Monday, June 24, 2024

𝗝𝘂𝗱𝗶𝗰𝗶𝗮𝗹𝗗𝗿𝗲𝗮𝗺™

𝙰𝙵𝙵𝙾𝚁𝙳𝙰𝙱𝙻𝙴 & 𝙰𝙲𝙲𝙴𝚂𝚂𝙸𝙱𝙻𝙴

CONTRACTMODEL ANSWER

ANTICIPATORY BREACH

A company agreed to supply one thousand blankets to ‘X’ by a particular date. Rs. 10,000 were paid as an advance to the company by ‘X’. Before the due date of performance of the contract, the company informed that it would not supply blankets on due date and that he should treat the contract as repudiated. ‘X’ did not accept the repudiation and kept on demanding the supply till the last date/ due date of performance of the contract. In the meantime, war between India and China broke out and all the stocks of the company were requisitioned by government for military purposes. ‘X’ files a suit against the company for damages for breach of contract. Will he succeed? Decide by referring to the provisions of the Indian Contract Act, 1872, and decided cases.

In this present case the main issue which is involved is whether ‘X’ could claim damages from the company for the breach of contract. Section 39 of the Indian Contract Act, 1872, deals with the provisions of anticipatory breach of contract.

According to this section, if any party to the contract refuses to perform his contractual obligation before the due date of performance, then in such a case, another party can either treat the refusal as repudiation of contract or wait till the due date of performance. If he waits till due date of performance, in this case, the contract subsists and after the due date of performance, the aggrieved party can claim damages for the breach of contract.

In the leading case of State of Kerala vs. Cochin Chemical Refineries, the Hon’ble court held that anticipatory breach of contract by one party does not automatically put an end to the contract. It has already been noted above that on anticipatory breach by one party, the other party can exercise the option either to treat the contract at an end or treat it as still alive and subsisting until the due date of performance comes.

However, according to this section, if the aggrieved party elects to treat the contract as alive, then in such a case, if due to any reason, it becomes impossible to perform the contractual obligation for the party who has earlier refused to perform it, another party cannot claim damages from the former part and former party could not be made liable for the non- performance of contract. In this case, the latter party has to bear this risk.

In the leading case of Punjab Sons. Pvt. Ltd. vs. U.O.I., the Hon’ble court held that if due to any reason, it becomes impossible for a party to contract to perform his promise, then in such a case, he could not be made liable for the non- performance of contract.

In the present case, ‘X’ elected to treat contract as alive and subsisting and before the due date of performance, due to the political decisions, it became impossible for the company to perform its promise. So, due to subsequent impossibility, the company could not be held liable for the non- performance of contract. Hence, ‘X’ cannot claim the damages from the company for the breach of contract.

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