Anticipatory repudiation

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Contract Law

Part of the common law series
Contract
Contract formation
Offer and acceptance · Mailbox rule
Mirror image rule · Invitation to treat
Firm offer · Consideration
Defenses against formation
Lack of capacity to contract
Duress · Undue influence
Illusory promise · Statute of frauds
Non est factum
Contract interpretation
Parol evidence rule
Contract of adhesion
Integration clause
Contra proferentem
Excuses for non-performance
Mistake · Misrepresentation
Frustration of purpose · Impossibility
Impracticability · Illegality
Unclean hands · Unconscionability
Accord and satisfaction
Rights of third parties
Privity of contract
Assignment · Delegation
Novation · Third party beneficiary
Breach of contract
Anticipatory repudiation · Cover
Exclusion clause · Efficient breach
Fundamental breach
Remedies
Specific performance
Liquidated damages
Penal damages · Rescission
Quasi-contractual obligations
Promissory estoppel
Quantum meruit
Subsets: Conflict of law Commercial law
Other areas of the common law
Tort law · Property law
Wills and trusts
Criminal law · Evidence

Anticipatory repudiation (or anticipatory breach) is a term in the law of contracts that describes a declaration by one party (the promising party) to a contract that they do not intend to live up to their obligations under the contract. Where such an event occurs, the other party (the performing party) to the contract is excused from having to fulfill their obligations. However, the repudiation can be retracted by the promising party so long as there has been no material change in the position of the performing party in the interim. A retraction of the repudiation restores the performer's obligation to perform on the contract.

If the promising party's repudiation makes it impossible to fulfill its promise, then retraction is not possible and no act by the promising party can restore the performing party's obligations under the contract. For example, if A promises to give B a unique sculpture in exchange for B painting A's house, but A then sells the sculpture to C before B begins the job, this act by A constitutes an anticipatory repudiation which excuses B from performing. Once the sculpture has left A's possession, there is no way that A can fulfill the promise to give the sculpture to B.

The question arises as to why any party would want to provide notice of anticipatory breach. The reason is that once the performing party is informed of the anticipatory breach, a duty is then created for the performing party to mitigate damages as a result of the breach.

Another situation where anticipatory repudiation can occur is where a party has reason to believe the other party is not going to perform and requests reasonable assurances that the other party will perform. If such reasonable assurances are not given, it will constitute anticipatory repudiation, for which the performing party has various remedies including termination.

However, anticipatory repudiation only applies to an executory bilateral contract with non-performed duties on both sides. Additionally, the repudiation must be unequivocal.