Anticipatory Repudiation in Contract Law During COVID-19
This article discusses and explains the issues concerning Anticipatory Repudiation in Contract Law During COVID-19. The COVID-19 pandemic has thrown the business world into a time of uncertainty. Many businesses are trying to adapt to the new circumstances while others are folding entirely. This situation has put many business owners into a position where they may be forced to either breach a contract, or be on the other side of a broken contract.
If you believe that a party you have contracted with cannot or will not perform their contractual obligations, there are certain steps you can take to protect your interests against uncertainty.
What is Anticipatory Repudiation?
While an actual breach of contract cannot occur until the time for performance has arrived, anticipatory repudiation, or anticipatory breach of contract, occurs before performance is actually due. A party anticipatorily repudiates a contract where they either refuse to perform, or where their conduct makes performance of their promise impossible.
Demand for Adequate Assurance
If you reasonably believe a party has anticipatorily repudiated a contract, or if you are concerned that they will not perform their contractual obligations, California Uniform Commercial Code section 2609 allows you to demand adequate assurance of performance. This demand must be in writing, and should mimic the language of section 2609.
A demand for adequate assurance can only be made when a party has “ reasonable grounds for insecurity” that the other side will perform. (UCC § 2609(1)) Further, if commercially reasonable, the party demanding adequate assurance may suspend its performance until assurance is received. (Id).
Once a demand for adequate assurance is made, the other party has a reasonable time, not to exceed 30 days, in which to provide assurance that it will perform. (UCC § 2609(1)). If the party does not provide adequate assurance within a reasonable time, it is considered an anticipatory repudiation of the contract.
For more COVID-19 legal resources, click here.
Getting Legal Help
Brown & Charbonneau, LLP represents individuals as well as large and small companies in cases involving all forms of business disputes. If you are involved in a business dispute, or would like to learn about your rights and how to protect them, we can provide you with the information you need. Contact us or call today at 714-406-4397 to schedule a consultation and learn more about how we can help you.
Brown & Charbonneau, LLP is a top-rated business litigation, corporate, real estate and family law firm in Irvine, California. We are honored to be named by Best’s Lawyers® as one of the Top Law Firms in the US, including the specialty area of commercial litigation. As an AV-rated law firm, we are proud of our 10.0 Superb Client Rating from Avvo. Our top-reviewed Southern California attorneys have also earned specializations from the State Bar of California, as Certified Trial Specialists, and are included amongst the elite attorneys to be named Super Lawyers®.
Should you have any other issues involving any of the below areas of practice, please feel free to contact us.
- General Business & Corporate
- Business Litigation & Contract Disputes
- Civil Litigation
- Partnership & Shareholder Disputes
- Fraud Claims
- Breach of Fiduciary Duty Claims
- Real Estate & Construction Disputes
- Trade Secrets, Non-Competes & Unfair Competition
- Employment Disputes
- Personal Injury & Elder Abuse Cases
- Trial Specialist
- Family Law
Our website is full of valuable information and resources. Our goal is to provide as much information as possible to assist all our clients in making fully informed decisions. Just click any area of interest.
Brown & Charbonneau, LLP publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our “Contact Us” form, which can be found on our website at www.bc-llp.com. The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.