ANTICIPATORY BREACH OF CONTRACT DURING THE COVID-19 PANDEMIC
COVID-19 is having a once in a generation impact on businesses and their operations. During this dynamic and uncertain time, business owners may be faced with no choice but to breach a contractual obligation, or be on the other side of a broken contract. An anticipatory breach of contract is a breach based on the words or conduct of a party, occurring before performance is actually due under the contract. What can you do to prevent an anticipatory breach contract? Can you file a lawsuit based on an anticipatory breach? The Orange County business litigation attorneys at Brown & Charbonneau, LLP can help.
What is an Anticipatory Breach of Contract?
While an actual breach of contract cannot occur until the time for performance has come and gone, an anticipatory repudiation of the contract, or “anticipatory breach,” occurs before performance is due under the contract.
An anticipatory breach occurs when a party clearly, positively and unequivocally indicates, by words or conduct, that they will not (or cannot) meet their obligations under the contract. This may include a party’s sale or transfer to a third-party of rights, equipment or other property that are essential to their performance of the contract, or other acts which render their performance under the contract impossible.
When an anticipatory breach of contract has occurred, the non-breaching party’s own performance (if any) may be excused, and they can immediately seek damages for breach of contract. Or, the non-breaching party may treat the repudiation as an empty threat, wait until the time for performance has arrived, and then seek damages for breach if the breach does in fact occur at that time.
As business owners continue to respond to the COVID-19 pandemic, recognizing whether an anticipatory breach of contract may have occurred, and understanding how to avoid such breaches are critical. Claims of anticipatory breach may also involve related legal issues such as force majeure, impossibility and mistake of fact. An experienced business law and contracts attorney can assist you in determining whether a claim of anticipatory breach, or these and other related legal issues, may apply in your contractual dispute.
Getting Legal Help
Brown & Charbonneau, LLP represents individuals as well as large and small companies in cases involving all forms of contractual disputes. If you are involved in a contract dispute, or would like to learn about your rights and how to protect your business, we can provide you with the information you need. Contact Brown & Charbonneau, LLP today by calling 714-505-3000 to schedule your appointment or email us at firstname.lastname@example.org.
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