ANTICIPATORY & ACTUAL BREACH OF CONTRACT

Written By:- Nehraj Bisaria (Amity Law School)

An anticipatory contract breach is a contract breach that happens before the time set for results has arrived. It is called Anticipatory Violation when the promisor declines completely to fulfill his pledge and shows his unwillingness even before the time for success has arrived. Anticipatory breach of a contract may take either of the following two ways:

(a) Directly through written or spoken terms, and

(b) Indirectly, by the actions of one of the parties.

Example 1: Where A contracts with B on 15h July, 2016 to supply 10 bales of cotton for a specified sum on 14 August, 2016 and on 30 July informs 8, that he will not be able to supply the said cotton on 14 August 2016 there is an express rejection of the contract.

Example 2: Where A agrees to sell his white horse to B for? 50,000/- on 10 of August, 2016, but he sells this horse to Con 1” of August, 2016, the anticipatory breach has occurred by the conduct of the promisor.

Section 39 of the Indian Contract Act deals with a breach of contract in expectation and provides as follows:  “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”

Effect of anticipatory breach: Exemption from results or further performance is given to the promisee. He gets a choice later:

  • Either regard the contract as “rescinded” and sue the other party immediately for damages arising from the violation of the contract without waiting until the due date of performance.

OR

  • He may choose not to withdraw but to treat the contract as still working and to wait for the time of performance and then keep the other party liable for the consequences of the failure to perform. But in this situation, for the good of the other party as well as his own, he will hold the contract intact, and the culprit, if he so wishes to re-consider, may still fulfill his part of the contract and may also take advantage of any supervening impossibility that may have the effect of discharging the contract.

ACTUAL BREACH OF CONTRACT

It is a case of failure to fulfill the commitment on the scheduled date, as opposed to an anticipatory violation. The parties to a legitimate contract are obliged to fulfill their respective promises. However, when one of the parties violates the contract by refusing to fulfill his promise, a violation is said to have been committed. In that case, the other party to the contract is entitled to bring an action against the person who has failed to fulfill his commitment to perform an actual violation of the contract.  

At the point at which the execution of the contract is due.

  1. Example: A agrees on 1 February 2016 to send 100 bags of sugar to B. On that day, he failed to provide B with 100 bags of sugar. This is an actual contract violation. A has committed the violation at the time when the performance is due.
  2. During the performance of the contract: Actual breach of contract also occurs when during the performance of the contract, one party fails or refuses to perform his obligation under it by express or Implied act.

Remedies for Breach of Contract