Breach of contract: anticipatory and actual
Contract I · Unit III · Topic 18 of 24 · 7 min read
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Cases checked to exist. Read the judgment before quoting a holding.
Every case cited here has been checked to exist — the citation resolves and names the right parties. The propositions attributed to each case have not been verified line by line against the judgment. Case names link through to the full judgment: read it before quoting a holding in an examination answer, and never carry a proposition from notes into court on trust.
1. What breach means
A breach of contract occurs when a party, without lawful excuse, fails or refuses to perform his obligation under the contract, or disables himself from performing it. Lawful excuses include valid tender refused (section 38), discharge by agreement (sections 62 and 63) and frustration (section 56). A breach does not automatically end the contract. It gives the innocent party a right to damages in every case, and, where the breach goes to the root of the contract, a further right to treat himself as discharged.
2. The classification
- Anticipatory breach, before the time for performance has arrived:
- express repudiation, by words; or
- implied repudiation, by conduct that disables the party from performing.
- Actual breach:
- at the time when performance is due; or
- during the course of performance.
3. Section 39: refusal or disablement
Section 39 of the Indian Contract Act, 1872 provides: when a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. The section covers both anticipatory breach and breach during performance. Its illustrations:
- A, a singer, contracts with B, the manager of a theatre, to sing at his theatre two nights a week for the next two months, and B engages to pay her Rs 100 for each night's performance. On the sixth night A wilfully absents herself. B is at liberty to put an end to the contract.
- On the same facts, A absents herself on the sixth night with B's assent, and sings on the seventh. B has signified his acquiescence in the continuance of the contract and cannot now put an end to it, but he is entitled to compensation for the damage caused by A's failure to sing on the sixth night.
Section 75 completes the picture: a person who rightfully rescinds a contract is entitled to compensation for any damage sustained through the non-fulfilment of the contract.
4. Anticipatory breach
An anticipatory breach occurs when, before the date fixed for performance, a party declares his intention not to perform, or acts so as to make his performance impossible. The innocent party need not wait for the due date.
- Hochster v. De la Tour (1853). A engaged B as a courier for a European tour starting on 1 June. On 11 May A wrote that he no longer needed him. B sued on 22 May, before the date of performance. Held, B could sue at once; he was not bound to remain idle and ready until 1 June.
- Frost v. Knight (1872). The defendant promised to marry the plaintiff on the death of his father. While the father was still alive, he broke off the engagement. Held, she could sue immediately, without waiting for the father's death.
Implied repudiation occurs when a party, by his own act, puts it out of his power to perform. A seller who contracts to sell a specific car to B in June and sells and delivers it to C in May has disabled himself; B may treat the contract as broken in May.
5. The innocent party's election
On an anticipatory breach the innocent party has a choice.
- Accept the repudiation and treat the contract as at an end. He may sue at once for damages. The damages are measured with reference to the date fixed for performance, but he must take reasonable steps to mitigate his loss from the date he accepts the repudiation.
- Refuse the repudiation and keep the contract alive. He then waits for the date of performance. But the contract stays alive for both sides: the party in default may still perform, and if a supervening event discharges the contract before that date, the innocent party loses his claim. In Avery v. Bowden (1855) a charterer refused to load cargo at Odessa; the shipowner stayed on, hoping he would change his mind; the Crimean War broke out, the contract was frustrated, and the shipowner's claim failed.
A repudiation that is not accepted is, in the familiar phrase, “a thing writ in water”. The election, once made, is final, and under section 39 acquiescence by words or conduct removes the right to put an end to the contract.
6. Actual breach
At the time of performance. A party fails to perform on the date fixed. A seller who does not deliver on the due date, or a buyer who does not pay, commits an actual breach. Whether the other party can treat the contract as ended depends on whether time was of the essence (section 55).
During performance. A party who has begun performance stops, or performs defectively. If the failure goes to the root of the contract, the other party may treat it as ended (section 39, first illustration). If it concerns a minor term, the remedy is damages only, and the contract continues.
7. Remedies for breach
- Rescission of the contract and refusal of further performance (sections 39 and 75).
- Damages under sections 73 and 74.
- Specific performance under the Specific Relief Act, 1963. Since the 2018 amendment, section 10 makes specific performance enforceable as a rule, subject to the exceptions in sections 11(2), 14 and 16, and the old discretion has gone. Section 20 now gives the innocent party the option of substituted performance through a third party at the defaulter's cost.
- Injunction, especially to enforce a negative stipulation (section 42, Specific Relief Act).
- Quantum meruit, where a party has done part of the work and the other has prevented completion.
8. Problem
P promises to marry Q on the death of P's father. While the father is alive, P marries R. Can Q sue P now, or must she wait until the father dies?
Issue. Whether P's marriage to R is an anticipatory breach entitling Q to sue before the event on which performance depends.
Law. Under section 39, where a party disables himself from performing his promise in its entirety, the promisee may put an end to the contract. Frost v. Knight allowed a suit on a promise to marry on a father's death before the father died. The law of contingent contracts (sections 32 and 34) reaches the same result: where the future event depends on the conduct of a person, it is treated as impossible once that person acts so as to rule it out.
Application. By marrying R, P has disabled himself from performing his promise to Q (assuming the personal law applicable to P forbids a second marriage). This is an implied repudiation by conduct. Q need not wait for the father's death, which might be years away. She may accept the repudiation at once.
Conclusion. Q may sue P immediately for compensation under sections 73 and 75. Specific performance of a promise to marry would never be granted, since it is a contract depending on personal qualifications (section 14, Specific Relief Act).
How this is examined
“Explain the various modes of breach of contract” is the standard 10-mark question, answered with the classification above, section 39 with both illustrations, Hochster and Frost v. Knight, the election with Avery v. Bowden, and a closing paragraph on remedies. As a short note: anticipatory breach, or section 39. The promise-to-marry problem appears regularly, sometimes framed as a contingent contract question; mention both lines.
Now try the real questions: Contract I past question papers.