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The contractual issue of repudiation

On Behalf of | Mar 7, 2023 | Civil Litigation

When two parties enter into a contract, both must honor the agreement. If one party does not meet their obligations, they could be in breach of contract. For example, Virginia investors might find that the vehicle does not pay the promised rate of interest. That would be an example of repudiation.

Repudiation and breaches

With repudiation, one party might refuse to honor the terms of a contract. Not paying the other party an agreed amount sum of money for a particular product or service would be an example of repudiating a contract. The breaching party may want to meet its contractual obligations but may lack the funds or resources. So, the party is not unwilling to follow the terms. Instead, the party becomes unable to do so. Regardless, a breach still occurs.

Repudiation does not mean the contract becomes automatically invalid. The aggrieved party could accept the breach and keep the contract in place. Decisions to allow the contract to continue might come with the intention of resolving the breach. However, the aggrieved party may elect to terminate the agreement upon repudiation.

Legal consequences

Breach of contract issues are often settled out of court. If litigation becomes necessary, the innocent party would need to prove that a breach occurred. If a contractor did not complete agreed-upon repairs after receiving the money to finish the work, providing evidence that the work never occurred and the other party made payments may suffice.

A lawsuit seeking damages for the repudiation of a contract may happen after the breach. If a party suffered losses because of repudiation, they might want compensation. Anyone suing for compensation will need to establish the amount they lost from the breach.