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Understanding what anticipatory repudiation is and how it works

On Behalf of | Aug 17, 2021 | Business Litigation

Not all business contractions in New York are fully executed. Some contracts can dissolve legally under a doctrine called anticipatory repudiation. Any person or company not able to fully execute a contract may have to mitigate damages depending on the situation.

Anticipatory repudiation defined

In most cases, a contract cannot be breached until its obligations are due to the time for those obligations has passed. Business litigation practices recognize that a party may be declared in breach of contract before obligations are due in common law jurisdictions. anticipatory breaches can occur under the following conditions:

  • A party indicates in writing that it cannot fulfill obligations.
  • One party acts in a way that indicates it’s unwilling to fulfill its contract.
  • A party is unable to fulfill its obligations.

When one of the parties involved in a contract merely expresses dissatisfaction with a contract or has some type of difficulties with it, such situations do not qualify for anticipatory breach of contract. When a notice of contract repudiation occurs, the aggrieved party has a duty to mitigate damages.

Contract repudiation types

Contract repudiation cases fall into three types:

  • A party clearly expresses the intention to refuse to execute a contract.
  • One party’s behavior makes it difficult for the other party to perform its obligations.
  • A seller transfers real estate or other property to a third party.

Proving anticipating repudiation can be difficult to improve in court. Therefore, it’s important to understand the elements of contract repudiation and to thoroughly discuss your contract situation with your lawyer before embarking on a court case. Those accused of contract repudiation can invoke a number of legal defenses to prove their point. Not all anticipatory repudiation cases end up in court. You may be able to resolve the situation through mediation or contract renegotiation.