Buffington Law Firm’s breach of contract attorneys have often dealt with situations in which the client wishes to be relieved of performance under a contract because of either unforeseen circumstances or, more commonly, the belief that the other party has already breached the contract in a way that has made performance by the client unfair or impractical. These scenarios are common. Sometimes it is arguable whether the other side has actually breached the contract. The client is sometimes placed in a position where they believe that the other side’s bad faith has made their own performance unfair. Other times, some external event or factor may have made performance commercially impracticable. Such situations can be tricky because if the client does not carry out performance it runs the risk of being sued for breach of contract.
Preemptive or anticipatory breach of contract occurs when one party to a contract repudiates the agreement before their performance is due. This repudiation can be express or implied and gives the non-breaching party the right to elect remedies, such as suing immediately or waiting to see if the breach occurs. Notification requirements, if any, depend on the specific circumstances and the governing law, including whether the breach involves installment contracts, termination, or other contractual obligations. [Hewlett-Packard Co. v. Oracle Corp. (2021) 65 Cal. App. 5th 506, 550]. Express repudiation “…is a clear, positive, unequivocal refusal to perform…” [Id.].
For contracts between merchants, there are specific provisions in the the California Uniform Commercial Code. [See generally Cal. U Com. Code Sections 2615, 2616, 2309].
In a practical sense, the real quandary that confronts both sides in an anticipatory breach scenario is whether to preemptively sue. Not uncommonly, the client hopes to avoid a lawsuit. Often the best scenario is to try to negotiate with the opposing side to reach a settlement. In higher-stakes cases, actual mediation may be an alternative to actually filing a lawsuit. Or, of course, sometimes clients elect to simply stop performance on the contract and see how the other side reacts. Each case is different. In these situations we recommend that the party that contemplates anticipatory breach retain legal counsel to advise them through the process. Handled badly, a party can simply become liable for breach of contract with liability for damages.
If you are involved in a breach of contract situation, whether you believe that the other side has breached the contract, or you believe that you are in an anticipatory breach scenario, Buffington Law Firm’s breach of contract attorneys invite you to call for a free legal consultation. All consultations are with an experienced breach of contract trial attorney, are completely confidential and protected by the attorney-client privilege, and there is never any obligation.