Most major contract disputes arise after some kind of overt violation of agreement terms occurs. One party doesn’t deliver goods as promised or clearly fails to meet the standards outlined in an agreement. The other party seeks relief by taking the matter to civil court.
Judges have the authority to award damages, enforce penalty clauses, issue orders of specific performance and even invalidate or terminate contracts. Usually, the plaintiffs initiating a breach of contract lawsuit have to come to court with clear evidence of how the other party breached their written agreements. However, sometimes one party files a breach of contract lawsuit before an actual breach occurs. They may go to court because of an anticipatory breach of a contract.
What constitutes an anticipatory contract breach?
A declared intention to violate the contract
Occasionally, one party knows a breach of contract is imminent because the other party outright informs them that they do not intend to follow through on the agreement. Sometimes, one party may reach out and indicate the cannot send payments or do not intend to deliver goods as negotiated. In situations where one party to a contract openly admits that they may soon violate the terms of the agreement, the other party might seek relief by initiating a lawsuit.
Clear indicators of an upcoming default
Perhaps the contract involves the completion of a specific project. If there are only four weeks left before the completion deadline for a three-month construction project and the company has not yet broken ground or delivered materials, that can be a warning sign of an incoming breach. So can company closures.
Businesses facing a potential future contract breach often take action quickly to deter contractual violations by the other party or to ensure their issues receive priority consideration over claims brought by other parties experiencing similar contract issues. Judges have the authority to remedy anticipatory contract breaches in several different ways depending on the situation.
Occasionally, a party about to breach an agreement may follow through on their obligations if they know they may face consequences in civil court. Tracking signs of non-compliance with a contract can help businesses identify potential breaches before they occur. Initiating contract litigation early may give them the best chance of remedying the situation to secure a favorable outcome.
