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The matter of an anticipatory breach

On Behalf of | Aug 7, 2023 | Business Law

A breach of contract can be a serious legal issue that leaves one party suffering a loss. The injured party may expect the breach to occur once the contract expires and not before. However, not all contract breaches affect Georgia residents in this way. Sometimes, people deal with an anticipatory breach, leaving them to seek a remedy before a contract expires.

The anticipatory breach

With an anticipatory breach, the contract has not expired, but one party states it will not honor the terms of the agreement. For example, a business owner may pay a contractor for renovation work, and the contractor says they will not complete the job by the agreed-upon completion date. Or, a producer may pay talent to perform at an event, and the talent says they intend to no-show after receiving their money. In both these instances, it might be possible to amicably solve the problem since the associated contracts have yet to expire.

Both parties may agree to cancel a contract when an anticipatory breach is notified. While this might not be the preferred outcome, it could be the most amicable. Other scenarios may require legal action to address the promised party’s problems.

Legal actions with an anticipatory breach

When someone indicates they intend to inflict an anticipatory breach, the party committing the breach should do what they can to reduce the promiser’s damages. Failing to renovate a business by the expected due date might result in the promisor experiencing a substantial loss of income. business litigation may occur when the promisor seeks compensatory damages for the loss.

The promisor will likely have to prove specific losses to establish claims of compensatory losses. Keeping accurate records may help with the case.