ANTICIPATORY BREACH
Explain the concept of Anticipatory Breach of Contract as laid down under the provisions of the Indian Contract Act 1872.
A breach of contract occurs when two or more people enter into an agreement, and at least one party does not fulfil their part of the contract by failing to meet the contract terms without a legal excuse.
There are two types of breach:-
• Anticipatory breach – Where the failure of performance or renunciation takes place before the time of performance has arrived.
• Actual breach– Where the failure of performance or renunciation takes place when the time of performance has arrived.
Anticipatory breach, though not per se defined under the contract laws in India, is incidentally covered under section 39 of the Indian Contract Act.
Section 39:– Effect of refusal of party to perform promise wholly-
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.
Example-
• A, a singer, enters into a contract with B, the manager of a theatre, to sing at his theatre two nights in every week during the next two months, and B engages to pay her 100 rupees for each night’s performance. On the sixth night A wilfully absents herself from the theatre. B is at liberty to put an end to the contract.
• A, a singer, enters into a contract with B, the manager of a theatre, to sing at his theatre two night’s in every week during the next two months, and B engages to pay her at the rate of 100 rupees for each night. On the sixth night, A wilfully absents herself. With the assent of B, A sings on the seventh night. B has signified his acquiescence in the continuance of the contract, and cannot now put an end to it, but is entitled to compensation for the damage sustained by him through A’s failure to sing on the sixth night.
The following remedies are available to the aggrieved party in case of breach of contract-
- The aggrieved party may rescind the contract.
- The aggrieved party may receive monetary compensation or damages for the breach of contract.
- The Court, in accordance with section 14 of The Specific Relief Act, 1877 order specific performance of the contract in place or along with the damages.
- Restitution- restoring the party back to its original condition.
- Quantum merit- Payment in accordance with the work done.
In the leading case of Hochster vs. De la Tour (1853), Hochster (plaintiff) was hired by De La Tour (defendant) to serve as a courier during a tour that was scheduled to begin on June 1st, 1852. However, 19 days before the scheduled date, De La Tour informed Hochster that he no longer needed his services and refused to pay the promised amount. The plaintiff sued him for damages.
The court held that Hochster did not need to wait until the performance date was due to commence the action and awarded damages. It is wasteful to make Plaintiff wait and prepare for an event that won’t happen because the defendant denied his agreement with Plaintiff. The court ruled in favour of Hochster and held that the plaintiff in such a case has the right to take immediate action.
In the case of Frost vs. Knight, The defendant had promised to marry the plaintiff on the demise of his father but while the father was still alive, the defendant had announced his intention of non-fulfilment of the promise and thus broke off the engagement. The plaintiff was allowed to take immediate action for breach of contract and did not need to wait till the death of his father.
In the case of Avery v. Bowden, The defendant had chartered the ship of the plaintiff promising to load it with cargo at Odessa within forty-five days. Later on the arrival of the ship, the defendant refused to load cargo but still the plaintiff stayed in the hope of the defendant fulfilling the contract. But, a war broke out rendering the performance of the contract illegal. Here, when the plaintiff brought an action for breach, it was held that the contract had ended by frustration and therefore it wasn’t the fault of either of the parties.
