Scribd
Upload
22 views4 pages

Breach of Contract

Uploaded by

Meenakshi Sheokand
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
22 views4 pages

Breach of Contract

Uploaded by

Meenakshi Sheokand
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

Indian Contract Act Discharge of contract

DISCHARGE OF CONTRACT
Breach of Contract and Remedies for breach of contract – Section
73-75

Meaning of breach of contract –


When a promise or agreement is broken by any of the parties, we call it a breach of
contract. So when either of the parties does not keep their end of the agreement or does not
fulfil their obligation as per the terms of the contract, it is a breach of contract.

Breach of contract can be actual breach or anticipatory breach.

(A) Anticipatory Breach of Contract


As the name suggests, an anticipatory breach is a breach of contract before the time of
performance. So, if a promisor denies to perform his promise and signifies his
unwillingness before the time for performance, then it is an anticipatory breach of
contract.

Examples –

a) Peter enters into a contract with John on May 30, 2018. In the contract, Peter
agrees to sell his house to John provided he receives a token amount of Rs
5,00,000 from John on or before June 30, 2018. However, on June 15, 2018, John
informs Peter that he will not be able to provide the token amount on the said
date, thereby expressing rejection of the contract.

b) Peter enters into a contract with John on June 01, 2018. As per the contract, Peter
agrees to sell his guitar to John on June 10, 2018, for an amount of Rs 5,000.
However, he sells this guitar to Oliver on June 07, 2018. Hence, it is an
anticipatory breach of contract due to Peter’s conduct.

When a promisor refuses to perform his promise leading to an anticipatory breach of


contract, the promisee is excused from performance or from further performance of his
obligations. Also, he can either:

- Treat the contract as cancelled and file a suit against the other party for
damages arising from the breach. This suit can be filed immediately without
waiting until the date of performance specified in the contract.

1|P ag e Legal Era Institute


Indian Contract Act Discharge of contract

OR

- Choose not to cancel the contract but treat it as an operative and wait until the
time of performance has passed before holding the other party responsible for the
damages caused due to non- performance.

(B) Actual Breach of Contract


While an anticipatory breach is before the time of perfromance, an actual breach of
contract is on the scheduled time of performance of the contract. An actual breach of
contract can be committed either:

1] At the time when the Performance of the Contract is Due


Peter enters into a contract with John promising to deliver 50 bags of cotton to him on
June 30, 2018. However, on the scheduled day, he fails to deliver the same. This is an
actual breach of contract. Also, this breach is at the time the performance of the contract
is due.

2] During the Performance of the Contract


An actual breach of contract can also occur when one party fails to perform his
obligation, during the performance of the contract. This refusal can be expressed in words
or by action.

Summary –
Breach of contract

Anticipatory breach Actual breach

Breach before the due date Breach on the due date

Promise has 2 options


Actual breach of Actual breach of
Contract on the contract during
Option 1 Option 2 due date of its performance
Performance

rescind the wait till the due date


contract and rescind the contract promisee can rescind Promisee can
immediately on the due date and the contract on the reject the
and claim claim damages due date and claim performance
2|P ag e Legal Era Institute
damages damages and claim damages
Indian Contract Act Discharge of contract

Following are the remedies for the breach of contract –

A) Recession of Contract
When one of the parties to a contract does not fulfil his obligations, then the other party
can rescind the contract and refuse the performance of his obligations.

As per section 65 of the Indian Contract Act, the party that rescinds the contract must
restore any benefits he got under the said agreement. And section 75 states that the party
that rescinds the contract is entitled to receive damages and/or compensation for such a
recession

B) Sue for Damages


Section 73 clearly states that the party who has suffered, since the other party has
broken promises, can claim compensation for loss or damages caused to them in the
normal course of business.

Such damages will not be payable if the loss is abnormal in nature, i.e. not in the
ordinary course of business. There are two types of damages according to the Act,

- Liquidated damages - Sometimes the parties to a contract will agree to the amount
payable in case of a breach. This is known as liquidated damages.

- Unliquidated Damages - Here the amount payable due to the breach of contract is
assessed by the courts or any appropriate authorities.

C) Sue for Specific Performance


This means the party in breach will actually have to carry out his duties according to the
contract. In certain cases, the courts may insist that the party carry out the agreement.

So if any of the parties fails to perform the contract, the court may order them to do so.
This is a decree of specific performance and is granted instead of damages.

For example, A decided to buy a parcel of land from B. B then refuses to sell. The
courts can order B to perform his duties under the contract and sell the land to A.

D) Injunction
An injunction is basically like a decree for specific performance but for a negative
contract. An injunction is a court order restraining a person from doing a particular act.

3|P ag e Legal Era Institute


Indian Contract Act Discharge of contract

So, a court may grant an injunction to stop a party of a contract from doing something
he promised not to do. In a prohibitory injunction, the court stops the commission of an
act and in a mandatory isnjunction, it will stop the continuance of an act that is
unlawful.

E) Quantum Meruit
Quantum meruit literally translates to “as much is earned”. At times when one party of
the contract is prevented from finishing his performance of the contract by the other
party, he can claim quantum meruit.

So he must be paid a reasonable remuneration for the part of the contract he has already
performed. This could be the remuneration of the services he has provided or the value
of the work he has already done.

4|P ag e Legal Era Institute

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy