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. Misfeasance

    With regards to performance on a contract, misfeasance is engaging ...
  5. Malfeasance

    Used in regards to performance on a contract, malfeasance is ...
  6. Breach Of Contract

    Violation of any of the agreed-upon terms and conditions of a ...
Related Articles
  1. Understanding Your Insurance Contract
    Insurance

    Understanding Your Insurance Contract

  2. Exploring Advanced Insurance Contract ...
    Home & Auto

    Exploring Advanced 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. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center