The performance date has not arrived, but the position already looks uncomfortable. The buyer is late opening the letter of credit. The seller has stopped responding. A broker says the cargo may not appear. Declaring default first can feel like the sensible response. Sometimes that becomes the next mistake.
Under English law, a breach can occur before the contractual performance date where a party clearly indicates that it does not intend to perform. But there are two traps: saying too much and creating your own anticipatory breach, or misreading the counterparty's difficulties as a clear refusal to perform.
Non-performance is not always an act. A letter, a call or conduct may be enough if it clearly shows that the party does not intend to perform.
Commercial conversations can turn into legal facts quickly. “There are difficulties with shipment” may still be a negotiating position. “We will not ship” is a different statement.
The L/C has not been opened. The vessel has not been nominated. Loading is slow. Replies are vague. Negotiations are tense. A broker says things are not looking good. Bad news is not always an anticipatory breach.
If the refusal was not sufficiently clear, but you stop your own performance and declare default, an arbitration tribunal may find that the breach is yours. The counterparty's difficulties were ambiguous. Your refusal was not.
Record the facts instead of guessing. What exactly must the counterparty do? When is performance due? What words were used? Is the information direct or relayed through a broker? Has the party taken an action incompatible with performance? Is it refusing to perform or trying to renegotiate?
Sometimes the safest next step is a short question: “Please confirm that you intend to perform the contract in accordance with its terms.”
Anticipatory breach is not a button for exiting a contract first. It is the ability to distinguish a clear refusal to perform from ordinary commercial noise. The other side's potential future default can become your present default surprisingly quickly.