refusal to fulfill a responsibility to another party.

Elements of the breach can constitute any of the following:

  • The breach does not ask for any written contract, direct or implied communication.
  • Failure to transfer property from one party to another. The failure encompasses a potential sale, a sale, a merger or any other situation that alters the repudiating company’s contractual obligations.
  • A refusal to follow through on a vocalized, written or implied contract.

While the court does entertain oral agreements, there are exceptions:

  • The contract involves real estate or land.
  • The contract has a set amount established by the state.
  • The payment is a debt belonging to a party not part of the agreement.
  • The contract lasts longer than then a signee’s lifespan.
  • The contract will take more than a year to complete.
  • The property lease lasts over a year.

Take note an expression of doubt doesn’t mean there’s an anticipatory breach. It can lead to the same legal action though if it demonstrates a lack of performance or refusal to hold up to obligations set by the agreement.