Ans.DISCHARGE BY
BREACH OF CONTRACT
When a contract is broken by one party the other party or
parties are freed from the obligation of performing the contract. They can also
take the remedial measures to which they are entitled. Breach of contract may
arise in two ways:
1. By actual breach or present breach.
2. By anticipatory breach.
ACTUAL BREACH OF
CONTRACT
Actual breach of contract occurs when during the
performance of the contract or at the time when the performance of the contract
is due, one party either fails or refuses to perform his obligations under the
contract. The refusal of performance may be express (Le. by word or by writing)
or implied (Le. by conduct of the party or by non-action) or abstaining from
doing something. D agrees to deliver to B, 5 tons of sugar on 1st June. He
fails to do so. There is breach of contract by D.
ANTICIPATORY BREACH OF
CONTRACT (Sec. 39)
Anticipatory breach of contract occurs
:
1. when a party before the time for performance is due
announces that he is not going to perform the contract or,
2. when a party by his own act disables himself from
performing the contract.
a. C enters into a contract to supply B with certain
articles on the 1st June. Before 1st June he informs B that he will not be able
to supply the goods.
b. X agrees to marry Y. Before the agreed date of
marriage, he marries Z.
CONSEQUENCES OF
ANTICIPATORY BREACH
When anticipatory breach occurs, the aggrieved party can
take the following steps:
(A) May treat the contract as discharged-
(i) He can treat the contract as discharged, so that he
is no longer bound by any obligations under the contract; &
(ii) He can immediately adopt the legal remedies
available to him for breach of contract, vz'z., file a suit for damages or
specific performance or injunction.
(B) May not treat the contract as discharged-
Anticipatory breach, by itself, does not discharge the
contract. The contract is discharged, when the aggrieved party chooses to treat
it as discharged. The aggrieved party may decide not to rescind the contract
but to treat the contract as alive and operative and wait for the time of
performance. In such a case the consequences are as follows:
(i) The contract will be operative for the benefit of
both the parties. The contract will continue to exist and may even be performed
by the other party.
(ii) If the contract is not rescinded and subsequently an
event happens which discharges the contract legally (e.g. a supervening
impossibility) the aggrieved party loses his right to sue for damages.
For example, A agrees to supply one ton of sugar
to B by 20th August. On 10th August, A informs B that he cannot supply sugar B
did not accept the refusal and preferred to wait till 20th August. On 15th August,
the Minister declares nationalization of sugar industry. Now the contract is
discharged and B has no remedy against A. 
