Your supplier tells you in March that the June delivery you contracted for will not happen. You do not have to wait until June to act. Anticipatory breach in Ontario lets you treat the contract as over and sue before performance was ever due. However, the response you choose in the next two weeks decides the case, because guessing wrong may turn you into the party in breach.
What Counts as an Anticipatory Breach in Ontario
An anticipatory breach occurs when one party, before its performance falls due, shows by words or conduct that it will not honour the deal. The classic example is a flat refusal to perform, although conduct alone can be enough.
Two points surprise people. First, the repudiation does not end the contract by itself. In Guarantee Co. of North America v. Gordon Capital Corp., 1999 CanLII 664 (SCC), the Supreme Court confirmed at paragraph 40 that the effect of a repudiation depends on the election the innocent party makes.
Second, the bar is high. A court asks objectively whether a reasonable person would conclude that the other side no longer intends to be bound, and the refusal must reach something central enough to justify ending the whole agreement.
Therefore, not every worrying email amounts to an anticipatory breach in Ontario. A party who warns that a deadline will be tight has not repudiated anything.
Demanding is not the same as asking
This is the line that decides most disputes, and it is finer than it looks. Requesting an extension, flagging a problem or proposing new terms is ordinary commercial conduct, and none of it signals an intention to abandon the deal.
Making your own performance conditional on the answer is different. In Taheripouresfahani v. Dormer Bond Inc., 2025 ONSC 5833, a developer inserted roughly $60,000 in unjustified and unauthorized charges into the statement of adjustments at closing, and the court held at paragraph 67 that the plaintiffs were entitled to treat the demand as an anticipatory breach of contract.
So ask freely, but never tell a counterparty that your completion of what you promised depends on getting what you want. Ontario courts separate an anticipatory breach from hard bargaining on precisely that point.
Your Two Options After an Anticipatory Breach in Ontario
Once the other side repudiates, the law hands you an election. You may accept the repudiation, treat the contract as terminated and sue immediately. Alternatively, you may affirm it, insisting that the deal proceed.
The consequences diverge sharply. Accepting ends the contract and starts your claim at once, whereas affirming keeps the agreement alive for both parties.
That second half catches people out. If you affirm, your own obligations continue, so you must still be ready, willing and able to perform when the date arrives.
Silence leaves the contract standing
Doing nothing is not neutral, although it is not automatically an affirmation either. Because the contract survives a repudiation until the innocent party acts, staying quiet generally leaves the agreement in place.
On repudiation generally, Ching v. Pier 27 Toronto Inc., 2021 ONCA 551 illustrates the mechanics. A party who keeps pressing for performance will be found to have affirmed, while a party who accepts the repudiation ends the contract.
Communicate your election clearly, in writing, and reasonably promptly. An ambiguous letter that neither terminates nor demands performance is the worst of both worlds, and it is how many an anticipatory breach claim in Ontario unravels.
The Trap That Turns Claimants into Defendants
Here is the risk nobody warns businesses about. If you treat the other side’s conduct as an anticipatory breach and walk away, and a judge later decides the conduct fell short of repudiation, then your own departure becomes the breach.
More v. 1362279 Ontario Ltd. (Seiko Homes), 2023 ONCA 527 shows how fast that can happen. The agreements stipulated no closing time, yet just after 5:00 p.m. on the closing date the vendor’s lawyer terminated for failure to close and kept the deposits.
The Court of Appeal upheld the finding that the vendor, not the purchasers, was in anticipatory breach. Because the vendor had not obtained the severance and had not delivered the deficiency list from the Tarion inspection, it was not ready to perform either, so it could not rely on time being of the essence, and the purchasers obtained specific performance.
Commercial deals produce the same pattern. In The Rosseau Group Inc. v. 2528061 Ontario Inc., 2022 ONSC 486, a vendor of development land demanded a further $400,000 deposit it was not entitled to and then refused to complete. The Court of Appeal, in 2528061 Ontario Inc. v. The Rosseau Group Inc., 2023 ONCA 814, upheld the finding that the vendor was the party in breach, describing the refusal as an anticipatory repudiation, although it sent the damages question back for a new hearing.
Consequently, where the conduct is genuinely ambiguous, the safer course is to treat the contract as continuing while you take advice. Affirming preserves your options, although walking away forecloses them.
That asymmetry explains why an anticipatory breach in Ontario is so often litigated after the fact. Both sides walked, and only one of them was entitled to.
When the Limitation Clock Starts Running
Anticipatory breach in Ontario creates a timing problem that ordinary breaches do not. Section 4 of the Limitations Act, 2002 sets the basic period:
Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
Your election drives the answer. If you accept the repudiation, the contract ends then, your claim exists then, and you should assume the two years run from that moment rather than from the date performance was originally due.
If instead you reject the repudiation and keep demanding performance, the original bargain stays intact, so the loss generally crystallises only when the other side actually fails to perform. Ontario courts have not squarely settled the point, however, so treat the earlier date as the safe assumption.
The practical lesson is the same either way. Put your position in writing at the time, because an unrecorded election is the fastest route to an argument you cannot win two years later.
What to Do Next: When to Call a Lawyer
Do not send a termination letter to make a point. It is the single most expensive email in commercial litigation, and it cannot be unsent.
Take advice before you stop performing. Establishing an anticipatory breach in Ontario requires more than frustration with a counterparty, and the difference between a repudiation and a difficult negotiation is a legal question.
Preserve the record now. Save the emails, texts and call notes showing exactly what was said, since repudiation is judged objectively on what a reasonable person would understand from the words and conduct.
Then diarise two dates: the day of the alleged repudiation, and the day performance was due. Because an anticipatory breach in Ontario can start the clock on either footing, you may need both.
Finally, if you decide to accept the repudiation, say so plainly and start mitigating. Once you terminate, your duty to reduce your loss begins immediately rather than on the original delivery date.
An anticipatory breach in Ontario rewards the party who responds deliberately and punishes the one who reacts. If a counterparty has told you the deal is off, contact Cowan before you answer.
