As you operate your New York business, a couple of your contracts might experience an anticipatory breach at some point. This type of breach happens when the other party states that they’re unable to fulfill their contractual obligations before the contract expiration date. When one of these anticipatory breaches occurs, you have a few different options.
Cancel the contract
If you want to avoid business and commercial litigation altogether, you may just want to cancel the contract. This formally stops the contractual duties of the contract and allows you to have any consideration refunded. This type of option is best if you’re able to get the obligations of your contract fulfilled by another party with little to no detriment to your business.
Take legal action
If the other party’s breach of the contract will impact your business in a financially significant way, you may want to take legal action against them. It’s important to realize that when you take legal action, you can do so before the contract expiration date. However, it is your responsibility to try to limit the amount of financial loss that you experience due to the other party’s breach of the contract.
Have no reaction
If you have a long-standing business relationship with the party that is breaching the contract, you may simply want to not react to it at all. This means that you let the contract expire and don’t hold the other party legally accountable for fulfilling its contractual duties. In most cases, you would not have given consideration to the contract, so you’re not losing any sort of money over the deal.
While an anticipatory breach of contract is likely not something that you deal with every day, you do need to be aware of the possibility. Depending on the specific circumstances of your contract, one of the three responses above is likely better than the other two.