What to Do About an Anticipatory Breach
An anticipatory breach occurs when the party who agrees to deliver goods or services notifies the other party that it will not perform, i.e., deliver the goods or services by the date specified in the parties’ contact. Illinois law allows for several remedies in the event of an anticipatory breach of contract.
The Receiving Party Can Decide Not to Strictly Enforce the Agreement
The receiving party may choose to overlook the breach if it either has a strong relationship with the other party or if timely perform is not required to prevent a loss. Ignoring the breach may be an ideal solution if event’s outside of the other party’s control caused the breach.. Similarly, if the breaching party agrees to perform later and has the ability to cure the default in a timely manner.
The Receiving Party Can Cancel the Contract
Alternatively, the receiving party can provide a cancellation notice. In this scenario, the receiving party can demand the return of any deposit made and require the breaching party release any lien it otherwise holds. For instance, if the receiving party delivered a $1,000 deposit to secure the other party’s services, it has a right to have the deposit returned.
The Receiving Party Can Take Legal Action
The failure to deliver a good or service could harm the receiving party’s reputation, cause it to breach a contract with its customer, or otherwise give rise to monetary damages. For example, a party might signed an agreement to perform at an event for which the receiving party sold tickets.. If the performer fails to show up, the paying customers may feel the receiving party hoodwinked them or acted in bad faith. In this scenario, the receiving party may feel compelled to engage in business litigation to obtain compensation for its lost profits and prevent the loss of goodwill from customers.
A victim of a breach of contract may be entitled to various forms of relief. Although cases may be resolved in court, we encourage clients to attempt to reach an out of court agreement. A settlement may allow a client to obtain a satisfactory outcome without incurring legal fees and avoiding straining relationships with suppliers.