What to do for anticipatory breach of contract?

Montana business owners who engage in creating contracts will likely deal with an anticipatory breach or two. This type of breach happens when one party states that it will be unable to deliver on its contractual obligations before the contract’s expiration date. If your business is facing an anticipatory breach of contract, you have a few different options.

Do nothing

Your first option is to simply do nothing. This means that you don’t give payment to the other party, and they don’t deliver on their obligation. Instead of formally voiding out the contract, you simply let it expire. This reaction is more common for businesses that have long-standing relationships with one another.

Seek damages

Business law allows companies the right to seek damages for an anticipatory breach of contract before the contract’s expiration date. This basically means that your business can seek damages from the breaching party even though the contract hasn’t expired yet. As soon as the other party states that it’s unable to fulfill its obligations, you may terminate the existing contract immediately. There is no need to wait until the contract’s expiration date to do so.

Amend the contract

Depending on the specific circumstances surrounding your contract, you may opt for having it amended. For example, if the other party is unable to deliver on its obligations due to late shipments because of a natural disaster, you may opt to amend the contract to have an expiration date that is further in the future than the initially stated one.

As a business owner, you should expect to deal with anticipatory breach of contracts from time to time. Understanding what your options are regarding these breaches can help you to act swiftly when they happen. If you’re not sure of your legal rights, it’s a good idea to contact an attorney to assist you.