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What remedies do businesses have for anticipatory breach?

On Behalf of | Jul 23, 2021 | Business & Commercial Law, Contracts

From procurement contracts to sale agreements, contracts are a part of daily life for most business owners in Oregon. While many parties to business contracts fulfill their legal and contractual duties, others are either unable or unwilling to do so.

According to the Uniform Commercial Code, anticipatory repudiation occurs when a party to a contract informs the other it will not be able to complete its obligations under the contract. If anticipatory repudiation happens, the aggrieved business owner likely has a few options.

Can business owners ignore the anticipated breach?

Many business leaders have long-standing relationships with contractors. Consequently, it may be in a company’s financial interests to do nothing about the anticipated breach. After all, the breaching party may be able to perform the contract promptly or perform future contracts according to their terms.

Can business owners cancel the contract?

Because many contracts are necessary for day-to-day business operations, business owners may need to move quickly to find an alternative for an anticipatory breach. Typically, the aggrieved party may cancel the contract even before its completion date after receiving a positive statement about a contractor’s intention to breach.

Can business owners file suit?

The terms of the contract may outline each party’s options following both a breach and an anticipatory one. Typically, though, business owners may file suit to seek damages for anticipatory breaches. During litigation, it may be possible to seek specific performance, financial compensation or other legal remedies.

Determining how to handle anticipatory repudiation of a contract probably depends on a business owner’s goals. Ultimately, savvy business leaders must weigh their business interests with both the terms of the contract and the law to develop a response strategy.