Anticipatory Breach

AAA

DEFINITION of 'Anticipatory Breach'

In contract law, an action that shows a party's intention to fail to perform or fulfill its contractual obligations to another party. An anticipatory breach negates the counterparty's responsibility to perform its requirements under the contract. By demonstrating a party's intention to breach, the counterparty may also begin legal action.

Also referred to as an "anticipatory repudiation."

INVESTOPEDIA EXPLAINS 'Anticipatory Breach'

An anticipatory breach occurs when a party demonstrates its intention to break a contract. However, vocal or written confirmation is not required, and failure to perform an obligation in a timely matter can result in a breach. By declaring an anticipatory breach, the counterparty may begin legal action immediately rather than waiting until a contract's terms are actually broken.

For example, if Company A refuses to pay substantial interim payments to Company B, Company B can begin legal action due to anticipatory breach. Company B could also stop performing its contractual obligation, potentially saving time and or money.

RELATED TERMS
  1. Meeting Of The Minds

    An agreement between parties in which each party is aware of ...
  2. Blamestorming

    A fusion of the words "blame" and "brainstorming" which is used ...
  3. Exculpatory Clause

    A contract provision that relieves one party of liability if ...
  4. Malfeasance

    Used in regards to performance on a contract, malfeasance is ...
  5. Misfeasance

    With regards to performance on a contract, misfeasance is engaging ...
  6. Breach Of Contract

    Violation of any of the agreed-upon terms and conditions of a ...
Related Articles
  1. Exploring Advanced Insurance Contract ...
    Home & Auto

    Exploring Advanced Insurance Contract ...

  2. Understanding Your Insurance Contract
    Insurance

    Understanding Your Insurance Contract

  3. Easy Ways To Cut Rental Costs
    Options & Futures

    Easy Ways To Cut Rental Costs

  4. What is an alienation clause?
    Investing

    What is an alienation clause?

comments powered by Disqus
Hot Definitions
  1. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  2. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  5. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  6. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
Trading Center