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Anticipatory breach of contract

Your business contracts are important to your success -- you expect (and need) the other party to meet his or her obligations. You also fully expect to meet your obligations in return.

So, what happens when something doesn't go as planned and the contract is breached? In order to decide how you need to handle the situation, consider the following questions:

1. Is the breach serious?

If the breach is serious, or material, you may have a good cause of action. If the breach is immaterial, or minor and doesn't really affect anything, you don't.

For example, if your contractor can't finish the remodel of your storefront for an extra day but the job is still done by opening, the breach is immaterial. If the contractor's delay causes you to reschedule your grand opening and it costs you hundreds in new announcements and lost business, that's likely material.

2. What remedy do you want?

While damages, or money for your losses, are a common remedy, you may also just want the other party to fulfill his or her agreement. If so, you need to ask for specific performance, not damages. If you're actually relieved that the contract might go unfulfilled, you may seek to end the contract and ask for restitution (a return to your original state).

For example, maybe your website designer can't finish the site for another two months. You've decided that you'd rather use someone else anyhow. Since that's a serious breach, you may decide to ask the court to simply void the contract and give you restitution in the form of your deposit on the work. That would free you up to go with another designer -- and make you whole again.

Going to litigation over a breached contract may or may not be the answer. Once you've decided on your goals, it's much easier to determine what your next steps should be.

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