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Contract Law-Breach of Contract and Remedies notes for Law Students

Contract Law-Breach of Contract and Remedies notes for Law Students

Ba llb notes for contract-I

Q. 1. Explain ‘breach of contract’ as a mode of discharge
of contract.
Or
What do you understand by ‘anticipatory breach of
contract’? State the rights of the promisee in case of such
breach.
Ans. Breach of contract means a breaking of the obligation which
a contract imposes. It occurs when a party to the contract without lawful
excuse does not fulfill his contractual obligation or by his own act makes
it impossible that he should perform his obligation under it. It confers
a right of action for damages on the injured party,
Breach of contract may be :
1. Actual breach of contract, or
2. Anticipatory or constructive breach of contract.
1. Actual breach of contract(contract law)
It may take place;
(1) At the time when the performance is due: Actual breach of
contract occurs, when at the time when the performance is due, one
party fails or refuses to perform his obligation under the contract.
Example: A agrees to deliver to B 5 bags of wheat on ist January.
he does not deliver the wheat on that day. There is a breach of contract.
If time is not of the essence of the contract and the defaulting party
expresses his willingness to perform the obligation after the appointed
time the other party may accept the performance subject to the payment
of compensation for failure to perform the obligation at the appointed
time. Prior notice shall have to be given to the party in default by the
party not in default if compensation is to be claimed.
(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 the contract. Theis
refusal to perform may be by :
(a) Express repudiation (by word or act): Where there has been
some performance of the contract and one party by his word or act
refuses to continue to perform his obligation in some essential respect,
the other party can treat the contract as no longer binding on him and
sue for breach of contract.
Example: C contracted with a railway company to supply it 3,000
tons of railway chairs at a certain price, to be delivered in installments
.
After 1,787 tons had been supplied, the railway company asked C to
deliver no more. Held, C could bring an action for breach of contract
[Cort v. Ambergate etc. Rly. Co., (1851) 17 Q.B. 127].
(b) Implied repudiation (impossibility created by the act of a party
to the contract) : If a party, during the performance, makes by his own
the fact the complete performance of the contract is impossible, the effect is as
if he has breached the contract, and the other party is discharged from
the further performance of the contract.
Example : P, a British subject, was engaged by the Captain of a
warship owned by the Japanese Government to act like a fireman.
Subsequently when the Japanese Government declared war with China,
P was informed that the performance of the contract would bring him
under the penalties often Foreign Enlistment Act. He consequently left
the ship. Held, he was entitled to recover the wages agreed upon (O Nell
V. Armstrong (1895) 2 Q.B. 418].
In both cases (a) and (b) the party not in breach can treat the
contract as no longer binding on him and sue for breach of contract.
2. Anticipatory breach of contract
It occurs when a party to an executory contract declares his
the intention of not performing the contract before the performance is due.
He may do so :
tag on
-(1) By expressly renouncing his obligation under the contract.
Example: A undertakes to supply certain goods to B on 1st January.
Before this date, he informs B that he is not going to supply the goods.
This is an anticipatory breach of contract by express repudiation
(2) By doing some action so that the performance of his promise
becomes impossible.
Example: A promised to assign to B, within seven years from the
date of his promise, all his interest in a lease for the sum of £, 140.
Before the end of seven years, he assigned his interest to another person.
Held, this was an anticipatory breach of contract by implied repudiation
[Lovelock v. Franklyn, (1846) 8 Q.B. 371).
Séc., 39 gives expression to the doctrine of anticipatory breach.
“The rights of the promisee (the party not in breach or the aggrieved
party) in case of an anticipatory breach are as follows:
(1) He can treat the contract as discharged so that he is absolved
of the performance of his part of the promise.
(2) He can immediately take legal action for breach of contract
or it till the time the act was to be done.
An anticipatory breach does not necessarily discharge the contract,
unless the promisee (the aggrieved party) so chooses.
Example: Disengaged H on the 12th of April to enter into his service
as a courier and to accompany him upon a tour. The employment was to
commence on 1st June. On 11th May D wrote to H telling him that his
services would no longer be required. H immediately brought an action
for damages although the time for performance had not yet arrived.
Held, he was entitled to do so (Hochster v. De La Tour, (1853) 2 E. &
B. 678).
If the promisee refuses to accept the repudiation of the contract
by the promisor and treats the contract as alive, the consequences are
as follows:
(1) The promisor may perform his promise when the time for its
performance comes and the promisee will be bound to accept the
performance
(2) If, while the contract is alive, an event (say, a supervening
impossibility) happens which discharges the contract legally, the promisor
may take advantage of such discharge. In such a case, the promisee loses
his right to sue for damages.
Example: B chartered A’s ship and agreed to load it with cargo
at Odessa within 45 days. When the ship reached Odessa, B was unable
to supply the cargo. A did not accept the refusal and continued to demand
the cargo. Before the expiry of 45 days, the Crimean War broke out
rendering the performance of the contract impossible. Held, the contract
was discharged and A could not sue for damages (Avery v. Bowden,
Yv
(1856) 6 F & B. 953).
A measure of damages in anticipatory breach of contract. If the
contract is ended by the promisee at once, he can sue the promisor for
damages. The number of damages will be measured by the difference
between the prevailing on the date of the breach and the contract price.
If the contract is kept alive till the date of performance of the
contract, the measure of damages will be the difference between the
price prevailing on the date of the performance and the contract price.

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