Anticipatory repudiation of a contract occurs when a party refuses to fulfill its obligations under the contract in response to the other party giving the appearance that it is breaching the contract. This is also called an anticipatory breach. Ultimately, the purpose of the anticipatory repudiation is breaking the contract.
There are three ways a party can anticipatorily repudiate a contract:
- Express repudiation: This mean the party must tell the other party it will not fulfill the contract. This is a straightforward, clear refusal to complete the terms of the contract.
- Implied repudiation: The party’s actions make it impossible to complete the contract. The party may not show up to work or make a loan to the other party.
- Property transfer: The party transfers any property that is central to the contract to a third party to avoid fulfilling the contract.
Yes, it is possible to retract the anticipatory repudiation. However, the other party must not have made a material change to their position between the time that the first party chose to repudiate and the time that the party chose to withdraw the repudiation.
A material change is any major change that the other party makes in reliance on the repudiation. For example, the other party may make a new contract with a different party to complete the terms of the agreement. This change in the other party’s position prevents the first party from fulfilling the contract.
In order to successfully withdraw its anticipatory repudiation, a party can:
- Compete the terms of the agreement
- Reimburse the other party for any delay caused by the anticipatory repudiation
Anticipatory repudiation is a difficult thing to do correctly, and withdrawing that repudiation is even more complicated. It is in your best interest to speak to a business lawyer to understand if and how you can withdraw your repudiation.