What is meant by "anticipatory breach" in contract law?

Prepare for the Texas Contract Law Exam. Study with engaging multiple choice questions, each with explanations. Get ready to excel in your Texas Contract Law Exam!

Anticipatory breach occurs when one party to a contract clearly indicates, either through words or conduct, that they will not perform their contractual obligations when the time for performance arrives. This proactive indication provides the other party the opportunity to take action before the actual breach occurs, such as seeking damages or terminating the contract.

In Texas contract law, this principle allows the non-breaching party to treat the contract as breached, which enables them to pursue remedies for the anticipated harm. It is essential for protecting the interests of parties in a contractual relationship, as it prevents the necessity of waiting for a non-performance to take action.

The other options discuss scenarios that do not align with the concept of anticipatory breach, such as mutual termination, breaches that occur after the performance period, or modifications to contract terms. These options reflect different legal concepts and do not address the proactive indication of non-performance that characterizes anticipatory breach.

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