Performance of the contract | A contract is a contract from the date it is made and not from the date on which its performance is due’. Discuss with reference to statutory provisions and case law.

Question: Performance of the contract | A contract is a contract from the date it is made and not from the date on which its performance is due’. Discuss with reference to statutory provisions and case law.

Find the answer to the mains question only on Legal Bites. [Performance of the contract | A contract is a contract from the date it is made and not from the date on which its performance is due’. Discuss with reference to statutory provisions and case law.]

Answer

As per the most leading case relating to the anticipatory breach, Hochestor v. De La Tour [1853] EWHC J72], Lord Campbell C.J. made a very important observation that forms the genesis of the concept of anticipatory breach. He states that a ‘contract is contracted from the date it is made and not from the date its performance is due.’ Hence, even though the performance becomes due on a future date, the obligations are still initiated on the date of creation of the contract.

Section 39 of the Indian Contract Act,1872 defines Anticipatory breach as

The repudiation of the contract by one party before its due date of performance has arrived. The breach could be made by the promisor; either by refusing to perform the contract, or disabling himself from performing his promise. While to act of the promisor the promisee may put an end to the contract either signifying by words or conduct; or its acceptance in its confirmation.

Under this breach, there are 2 remedies available to the sufferer 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 this landmark case, Defendant and Plaintiff entered into a contract for Plaintiff to accompany Defendant on a tour starting on June 1. Defendant contacted Plaintiff on May 11, stating that he had changed his mind. He refused to compensate Plaintiff. Plaintiff brought suit against Defendant on May 22. Plaintiff found a new job that would begin on July 1.

The question arose as

(1) whether a party’s refusal to perform the agreement before the date of commencement entitled the other party to damages and

(2) whether this breach is actionable before the date on which the contract was due to commence.

Under this case, it was held that a party to an executory contract may make a breach of contract before the actual date of performance, and the plaintiff in such a case is entitled to put an end to the contract and can bring an action even before the actual date of performance has arrived.

An important case is Frost v. Knight [(1872) L.R. 7 Ex. 111]. In this case, the defendant promised to marry the plaintiff on the father’s death. While the defendant’s father was still alive he broke off the engagement. Here the plaintiff didn’t wait for the defendant’s father’s death and immediately sued him for the breach, on which she was successful.

Thus, if two parties enter into a contract to be performed at a designated time in the future, and one party refuses to perform the contract before the designated time the parties agreed to perform, the other party may sue before the contract was to be performed. That party need not wait until the time for performance has passed.

Because waiting for the performance of the contract till the date of performance might cause loss to the sufferer party 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.

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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