Actual Breach and Anticipatory Breach

A contract is an agreement between two or more parties that creates legally enforceable obligations. Each party to the contract is bound to perform their obligations as set out in the contract. A breach occurs when one party fails to perform their obligations under a contract. There are two types of breach as follows:

Actual breach: An actual breach of contract occurs when one party fails to perform their obligations under the contract at the time that performance is due. This can occur in a number of ways, such as failing to deliver goods or services, delivering goods or services that are defective, or failing to pay for goods or services that have been provided. When an actual breach occurs, the non-breaching party has the right to claim damages for any losses that they have suffered as a result of the breach. They may also have the right to terminate the contract if the breach is serious enough, such as a fundamental breach.

Anticipatory breach: An anticipatory breach of contract occurs when one party indicates, before the time for performance has arrived, that they will not perform their obligations under the contract. This can occur in a number of ways, such as by explicitly stating that they will not perform, or by actions that make it clear that they will not perform. When an anticipatory breach occurs, the non-breaching party can either treat the contract as terminated immediately and claim damages, or wait until the time for performance has arrived to see if the breach actually occurs. If the non-breaching party chooses to wait, they must be ready and willing to perform their own obligations under the contract.

In both cases, the non-breaching party has the right to claim damages for any losses that they have suffered as a result of the breach. However, the remedies available may be different depending on the type of breach and the circumstances of the case.