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What to do when you experience an anticipatory breach of contract?

On Behalf of | May 19, 2021 | Business Law |

As a New York business owner, you likely enter into various contracts every month. While most of the time these contracts are fulfilled without a problem, sometimes they may not be. Be able to identify an anticipatory breach of contract and knowing what to do can help to save you a lot of time and money.

What is an anticipatory breach of contract?

Business and commercial law defines an anticipatory breach of contract as an action that shows that one party of the contract is unable to fulfill their contractual obligations before the contract expires. For example, let’s say you ordered 1,000 units of a specific supply that you need for your business. You entered into a contract with your supplier for the 1,000 units. After a natural disaster hits, your supplier notifies you that they’re unable to fulfill your contract by the expiration date. By them stating that they would be unable to fulfill it, they’re committing an anticipatory breach of contract.

What can you do?

There are a couple of different options you have to remedy the breach. One of the simplest options is to cancel out the contract and get your consideration back from the breaching party. This solution tends to be most common for businesses that work together on a regular basis. You also have the option to take legal action against the breaching party of the contract. If you decide that legal action is the right course of action for you, it’s important to note that it’s your legal responsibility to help mitigate financial losses due to the violation of the contract.

Anticipatory breaches of contract do happen from time to time. For this reason, it’s important that you understand how to identify this type of breach and what your solutions are for handling it. Remember that you always want to consider the long-term effects of any actions that you take.

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