What do you understand by anticipatory breach of contract? M/s XYZ Textile enters into a contract with ABC Garment Showroom for the supply of 1000 pieces of cotton shirts at Rs. 400/- per shirt to be supplied on or before 31st December 2015. Later on… Discuss the remedies available to ABC Garment Showroom.

Question: What do you understand by anticipatory breach of contract? M/s XYZ Textile enters into a contract with ABC Garment Showroom for the supply of 1000 pieces of cotton shirts at Rs. 400/- per shirt to be supplied on or before 31st December 2015.

Later on, on 1st November 2015, XYZ Textile informs ABC Garment Showroom that they will not supply the shirts. Discuss the remedies available to ABC Garment Showroom. [UPJS 2016]

Find the answer to the mains question only on Legal Bites. [What do you understand by anticipatory breach of contract? M/s XYZ Textile enters into a contract with ABC Garment Showroom for the supply of 1000 pieces of cotton shirts at Rs. 400/- per shirt to be supplied on or before 31st December 2015. Later on… Discuss the remedies available to ABC Garment Showroom.]

Answer

Anticipatory breach of contract is an important concept under the law of contractual relationship. “An anticipatory repudiation occurs when, prior to the promised date of performance, the promisor absolutely repudiates the contract.”

When the promisor refuses altogether to perform his promise and signifies his unwillingness even before the time for performance has arrived, it is called Anticipatory Breach. It is an announcement by the contracting party of his intention not to fulfil the contract and that he will no longer be bound by it. This kind of anticipatory renunciation has certain effects on the rights of the parties.

A promisee, instead of putting an end to the contract forthwith may keep the contract alive up to the time when the contract is to be executed. But the amount of damages in one case may be different from that in the other.

Thus, under this breach, there are 2 remedies available to the injured party-

1. He can file a suit for compensation immediately after the breach of contract; or
2. He may wait till the date of performance in anticipatory that the promisor will perform his promise at the time of performance.

In the given problem M/s XYZ Textiles Ltd has indicated its unwillingness to supply the cotton shirts on 1st November 2015 itself when it has time up to 31st December 2015 for the performance of the contract of supply of goods. It is therefore called the anticipatory breach of contract. Thus, ABC Garments showroom can claim damages from M/s XYZ Textiles Ltd immediately after 1st November 2015, without waiting up to 31st December 2015.

But waiting for the performance of the contract till the date of performance 31^st December 2015 might cause loss to the ABC Garments as it might be possible that during the period of waiting for certainly unavoidable impossibility event may occur which may frustrate the contract under Section 56 of The Indian Contract Act,1872.

By whom contract must be performed?

A promisor need not perform the obligation himself and can employ someone else to perform it, unless it appears from the nature of the case that it was the intention of the parties that the promisor should perform the contract himself. Following are the persons by whom contract must be performed as laid down in Section 40 to 45 of the Indian Contract Act:

Promisor himself: If the terms and conditions of the contract clearly specify that the conditions are as such that the promisor only can perform them, and then it can be done by the promisor only. This means contracts that involve the use of personal skill and expertise, must be performed by the promisor himself.

Agent: When it is not separately mentioned that the promisor needs to complete the performance, then the agent can perform the contract on behalf of his principal i.e. the promisor.

Representatives: A contract that involves the use of personal skills of the promisor or is founded on personal consideration comes to an end on the death of the promisor. In such a condition, the legal representatives of the promisor are bound by the conditions of the contract entered into by him until contrary intention appears from the contract. But their liability will be limited to the share of the property they have inherited from the deceased promisor.

Sometimes the nature of the promise is an indication by itself that the promisor must perform the contract in his own capacity. This usually happens in cases where the use of the personal skills of the promisor is involved, for instance, a contract to paint, sing or marry and contracts to technical nature. In such cases, the death of the promisor puts an end to the contract.

Third Persons: For performance by a third person, the promisee has to accept it when the contract is being made. Once the condition of performance by the third party is accepted, the promisee cannot deny it later. The contract performed in this case will be discharged on the part of the promisor if done by the decided third party, even if the promisor does not ratify the performance explicitly.

In Hirachand Punamchand v. Temple [1911] 2 K.B. 330], a debt was held to be discharged when the creditor accepted a smaller sum from the debtor’s father in full settlement. Performance of the father (read the third party) in this case discharged the contract. Discharge of a contract by the third party’s performance can take place only when it is done with the intention of doing so.

Joint promisors (Section 43): When two or more persons make a joint promise, the promisee may, in the absence of an express agreement to the contrary, compel any (one or more) of such joint promisors to perform the whole of the promise.

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
4. Law of Contract Mains Questions Series Part-IV
5. Law of Contract Mains Questions Series Part-V
6. Law of Contract Mains Questions Series Part-VI
7. Law of Contract Mains Questions Series Part-VII
8. Law of Contract Mains Questions Series Part-VIII
9. Law of Contract Mains Questions Series Part-IX
10. Law of Contract Mains Questions Series Part-X