An anticipatory breach of contract can cause real issues for the non-breaching party. For example, the non-breaching party may have been relying on the promises of the breaching party and may have to make last minute arrangements that are less favorable than the original agreement. This can lead to a significant amount of money being lost due to the breached deal or possibly the loss of an important client to the non-breaching party’s business.
If you or your business has been harmed due to an anticipatory breach of contract, you should consult with an experienced business lawyer. The Baltimore contract lawyers at the Heyman Law Firm can help you recover damages for a breach of contract violation. To schedule a no-obligation, confidential consultation to discuss your breach of contract case, call the Heyman Law Firm at (410) 305-9287.
What is an Anticipatory Breach of Contract?
Under Maryland law, a breach of contract occurs when a party to the contract, without any legal justification, fails to perform any promise that forms a part or all of the contract. Alternatively, an anticipatory breach of contract occurs when one party (breaching party) breaches the contract prior to the time the performance must be completed.
An anticipatory breach happens when a party to the contract completely refuses to perform their role in the contract and there is no inference that they will attempt to complete the performance in the future. To show repudiation of a contract, it is not necessary that the performance be made literally and utterly impossible. Repudiation of a contract can be inferred by an action that reasonably indicates a rejection of the contract’s obligation.
An anticipatory breach automatically happens when the breaching party fails to provide adequate assurance that the performance will occur within 30 days after a justifiable demand by the non-breaching party is made.
An anticipatory breach cannot merely be a delay in performing the contract, the breach must amount to a repudiation or cancellation of the contract. An anticipatory breach cannot be created because one party believes the other party will be unable to perform the contract.
What Are Your Options After an Anticipatory Breach?
There are a few courses of action an individual may take if they are the victim of a repudiated contract. If a breaching party repudiates a performance that is not currently due, and the loss of performance will substantially impair the value of the contract to the other party, the non-breaching party can:
- Wait for the breaching party to perform the obligations of the contract in a commercially reasonable time;
- Assert any remedy for breach of contract available in Maryland; even if the non-breaching party told the repudiating party they would await performance or;
- Suspend their own performance.
Damages and Remedies Available After a Breach of Contract
There are various kinds of remedies available to the non-breaching party of a contract. For example, the non-breaching party can be awarded compensatory damages. Compensatory damages are given to a non-breaching party to make them “whole.” There are two types of compensatory damages that a non-breaching party can recover in Maryland:
- General Damages – General damages allows a plaintiff to recover losses that are a direct result of the breach of contract.
- Special Damages (Consequential Damages) – Special damages are awarded to recover losses that were not predictable or were incurred due to special circumstances.
In addition to compensatory damages, a court may also award punitive damages. Punitive damages are damages that are given to a prevailing party on top of compensatory damages, the purpose of punitive damages is to punish the breaching party for a particularly egregious action.
If the contract contained a clause for liquidated damages, it means that a predetermined amount of money will be distributed in the event of a breach.
There are also certain remedies available to a non-breaching party besides the distribution of damages, like:
- Recission of Contract – A recission is a termination or cancellation of the contract.
- Quantum Meruit – Quantum meruit involves the payment of a reasonable sum of money for services rendered when the cost of the services is not stipulated in a legally enforceable contract.
- Injunction – An injunction is a court order that demands a party to perform a specific action or to refrain from performing a specific action.
- Specific Performance – Specific performance is when a breaching party is ordered by the court to honor the performance specified in the contract because damages would not be an adequate remedy.
Baltimore, MD Business Litigation Attorney
If you have suffered damages due to a breach of contract, you should speak with a Baltimore business litigation attorney immediately. The attorneys at the Heyman Law Firm have years of experience in serving clients in Baltimore and across the region in complex business litigation cases. Our business attorneys are dedicated to getting every client the compensation they deserve. To schedule your consultation, call us at (410) 305-9287.