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How to deal with anticipatory breach of contract in California

On Behalf of | Oct 16, 2023 | Business Litigation

All parties must meet contract obligations for a business to operate successfully in California. It is what’s right under the law. However, some individuals or entities may fail to fulfill their contractual obligations. But before they do it, you’ll notice signs of impending breach. Here’s an overview of how to deal with it.

Understanding anticipatory breach in California

Anticipatory breach occurs when one party of a contract intends not to fulfill their contractual obligations. It could be through words or actions that suggest non-compliance with the terms and conditions of the agreement. The state of California considers such behaviors a severe offense as it undermines the trust between parties and may result in significant financial losses.

Steps to take when faced with an anticipatory breach

The first thing you need to do is gather evidence that shows the other party’s intentions not to fulfill their obligations. This could be through written communication, emails, witness testimonies or even failure to meet deadlines.

Next, you should review your contract to understand what remedies are available in case of anticipatory breach. You may have a specific performance provision that requires the breaching party to fulfill their contractual obligations as agreed upon. Or condition for damages, where you can recover financial losses incurred due to the breach.

If that doesn’t work, you can consider business litigation. In California, you may be able to seek remedies such as rescission (canceling the contract), restitution (returning any benefits received under the agreement) or specific performance.

Things like an anticipatory breach or an actual contract breach are often bound to happen in business. The best a person can do is to prepare them to deal with them when they occur adequately. Proper steps can protect your legal rights and minimize potential financial losses.