Anticipatory Breach

Posted in Finance, Accounting and Economics Terms, Total Reads: 389
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Definition: Anticipatory Breach

According to the contract law, an anticipatory breach indicates that a party is about to fail to fulfil or meet its obligations which are predefined under contract with another party. This gives power to the counter party to sue the defaulted partner for not fulfilling its obligation without further delay. All the responsibilities to perform and obligations of the counterparty under contract are negated after the breach has occurred.


Whenever any party under contract wants to demonstrate its intention to break the contract an anticipatory breach takes place. In this case without any written or vocal conformation breach can take place. Failure of any party to meet an obligation before the deadline mentioned under contract can result into a Anticipatory breach. After breach has occurred counter party immediately take legal actions without waiting any further for contract to be actually broken.


For example, Suppose Company X has defaulted on substantial interim payments before the deadline to company Y. Here Company Y can take legal actions against company X because of anticipatory breach. All of Company Y’s contractual obligations are negated after the breach has occurred which will help company Y to save its resources like time and money.

 

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