On Legal Consequences Of Anticipatory Breach

Anticipatory breach, based on and developed from the case law, is a special system of common law. Anticipatory breach exemplifies that logic would never control the development of law. Anticipatory breach aims at preventing both parties from suffering risks before the deadline of contract. As a form of breach of contract, anticipatory breach connects with but distinguishes from practical breach. However, the Law of Contract regulates legal consequences of anticipatory breach in the Article 108, the Article 94, the Article 68 and the Article 69. The legal consequences of anticipatory breach and that of practical breach are not regulated separately in the Law of Contract, which also does not differentiate the legal consequences of express anticipatory breach and implied anticipatory breach, leading to some contradictions in the application of anticipatory breach. Many researches focus on the connotation and reasonableness of anticipatory breach itself, but not on the legal consequences systematically. From the perspective of systematization, this paper analyzes the series of legal consequences of anticipatory on the basis of regulations in effect. This paper also researches on the scholarly articles of scholars at home and abroad, so that provides some advices for perfecting the anticipatory breach system.In addition to the introduction, this paper is divided into five parts, as follows:The first part introduces the ambiguous legal consequences of anticipatory breach according to a determined case. This part also explains the classification of anticipatory breach, on which this paper is based to study the legal consequences of anticipatory breach.The second part exemplifies and theorizes the manifestations of the responsibility for breach of contract in anticipatory breach system, including specific performance, damages, liquidated damages and earnest. This part finds that although specific performance can be applied in the case, the determinations cannot adjudicate that the defendant performs his obligation in advance. However, things are different in the folk loan contract or the cases concerning only one party have his monetary obligation performed. Determinations in these cases can adjudicate the obligor to repay his debt in advance. In anticipatory breach, the obligee would suffer nothing if he wants to preserve the effectiveness of the contract. As the result, the obligee cannot claim damages, liquidated damages or earnest when asserting the obligor performs his obligation. As the obligor never begins to perform his obligation, the obligee shall not claim the application of remedial measures.The third part discusses that the party have the right to dissolve the contract, when another party refuses to perform the obligation which is related to the purpose of the contract. The consequences of dissolution include termination, damages and restitution. The calculation of the damages under anticipatory breach bears no difference with practical breach, except that the mitigation rule shall be explained differently. Namely, the obligee has the duty to mitigate if he receives the repudiation of obligor, otherwise he takes no responsibility. Nevertheless, the obligee has the duty to mitigate as long as the contract cannot be performed or the contract is terminated.The forth part illustrates how the obligee shall terminate the contract under the circumstances that the implied anticipatory breach overlaps with the disturbed defense right, according to the Article 68, the Article 69 and the Article 94. The law regulates the different way to exercise the right to terminate the contract under the same fait juridique, which would confuse the obligee. To harmonize this two rules in the framework of the Contract, this paper advises to modify the legal consequences of implied anticipatory breach as follows: Before the time of performance, the other party indicates that he will not perform his main obligations by his conduct, then the party may suspend his performance and terminate the contract if the other party fails to regain his ability to perform or fails to provide appropriate assurance within a reasonable time.The last part summarizes the legal consequences of anticipatory breach and gives advices on how to perfect that.