Anticipatory Breach

Anticipatory breach is a contract law term that refers to a situation when a party lets the other party know that it will not be honoring the obligations of a contract. Technically, a party does not breach its contract until the obligation comes due. In these cases, though, the party makes clear that it is not going to live up to the deal that it made. When one party learns that the other party is going to breach, the first party has the ability to take action and break the contract. For instance, if a buyer had agreed to pay a certain amount by the first of May but lets the seller know in early April that he or she was not going to pay, the seller could put the home back on the market without incurring any contract liability. This doctrine is in place to protect parties that have their contracts breached by other parties.