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Options For Responding To An Anticipatory Breach Of Contract

On Behalf of | May 25, 2023 | Business Law

South Carolina companies enter into contracts to exchange goods or services for compensation. Bilateral contracts spell out due dates for deliverables or certain milestones. Such a contract identifies the promisor who has pledged to deliver by a certain date and a promisee who expects delivery of the product or service. An anticipatory breach or repudiation occurs when a promisor, prior to the contractual deadline, informs the promisee that what was promised will not be forthcoming.

Seeking damages for breaching the contract

As a promisee, you will need to take stock of your situation. The information that the promisor to your contract will not meet obligations could cause you significant financial trouble. Receiving the information that the promisor cannot honor the contract while the terms of the contract are still in effect grants you the right to pursue financial losses that result from the breach.

When the stakes are high, you may need to pursue civil litigation and seek damages. You may suffer financial losses due to failing to receive products for your business or materials for a construction project. You may even lose customers if you cannot replace what was lost due to the promisor failing to come through.

Alternative to legal action

You have the option to forgo legal action for the promisor’s anticipatory breach. If you can source the goods or services elsewhere, you may simply choose to cancel the contract and go your separate ways.

You may prefer cancellation if the other party could not avoid the problem. For example, a flood that destroys goods in a warehouse could force the supplier to inform you that it cannot make delivery. Although the news is inconvenient, you may want to leave the business relationship intact because the company might recover and be a good supplier in the future.