• A breach of contract occurs when a person
thereto renounces his liability under it, or by
his own act makes it impossible that he should
perform his obligation under it or totally or
partially fail to perform such obligation.
[Associated Cinema of America, Inc. v. World
Amusement Co. [1937) Minn. 94]
• Every default does not strictly itself discharge
the contract. It enables the innocent party, if
he chooses, to absolve himself as discharged
from performance or further performance on
his side, he may be said to have accepted the
repudiation and ask for compensation, or he
may continue on insisting the performance.
When repudiation is accepted by the innocent
party, he is absolved from further contractual
• Renunciation or repudiation of the contract
takes place where the party shows the
intention to not to go on with the contract.
Kinds of Breach
• A breach may be (1) Actual or present
• Breach by one party always gives rise to right
to claim damages by the innocent party.
However, whether it would also enable the
party not in default to absolve himself
depends. A long line of cases have recognized
that the party not in default has such a right
in cases of anticipatory breach or in case of
Breach may occur in the following ways (a) A party renouncing his obligations under the contract.
(b) A party by his own acts making it impossible that he
should fulfill his obligations under the contract.
(c) A party may fail to perform what he has promised.
The first two ways of breach is the examples of
anticipatory breach and the third one is actual breach.
• Sec 39 of the Indian Contract Act gives
expression to the doctrine of anticipatory
• See Illustration (a) & (b).
Case Laws on anticipatory breach –
• Hoschster v. De la Tour (1853) 2 E&B 687
• Frost V Knight, [(1872) L.R. 7 Ex. 111] – Performance
• Therefore a breach of contract, by repudiation before
the time for performance is anticipatory breach. The
innocent party is entitled to treat the contract as
discharged and sue for damages immediately. It is also
open for him to not to treat the contract as repudiated
till the time for performance arrived.
• Restitution –
In case of anticipatory breach restitution should
be made u/s 64.
(Murlidhar Chatterjee v. International Film Co.
[AIR 1943 PC 34].
Sir George Rankin - The contract which may be
put an end to under sec 39 is voidable in
Actual Breach – If at the time when performance is
due, a party by words or conduct makes known
his intention to not to perform his part of the
contract it is actual breach.
Failure of performance obviously can occur only
during the performance.
It gives rise to right to demand damages.
The innocent party may treat the contract
discharged where time is of essence. But he can
always ask for damages. ( See Sec. 55).
Consequences of Breach
• Primary obligation of the parties is replaced by
the remedial rights and obligations irrespective of
the facts whether the injured party is entitled to
absolve himself from performance of his part or
not as a result of breach.
When a party breached the contract the other party
may have the right to rescind the contract and
treat himself as absolved from his obligations and
hold the defaulting party liable in damages. (See
Sec 62, rescission is cancellation of all or some of
Liquidated Damages and Penalty
• Under the English law liquidated damages are
recoverable but penalty is not recoverable.
Dunlop Pnumetic Tyre Co. Ltd. V New Garage &
Motor Co. Ltd[(1915) AC 79]
American Restatement of Law of Contract in S. 342
– punitive damages are not recoverable.
• Under Indian Law the treatment of liquidated
damages and penalty slightly differs from English
Law. ( See Sec. 74)
Remoteness of Damage
• Hadley v Baxendale [(1854) 9 Ex 341. The
principle of this leading case have been
followed, expounded and affirmed again and
again. The principles of this case was entered
into S. 73 of the Act.
• General and special damages –
Damages as may fairly and reasonably be
considered arising naturally according to the
usual course of things from the breach as its
probable result alone will be awarded unless
any special damages by special circumstances
are in the knowledge and contemplation of
Damages for the mental pain and
• Ordinarily in commercial contracts damages
are not allowed for mental suffering.
• But see – Hobbs v. L. & S.W. Railway [(1875)
L.R. 10 QB]
• Mitigation of damages – Explanation Sec 73
*Please consult the referred books as provided
in the course plan.