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Ways of remedying anticipatory breach of contract

On Behalf of | Apr 12, 2024 | BUSINESS & COMMERCIAL LAW - Contract Disputes

In business, contracts help establish clear agreements and expectations between parties. These documents can facilitate smoother transactions and minimize the risk of potential disputes. However, not all contracts are executed smoothly and sometimes one party may express an intention to breach the contract before their obligations are officially due.

This is known as an anticipatory breach of contract. When faced with such a situation, there are several ways to address it effectively.

Rescission or cancellation

This involves terminating the contract and releasing both parties from their obligations under the agreement. By mutually agreeing to rescind the contract, the parties can avoid the uncertainty and potential disputes associated with the anticipatory breach. Rescission essentially restores the parties to the position they were in before entering into the contract effectively undoing the legal relationship established by the agreement.

Specific performance

Specific performance is another remedy to anticipatory breach of contract. This legal remedy involves seeking a court order that compels the breaching party to fulfill their contractual obligations as originally agreed upon. Unlike monetary damages which aim to compensate for losses resulting from a breach, specific performance seeks to enforce the actual performance of the contract. This remedy is often pursued when the subject matter of the contract is unique or when monetary compensation would not adequately remedy the harm caused by the breach.

Monetary damages

The non-breaching party may pursue monetary damages to compensate for the losses incurred as a result of the anticipatory breach. These damages aim to put the non-breaching party in the position they would have been in had the breach not occurred. The amount of damages awarded depends on various factors including the nature of the breach, the extent of the harm suffered and the foreseeability of the damages at the time of contracting.

Seeking legal counsel can help to ensure that the appropriate course of action is taken to address an anticipatory breach of contract, considering the specific circumstances of the breach, the terms of the contract and the desired outcome of the parties involved.