When handling a business contract or navigating a personal agreement, the last thing someone needs is for the other party to back out or fail to deliver on their promises. Whether a contracting party is a buyer, seller, or service provider, an anticipatory breach of contract can create chaos. This breach may leave a party wondering what to do next and who to turn to.
Victims of contract breaches deserve clarity and a legal ally who can help them regain control. That is where a skilled Texas contract lawyer from Massingill comes in. We are a top-rated legal team, and we collaborate with our clients to obtain results that work best for them.
When the Other Party Will Not Follow Through
Contracts have many moving parts, and a good contract relationship depends on compliance from all parties involved. If a party to a contract does not hold up their end of the deal, the other party can seek many types of relief.
The Basics of a Contract
Every contract starts with an offer from one party to another. The offer may be to perform a service or pay someone else for a service. If one party accepts the offer of another, they have a contract, and both parties have made promises to follow the terms of their agreement.
But what happens when someone fails on their obligations? Even worse, what happens when they outright tell the other party—or through their actions, make it clear—they won’t perform? This is an anticipatory breach, also known as an anticipatory repudiation.
What Is an Anticipatory Breach?
The Texas court system defines an anticipatory breach as a positive and unconditional refusal to perform a contract term in the future. An anticipatory breach can happen after a partial performance or before the performance is due.
There are many ways an anticipatory breach could come up. For example, a party to a contract might commit an anticipatory breach if:
- They are a supplier that informs a buyer that they cannot deliver critical materials on time;
- They are a contractor who walks away from a project halfway through; or
- They are a buyer who tells the seller weeks in advance that they will not pay for the seller’s goods.
These are just a handful of examples, but these moments can jeopardize a party’s plans, resources, and future. Fortunately, those affected by an anticipatory repudiation do not have to navigate the fallout alone. Massingill can protect a non-breaching party’s rights and interests.
Addressing an Anticipatory Breach
Being told beforehand that the other party to a contract refuses to fulfill their promise is disheartening, but this scenario has a silver lining. An anticipatory breach allows the non-breaching party to act immediately instead of waiting for the contract’s deadline to pass.
Finding Someone Else to Fill in the Gaps
A first course of action for a non-beaching party may be to find another party to provide the service or benefit that the breaching party refused to provide. From there, the non-breaching party can take legal action against the breaching party for any damages that resulted from the breach.
However, some contract matters might be unique or personal enough to require a different legal action. For instance, an artisan might contract with a patron to provide a custom piece for the patron that cannot be sold to another. In that case, finding a third party to fulfill the rest of the contract will likely not be possible, and the non-breaching party might want to go to court right away.
Remedies for Anticipatory Breach
Depending on a contracting party’s situation, they may be entitled to at least one of the following types of relief after an anticipatory breach of contract.
Cancellation of the contract
In many cases of anticipatory breach, the non-breaching party is no longer bound to fulfill its contractual obligations. Once receiving notice of the other party’s refusal to keep its promise, the non-breaching party may receive a court order to cancel the contract, giving it the freedom to move forward without the breaching party. Asking a court to cancel a contract is also called asking the court to rescind the contract.
Demanding damages
A non-breaching party might have the right to ask the court for damages after an anticipatory breach. These damages might include:
- Payment for lost profits,
- Payment for additional expenses, and
- Payment for financial losses.
Once again, a non-breaching party’s first course of action might be to find another party to fill in for the breaching party before suing for damages.
Parties can also include provisions in their contracts for liquidated damages, which would require a party to pay a previously agreed-upon amount if they breach the contract. Courts typically enforce liquidated damages clauses if the agreed-upon amount is deemed just compensation for the actual losses in the case.
Asking for specific performance
Sometimes, a court may require the breaching party to fulfill their promise instead of paying for the financial fallout. An order for specific performance is a court order that forces a breaching party to take the action they agreed to take in a contract. This remedy might be appropriate when a contract involves real estate or unique goods or services.
Contact our Texas contract attorneys for a free consultation
At Massingill, we understand how unsettling and costly an anticipatory breach of contract can be. Contracting parties need answers, and they need them fast.
Fortunately, our team of Texas contract lawyers has extensive experience in helping individuals and businesses get the best out of their contracts and resolve disputes in the best ways possible.
With Massingill’s skill, knowledge, and passion for helping the Texas community, our clients receive a legal partner who prioritizes their needs and helps them confidently move forward.
Contact us online or call our office today to schedule a consultation. Let’s tackle your contract dispute together and protect what matters most.
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Resource List
- Atrium Med. Ctr., LP v. Hous. Red C LLC, 595 S.W.3d 188, link
Joshua Massingill
Joshua Massingill is an attorney practicing in Austin, Texas. He serves on the Texas State Bar’s Law Practice Management Committee, the Leander Educational Excellence Foundation (LEEF) Board of Directors, and the Success-Werx Board of Advisors. He mentors young entrepreneurs in Leander ISD’s INCubatorEDU program and is active in his church.
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