Anticipatory Breach

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."

BREAKING DOWN '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. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  2. Home & Auto

    Exploring Advanced Insurance Contract Fundamentals

    Understanding your contract can help you protect our family's financial security.
  3. Economics

    What's a Memorandum Of Understanding?

    A memorandum of understanding, or an MOU, is a written legal agreement.
  4. Bonds & Fixed Income

    What is an Indenture?

    An indenture is a legal and binding contract between a bond issuer and the bondholders.
  5. Term

    What are Mutually Exclusive Events?

    In statistics, mutually exclusive situations involve the occurrence of one event that does not influence or cause another event.
  6. Entrepreneurship

    Risks Associated With Government Contracts

    Government contracts can be rewarding, but they also come with a variety of risks.
  7. Entrepreneurship

    10 Public Companies That Rely On Govt. Contracts

    We look at 10 of the top public companies whose businesses rely on U.S. government contracts.
  8. Economics

    How Does an Operating Lease Work?

    Operating lease is a term used mostly in accounting to denote a lease that gives the lessee rights to use and operate an asset without ownership.
  9. Entrepreneurship

    Lockheed Martin Is Tight With The US Government

    The relationship between Lockheed Martin and the U.S. government is long-standing and the company's biggest revenue source, but it may be deteriorating.
  10. Home & Auto

    ‘Turnkey’ Properties: A Sensible Investment?

    Turnkey properties can make sense - for people who want a real estate investment without truly being in the real estate business.
RELATED FAQS
  1. Are waivers of subrogation clauses ever ineffective in preventing a third-party lawsuit?

    Sometimes waiver of subrogation clauses are ineffective at preventing a third-party lawsuits. In determining who is responsible ... Read Full Answer >>
  2. What is an alienation clause?

    Whether used in reference to insurance policies, mortgages or commercial loans, an alienation clause stipulates that should ... Read Full Answer >>
Hot Definitions
  1. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  2. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  3. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
  4. Dark Pool Liquidity

    The trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is ...
  5. Godfather Offer

    An irrefutable takeover offer made to a target company by an acquiring company. Typically, the acquisition price's premium ...
Trading Center