Termination of contract due to anticipatory breach

Abstract

Anticipatory breach of contract may occur when the promisor does an act which makes the performance impossible or he expressly renounces the contract before the due date. The term anticipatory breach of contract is rarely been heard among the stakeholder in construction industry. Uncertainty of performance prone to cause the innocent party to suffer financially and start to question their employer dedication to complete the project. Therefore, the first objective for this research is to determine the issues that leads to anticipatory breach of contract in construction industry while the second objective would be to determine the remedies for the innocent party that involved with anticipatory breach within the construction industry. This research adopts qualitative study which focusing on documentary analysis of legal document. In this study, data were collected from the primary sources such as books and articles and secondary sources such as case laws from the Lexis Malaysia. From that secondary data, nine court cases of anticipatory breach of contract were selected and analysed to identify common issues that leads to anticipatorily repudiated the contract whom was acted by the defaulting party. Content analysis technique was adopted in analysing all the law cases. From the cases referred, anticipatory breach arises after one of the parties decided to abandon the work or fail to commence the work regularly and diligently which is considered as an act in which make the performance impossible to accomplish. The findings for first objective concluded that failure to proceed diligently, impossibility of performance and project abandonment can lead to anticipatory breach of contract. However, several court cases within these categories ended up as a wrongful termination due to prejudice act done by the innocent party. For the second objective, remedies for the innocent party who suffers due to anticipatory breach is available in which the innocent party can choose whether to accept or reject the repudiation of contract. Most of the cases analysed, the innocent party chooses to accept the repudiation and terminate the contract with the defaulting party. In conclusion, to avoid from getting counter-claimed by the defaulting party and preserve the confidentiality of the project, the innocent party must investigate thoroughly before deciding to terminate others and the remedies will help them from falling into further delay in which will affect more resources in the future.