3 Pro-Tips You Need to Know When Breaking Contracts
1. Contracts are breached all the time. If you need to breach a contract, there are certain steps you may need to take to break it the “right” way to minimize possible consequences.
2. You may have a contract and not even realize it.
- Even if you agree to something orally and not in writing, it may still be enforceable in some cases.
- Emails back and forth can count as contracts…even text messages could establish a contract!
3. Know what repudiation is. If one party to a contract indicates that it is not going to perform (either by words or by something it does), the other party may be able to immediately claim breach of contract.
- Here is an example. Imagine you (a manufacturer) have a contract that requires you to deliver 100 new t-shirts to a retail store by April 1. If you email the retail store and tell them you are not going to be able to fill the order, the retail store could immediately sue you for breach, even before April 1. This is called a “repudiation” or an “anticipatory breach.”
- However, if you just give the store a heads up, like, “I can probably have the shirts to you by April 3, as long as I get my sewing machine repaired,” that may not be considered a breach. The store may ask for “assurance” that you will perform and, if you don’t provide that assurance within a certain amount of time, then they can sue for breach. Assurance in this case could be your repairman’s indication that he is going to fix the machine on April 1
- If it turns out that you can deliver the shirts on time, after all, that is called a “retraction of the repudiation.” You can retract as long as the store hasn’t changed its position because of what you did — for example, by finding another shirt supplier.
If you think you need to breach a contract due to an unforeseen conflict or a challenge with your business, contact an attorney to help you navigate the contract-breaking process.
See our previous post, “What to Know About Illinois Mechanic’s Liens When Buying Property”
These materials have been prepared by Statman, Harris & Eyrich, LLC for informational purposes only and are not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Internet subscribers and online readers should not act upon this information without seeking professional counsel, as the advice appropriate for your particular circumstances may vary.