In view of the coronavirus pandemic, we are making LIVE CLASSES and VIDEO CLASSES completely FREE to prevent interruption in studies
Business Laws > Indian Contract Act 1872: Part II > Anticipatory and Actual Breach of Contract
Indian Contract Act 1872: Part II

Anticipatory and Actual Breach of Contract

A breach is a failure by a party to fulfil the obligations under a contract. It is of two types, namely, anticipatory breach and actual breach. In this article, we will focus on understanding both types of breaches with the help of some examples.

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.

The promisor can convey his unwillingness either by:

  • Expressing it in words (spoken or written)
  • Implying it by his conduct

Let us look at an example. 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.

Here is another example. 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.

The anticipatory breach of contract is specified under Section 39 of the Indian Contract Act, 1872. It states: “When a party to a contract has refused to perform or disable himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signifi­ed, but words or conduct, his acquiescence in its continuance.”

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.

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. However, he will need to keep the contract alive for the benefit of all parties involved.

anticipatory breach

Source: Pixabay

Actual Breach of Contract

While an anticipatory breach is before the time of performance, 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.

Solved Example on Anticipatory Breach

Q1. Peter is a singer. He enters into a contract with John who is the manager of a music club. As per the terms of the contract, Peter promises to sing every Friday and Saturday night for two hours during the next six months, in exchange for a payment of Rs 2,000 per hour. On the fifth night, Peter wilfully absents himself. Can John end the contract?

Answer: Yes. John can end the contract and file a suit for damages since Peter has sown his unwillingness to perform the contract through his conduct.

Q2. In the same case above, John allows Peter to sing on the sixth night despite his unplanned absence on the fifth night. Can John end the contract and sue Peter for damages?

Answer: In this case, since John expresses his consent for the continuance of the contract through his actions, he cannot end the same. However, he is entitled to compensation for the damages sustained by him arising due to Peter’s unavailability on the fifth night.

Share with friends

Customize your course in 30 seconds

Which class are you in?
5th
6th
7th
8th
9th
10th
11th
12th
Get ready for all-new Live Classes!
Now learn Live with India's best teachers. Join courses with the best schedule and enjoy fun and interactive classes.
tutor
tutor
Ashhar Firdausi
IIT Roorkee
Biology
tutor
tutor
Dr. Nazma Shaik
VTU
Chemistry
tutor
tutor
Gaurav Tiwari
APJAKTU
Physics
Get Started

1
Leave a Reply

avatar
1 Comment threads
0 Thread replies
1 Followers
 
Most reacted comment
Hottest comment thread
1 Comment authors
Pratham Sethi Recent comment authors
  Subscribe  
newest oldest most voted
Notify of
Pratham Sethi
Guest
Pratham Sethi

K and A had entered into a contract where K was to supply 50,000 phones to A within 2 months from the date of signing of contract. K was to procure the phones from China and deliver the same to A. The rate of the phone was Rs. 5000/- a piece (inclusive of all taxes and duties). At the time of the execution of the contract, the duty was at 5% (five percent). Immediately after the execution of the Agreement, India had increased the duties to 1000% (one thousand percent). Therefore, K was finding it difficult to sell the phones… Read more »

Amber
Guest
Amber

section 20 of the contract act 1872 says that if there is a mistake of fact and both the parties did not know the fact occurred after assigning the contract then it can’t be enforceable by law and the money or any reward will be return to the party who accepted that offer(section 65,72 of contract act).

Sushil Kumar Singhal
Guest
Sushil Kumar Singhal

At the time of execution of contract Taxes and duties were different than while implementing the contract. which was not foreseeable hence K and A if agree than contract can be implemented otherwise K can rescind the contract.

RANABEER HALDER
Guest
RANABEER HALDER

K CAN CLAIM RELIEF UNDER DOCTRINE OF FRUSTRATION

Stuck with a

Question Mark?

Have a doubt at 3 am? Our experts are available 24x7. Connect with a tutor instantly and get your concepts cleared in less than 3 steps.
toppr Code

chance to win a

study tour
to ISRO

Download the App

Watch lectures, practise questions and take tests on the go.

Get Question Papers of Last 10 Years

Which class are you in?
No thanks.