Anticipatory Breach of Construction Contract
|
| After a construction contract has been entered into, but prior to the time for performance thereunder, a party may positively declare his intention not to fulfill his contractual obligations. This "anticipatory breach" can occur either through the party's express declaration or it can be implied through the party's conduct. If anticipatory breach occurs by implication, the breaching party's conduct must be unequivocal in the intention not to perform.
With construction contracts, an anticipatory breach may occur when the contractor fails to order any supplies or secure the necessary equipment and labor to perform under the contract or where the contractor refuses to begin work until the owner pays an additional amount over the contract price. Also, an anticipatory breach can be indicated when one party requests adequate assurance of the other party's ability to perform under the contract and such requests are not met. Another example where anticipatory breach may come into play is when one party files for dissolution. A corporation that does not exist cannot perform under a contract and the filing for dissolution would definitely indicate the intention not to perform.
After an anticipatory breach has taken place, the non-breaching party may pursue various avenues of relief. First, it may choose to rescind the contract and thereafter seek damages. Second, it may bide its time, waiting for the moment that the breaching party should perform. When the breaching party fails to perform (as was anticipated), the non-breaching party will then file a breach of contract action. One caveat, the non-breaching party must take care to mitigate his damages. Finally, the non-breaching party may treat the breaching party's action in repudiating the contract as a breach in and of itself. Copyright 2010 LexisNexis, a division of Reed Elsevier Inc. |