Duhaime's Law Dictionary


Anticipatory Breach Definition:

When a party to a contract receives an indication from the other party that they intend on not performing their contractual obligations.

Related Terms: Breach of Contract, Efficient Breach, Inducing Breach of Contract, Fundamental Breach

Anticipatory breach gives the party who is soon to suffer from the anticipated breach the option of suing for performance without waiting anymore, or to rescind the contract.

Generally, the court will examine the anticipatory breach carefully and look for  a definite and manifest intention not to perform before accommodating a claim for anticipatory breach of contract.

In a 1957 case, Universal Cargo, Justice Devlin wrote:

"[A]nticipatory breach means simply that a party is in breach from the moment that his actual breach becomes inevitable. Since the reason for the rule is that a party is allowed to anticipate an inevitable event and is not obliged to wait till it happens, it must follow that the breach which he anticipates is of just the same character as the breach which would actually have occurred if he had waited."

In 1987, Justice Diplock wrote this, in the case of Afovos Shipping:

"The doctrine of anticipatory breach is but a species of the genus repudiation and applies only to fundamental breach. If one party to a contract states expressly or by implication to the other party in advance that he will not be able to perform a particular primary obligation on his part under the contract when the time for performance arrives, the question whether the other party may elect to treat the statement as a repudiation depends on whether the threatened nonperformance would have the effect of depriving that other party of substantially the whole benefit which it was the intention of the parties that he should obtain from the primary obligations of the parties under the contract then remaining unperformed. If it would not have that effect there is no repudiation, and the other party cannot elect to put an end to such primary obligations remaining to be performed. The nonperformance threatened must itself satisfy the criteria of a fundamental breach."

In Trio Roofing, Justice Belleghem of the Ontario Superior Court of Justice adopted these words:

"Anticipatory breach occurs when a party, by express language or conduct, or as a matter of implication from what he has said or done, repudiates his contractual obligations before they fall due. What must be shown before such a breach is said to occur (is) ... the conduct of the party who has broken the contract is such that the other party is entitled to conclude that the party breaching the contract no longer intends to be bound by its provisions....

"[F]or this type of breach to occur the following must be established: (1) conduct which amounts to a total rejection of the obligations of the contract; (2) lack of justification for such conduct. If, to these, is added the acceptance by the innocent party of the repudiation, then the effect will be to terminate the contract.

"This does not mean that the repudiating party is free from all liability. It simply means that the innocent party may be freed from his obligations (as in the case of a breach at the due date of performance), and may pursue such remedies as would be available to him if the breach had taken place at the time when performance was due."

Chitty on Contracts describes anticipatory breach as follows:

"If, before the time arrives at which a party is bound to perform a contract, he expresses an intention to break it, or acts in such a way to lead a reasonable person to the conclusion that he does not intend to fulfill his part, this constitutes an anticipatory breach of the contract and entitles the other party to take one of two courses. He may accept out of the renunciation, treat it as discharging him from further performance, and sue for damages forthwith, or he may wait until the time of performance arrives and then sue."

In a 2008 Alberta case involving website design (E5 Group), Judge O'Ferrall of the Alberta Provincial Court adopted these words:

"[T]he conduct of the party said to be in breach must be such that it can be said to amount to a total rejection of the obligations of the contract. A mere breach of a contract may not be enough to justify the other party to terminate. However, if an anticipatory breach is established, then the innocent party has an immediate right to rescind the contract and pursue his or her remedies.

"Anticipatory breach is either a renunciation or an inability to perform. If it is a renunciation, it must be a clear and absolute refusal to perform. There must be an intent on the part of the wrongdoer to no longer be bound by the contract. If the anticipatory breach is a demonstrated inability to perform, then intention is less critical and capability is more critical."

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