Your business relies on the deals you make and the contracts you sign to continue to operate. With an anticipatory breach of contract, the contract hasn’t been broken yet, but you know the other party is intending to breach the contract and that your business will be hurt. You may be able to take legal action now to protect your business.
How Anticipatory Breaches of Contract Occur
A legal contract was executed. You are relying on the other party to fulfill its contractual obligations, but you’ve been told that won’t happen. The other party informed you before the contract due date that it could not do what was contractually required.
This situation is known as an anticipatory breach of contract, and it commonly occurs because of staffing issues, scheduling conflicts, financial considerations, or business decisions that interfere with completing the contract.
An Anticipatory Breach of Contract Is Still a Breach of Contract
Missouri law allows parties who are expecting to be hurt by an impending breach of contract to take legal action. Your options include:
- Canceling the contract. In some cases, you may decide the best course of action is to cancel the contract and recover any money you’ve paid so far or for any work you’ve done to date.
- Compensatory damages. Compensatory damages include expectation damages and consequential damages. Expectation damages refer to what you intended to get out of entering the contract, and consequential damages cover lost profit because of the breach of contract.
- Specific performance. You may ask, or the court may require, the other party to fulfill their contractual obligations. Specific performance is especially important when compensatory damages cannot fully compensate the non-breaching party.
Your lawyer may be able to negotiate a contract cancelation, compensatory damages, or specific performance. However, if the other party is unwilling to resolve the anticipatory breach of contract equitably, your Missouri business law attorney can represent you in court.
Give Your Business a Strong Legal Foundation with Our Business Law Attorneys
Quality legal representation is an investment in the future of your business. The team at Layton & Southard serves business owners throughout Southeast Missouri and Southern Illinois from our Cape Girardeau and Perryville offices. Please contact us online or call our Cape Girardeau office directly at 573.335.3359 to schedule your initial consultation.