- Anticipatory breach occurs when, before performance is due, one party makes clear — through words or conduct — that they do not intend to perform their contractual obligations.
- When you are on the receiving end of an anticipatory breach, Ontario law gives you a choice — and it is a choice you must make deliberately, because the path you choose has significant…
- Neither path is risk-free, which means the period immediately after a repudiation is when legal advice is most valuable.
Imagine you are three months away from the closing date on a commercial lease when the tenant calls to say they will not be moving in. Or a supplier emails to tell you they cannot fill your order, even though the delivery date is six weeks out. The other side has not yet broken the contract — the performance date has not arrived — but they have made clear they will not be performing when it does.
This situation is called anticipatory breach (or repudiation) of contract, and Ontario law treats it as a present, actionable wrong rather than something you simply have to wait out. But the legal framework also puts real choices — and real risks — in your hands. Making the wrong move at this stage can undermine an otherwise strong claim.
What Is Anticipatory Breach?
Anticipatory breach occurs when, before performance is due, one party makes clear — through words or conduct — that they do not intend to perform their contractual obligations. The "anticipatory" label reflects the timing: the breach has been signalled in advance rather than committed on the actual performance date.
The signal can take several forms:
- An express statement — the other party flat-out tells you they will not perform ("we are not proceeding with the contract")
- Conduct that makes performance impossible — the party sells the subject matter of the contract to someone else, or puts themselves in a position where they cannot possibly fulfill their obligations
- Conduct that clearly demonstrates an intention not to perform — actions short of an outright statement but inconsistent with any intention to follow through
Ontario courts have recognized all three forms. The key is that the repudiation must be clear and absolute — an equivocal statement, a request to renegotiate, or a complaint about the other party's own performance does not necessarily amount to repudiation.
The Election: Two Paths, Two Sets of Risks
When you are on the receiving end of an anticipatory breach, Ontario law gives you a choice — and it is a choice you must make deliberately, because the path you choose has significant legal consequences.
Option A: Accept the Repudiation and Sue Now
You can treat the anticipatory breach as an immediate, present breach of contract, accept the repudiation, bring the contract to an end, and commence legal proceedings without waiting for the performance date to arrive.
The advantages of accepting repudiation are substantial:
- You do not have to keep performing your own obligations (and incurring costs) under a contract the other side has already abandoned.
- You can take steps immediately to find alternative arrangements — another supplier, another tenant, another counterparty — and limit your losses.
- You can start the litigation clock running now rather than waiting months or years for the performance date.
- The other side cannot benefit from any change in circumstances between now and the performance date that might have reduced your claim (subject to important nuances discussed below).
The risk of accepting repudiation lies in the word "clear." If a court later finds that what you interpreted as a repudiation was actually not — perhaps it was an attempt to renegotiate, or a conditional refusal, or a statement made under frustration — then your own termination may be found wrongful, turning you into the party in breach.
Option B: Affirm the Contract and Wait
Alternatively, you can treat the contract as still alive, decline to accept the repudiation, continue performing your own obligations, and wait to see whether the other side follows through (or fails to) on the actual performance date.
Why would anyone choose this path? Several reasons:
- You are not certain the repudiation is genuine — the other side might change their mind.
- Market conditions or other circumstances may shift between now and the performance date in a way that increases the damages you can claim.
- You may have strategic or commercial reasons to preserve the relationship.
- The contract itself may require specific steps before termination becomes available.
The risks of waiting are equally serious:
- You continue to be bound by your own obligations for the duration, potentially incurring costs and liabilities.
- If a supervening event occurs between the repudiation and the performance date — a fire destroys the subject matter, government action renders the contract illegal, the market collapses — the contract may be frustrated or otherwise affected in ways that reduce or eliminate your claim.
- You cannot simply wait indefinitely; at some point, continued silence or continued performance may be treated as affirmation, and the right to terminate based on that repudiation may be waived.
Ontario courts have confirmed that once you elect to affirm, you are locked in unless a further repudiation occurs or the other side actually fails to perform at the due date.
Practical Guidance: What to Do When Repudiation Occurs
Neither path is risk-free, which means the period immediately after a repudiation is when legal advice is most valuable. That said, a few general principles apply regardless of which option you ultimately choose.
Do not respond impulsively. A hasty reply — especially one that is ambiguous about whether you are terminating or keeping the contract alive — can create a muddled legal record. Think before you write.
Document everything. Preserve the communication in which the repudiation occurred, along with any surrounding context. If the repudiation was verbal, follow up in writing to confirm what was said and when.
Do not accelerate your own losses. If you have not yet incurred certain costs under the contract, pausing or slowing down pending your election makes sense. Courts expect you to mitigate — spending money you did not need to spend, on a contract the other side has already said they are walking away from, may not be recoverable.
If you accept the repudiation, communicate it clearly. Acceptance should be unambiguous. Courts have found that the innocent party's acceptance of a repudiation must be communicated to the repudiating party — you cannot simply act on it internally.
Assess your damages immediately. Once repudiation is accepted, the clock runs on what you have lost. Begin documenting your actual losses and the steps you are taking (or have taken) to mitigate them.
Calculating Damages After Anticipatory Breach
When anticipatory breach is accepted, the innocent party is generally entitled to damages that place them in the position they would have been in had the contract been performed. This includes:
- Lost profits — the profit margin on the contract
- Wasted expenditure — costs already incurred in preparation for performance
- Costs of mitigation — reasonable costs of finding a substitute arrangement
- Consequential losses — losses flowing naturally from the breach, provided they were reasonably foreseeable
The duty to mitigate applies here as it does elsewhere. If you accepted the repudiation and did nothing to find a replacement supplier, buyer, or counterparty when you reasonably could have, courts may reduce your damages to reflect the loss you could have avoided.
Frequently asked questions
What if the other party says they "might not" be able to perform — is that repudiation?
Probably not on its own. Courts require the refusal or inability to perform to be clear, absolute, and unconditional. An expression of doubt, a warning that performance may be difficult, or a request to discuss modified terms is generally not enough to constitute repudiation. You may, however, be entitled to seek assurance of performance — and a failure to provide adequate assurance in a reasonable time can itself harden into a repudiation.
Can I sue for anticipatory breach even if the contract had years left to run?
Yes. Anticipatory breach crystallizes a cause of action at the moment of repudiation (or, if you wait, at the moment of actual breach on the performance date). The length of time remaining in the contract affects the quantum of damages — particularly for long-term commercial contracts — but not whether you have a right to sue.
What happens if I accept the repudiation but the other side then tries to perform?
Once you have accepted a repudiation and communicated that acceptance, the contract is at an end. The repudiating party cannot unilaterally revive it by tendering late performance. You are entitled to proceed with your damages claim. (This is one of the practical advantages of accepting repudiation promptly and clearly.)
Does the two-year limitation period start from the date of repudiation or the original performance date?
As of writing, Ontario's basic limitation period is two years from when you knew or ought to have known you had a claim — verify this applies to your circumstances. Where you accept the repudiation, the limitation period generally begins to run from the date of acceptance, not the original performance date. If you affirm and wait, it typically runs from the date of actual breach. This makes timing your election carefully all the more important.
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