When One Side Walks Away Early
Contracts don’t always fall apart at the end. Sometimes, one party makes it clear—before the work is finished—that they won’t follow through. Pennsylvania law has a doctrine for that situation called anticipatory repudiation.
Anticipatory repudiation allows a party to treat a contract as broken before performance is due if the other side clearly shows they will not perform. The idea is simple: the law does not force someone to keep preparing for a deal that the other party has already abandoned.
In PA, this doctrine goes back to 1849! See Campbell v. Gates, 10 Pa. 483 (1849).
Stricter Standards
Like many states, Pennsylvania courts have historically recognized anticipatory repudiation as set forth in the Restatement of Contracts.
But Pennsylvania courts set a high bar.
Anticipatory breach under PA law must be “an absolute and unequivocal refusal to perform or a distinct and positive statement of an inability to do so.” McClelland v. New Amsterdam Casualty Co., 322 Pa. 429, 185 A. 198 (1936); see also Harrison v. Cabot Oil & Gas Corp., 116 A.3d 449 (Pa. 2015).
In other words, the other side must clearly say or do something that leaves no doubt—they are not going to honor the contract. Vague statements, ongoing negotiations, or expressions of difficulty do not qualify. This strict rule protects parties from being dragged into lawsuits based on uncertainty or misunderstandings.
Once anticipatory repudiation occurs, the non-breaching party can stop performing and seek damages right away. Those damages often include lost profits and other losses caused by the broken agreement.
This doctrine plays a key role when contracts collapse midstream, especially in construction projects where timing, labor, and money are tightly connected.
Recent Case Overview
Tedesco Constr. Co. v. FWH Dev., LLC, No. 995 WDA 2022 (Pa. Super. Ct. 2025) (opinion filed March 27, 2026)
What Happened?
This case arose from a construction project gone wrong. Tedesco Construction Company agreed to perform work for FWH Development, LLC under a contract that set out both the scope of the work and how Tedesco would be paid.
The relationship broke down before the project was complete. Most importantly, FWH removed Tedesco from the job and brought in another contractor to finish the work. That decision cut Tedesco off from completing its part of the contract.
Tedesco sued. It argued that FWH’s actions amounted to anticipatory repudiation—a clear refusal to allow Tedesco to perform. Tedesco sought damages for breach of contract, including lost profits. It also sought additional remedies under Pennsylvania’s Contractor and Subcontractor Payment Act (CASPA), a statute that penalizes wrongful nonpayment in construction projects.
The Law the Court Applied
Anticipatory Repudiation
The court reaffirmed a straightforward rule: anticipatory repudiation requires a clear and definite refusal to perform,
That refusal can take two forms:
- A direct statement that a party will not perform, or
- Conduct that clearly shows they cannot or will not perform
The court also emphasized an important point: if one party prevents the other from performing, that alone counts as a material breach. When that happens, the non-breaching party can treat the contract as over and pursue damages, citing Campbell v. Gates, 10 Pa. 483 (1849).
CASPA (Payment Law for Construction Projects)
Pennsylvania has the Contractor Subcontractor Payment Act, or CASPA, which gives contractors tools to recover payment, including:
- Interest
- Financial penalties
- Attorneys’ fees
But the key question in this case was how far CASPA reaches. Does it apply only to unpaid bills for completed work? Or can it also apply to lost profits and other damages when a contractor gets pushed off a job before finishing?
What the Court Decided
1. FWH Breached the Contract
The court had little trouble here. By removing Tedesco and replacing it, FWH made an unequivocal decision not to allow performance.
That action met Pennsylvania’s strict standard for anticipatory repudiation.
As a result:
- Tedesco no longer had to perform, and
- FWH became liable for breach of contract
2. What Counts as “Performance”?
The most interesting part of the decision lies in how the court defined “performance.”
Traditionally, performance means finishing the job. But CASPA fails to define “performance.” The court turned to Black’s Law Dictionary, which defines performance as the “accomplishment of some but not all of [one’s] contractual obligations.”
Here, Tedesco did not complete the project—but only because FWH would not let it.
So the court reframed the issue. Instead of asking whether Tedesco finished the work, it asked:
- Did Tedesco perform up to the point it was allowed?
- Was it ready and able to finish the job?
The answer was yes. And that mattered.
The court treated Tedesco’s partial work plus its willingness and ability to complete the project as enough to count as “performance” once FWH made completion impossible.
Put differently:
- Performance does not require full completion when the other party blocks it
- Work already done still counts
- Readiness to finish also matters
This approach follows a common-sense rule: a party cannot benefit from its own wrongdoing. FWH could not avoid liability by firing Tedesco and then arguing the job was never finished.
This broader definition of performance became critical when the court turned to CASPA.
3. Tedesco Can Recover Damages
Because FWH’s actions ended the contract, Tedesco could recover expectation damages. These included:
- Payment for the work it already completed
- Lost profits from the work it was prevented from finishing
4. CASPA May Apply
The majority also ruled that CASPA can apply in this situation.
According to the court, CASPA remedies are available if:
- The contractor demands payment, and
- The owner wrongfully refuses to pay
Because the court treated prevented completion as a form of “performance,” it allowed CASPA to potentially cover damages tied to that performance—including lost profits.
This significantly expands how the statute can operate.
5. The Disagreement
Not everyone on the court agreed.
The dissent argued that CASPA should stay limited to payment for completed work only. In its view, lost profits and other breach-related damages fall outside the statute.
This disagreement highlights a deeper issue:
Is CASPA just a payment law, or does it also function as a broader remedy for contract disputes?
Why This Case Matters
This decision reinforces Pennsylvania’s strict rule: a party must clearly refuse to perform before anticipatory repudiation applies. But it also pushes the law in a new direction.
By treating prevented completion as performance, the court made it harder for parties to escape liability by cutting off a contract early. At the same time, it expanded the potential reach of CASPA beyond simple unpaid invoices.
That shift raises important questions for contractors, developers, and lawyers alike. Where does payment law end and contract law begin? This case suggests the line may be moving.
Conclusion
The doctrine of anticipatory repudiation applies to all contracts in PA per the common law described above; plus statutes apply to agreements for the sale or lease of goods:
- 13 Pa. Cons. Stat. § 2610 → applies to sales of goods (Article 2)
- 13 Pa. Cons. Stat. § 2A402 → applies to leases of goods (Article 2A)
But the concept is the same: anticipatory repudiation allows a party to treat a contract as broken before performance is due, so long as the other side demonstrates with certainty they will not perform, also triggering liability under CASPA.
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