Which action asks a court to determine the rights of the parties under a contract before a breach occurs?

• A. Suit for damages
• B. Action for a declaratory judgement
• C. Suit for cancellation
• D. Liquidated damages

Answer: (D)

The action described is a declaratory judgment. It lets a party ask a court to determine the rights and duties of the parties under a contract before any breach occurs, providing a clear legal interpretation to guide how the contract should be performed and to prevent disputes from escalating. This proactive remedy is distinct from other options: seeking damages requires a breach to have happened and aims to compensate; cancellation ends the contract; and liquidated damages set a pre-determined amount payable if a breach occurs. So the declaratory judgment is the mechanism that addresses rights and obligations in advance of breach.