One of the most common legal issues that construction professionals face is a breach of contract. That’s when a party to the contract fails to fulfill one or more of its terms. Some breaches are minor – for example, not meeting a due date for a particular deliverable. Others are considered material breaches because they affect the final outcome of the project and can cost the other party a considerable amount of money.
Then there’s something called an anticipatory breach. That’s when one party either tells the other party that they will be in breach of the contract or they do (or fail to do) something that indicates that they’ll breach it.
Signs that an anticipatory breach may be coming
Often, it starts when a party to the contract is failing to work at the pace that’s needed. At that point, they still may be able to make up for the lost time. However, if they fall farther behind because they’ve taken on more new projects or are still working on one they expected to be finished with, you may be looking at an anticipatory breach. The same is true if they say they used some of the materials they were going to use for your project on another one and they can’t get more.
Only when there’s a true anticipatory breach can you take legal action. This can get their attention – especially if their communication has been spotty at best. However, it’s generally best if you can work things out without having to take this action.
If you’re going to take legal action, it’s also crucial to show that you did your best to minimize damages. For example, if it doesn’t look like they’re going to finish the project, you may need to stop paying them.
Of course, you don’t want to create legal issues for yourself. That’s why it’s crucial to have legal guidance as you draw up or sign any contract. It’s also important to have this guidance if you think you’re looking at an anticipatory breach of contract before you take any action on your own.