Introduction:

Anticipatory breach of contract refers to a situation where one party to a contract makes it clear to the other party that they do not intend to perform their obligations under the contract. This is also known as anticipatory repudiation. Under the Indian Contract Act, 1872, an anticipatory breach of contract gives the innocent party the right to terminate the contract immediately and claim damages.

Section 39 of the Indian Contract Act, 1872, deals with the breach of contract, and it states that when a party to a contract has refused to perform or disabled himself from performing his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. In the case of anticipatory breach of contract, the promisor makes it clear to the promisee that they will not perform their obligations under the contract, even before the time for performance has arrived.

For example, if A contracts with B to deliver goods on a certain date, and before the due date, A informs B that they will not be able to deliver the goods, this constitutes an anticipatory breach of contract. B has the right to terminate the contract immediately and claim damages.

Suppose that X agrees to sell his car to Y on a specific date, and Y agrees to purchase it at the agreed price. However, before the date of delivery arrives, X sells the car to Z. This action constitutes an anticipatory breach of contract as X has acted in breach of his agreement with Y before the date of delivery.

REMEDIES FOR ANTICIPATORY CONTRACT BREACH

The following options are open for anticipatory contract breach:

1. The promisee has the right to sue for breach of contract if they believe there has been a real breach.
2. The promisee must hold off on filing the lawsuit until after the real date of performance.
3. Specific performance and injunction: In some cases, a party to a contract may be protected by the alternative relief of specific performance of the contract rather than pursuing damages for a breach of the contract.
4. Damages: The most frequent remedy open to the injured party is compensation for damages. As a result, the party who was harmed is liable for paying damages to the wounded party. The relevant clauses are incorporated into Sections 73 to 75. It was decided in the Hadley v. Baxendale case from 1854 that the plaintiffs had not informed the defendants of the special conditions. Therefore, the claimants were not qualified to receive the loss compensation. In the 1949 case of Victoria Loundry Ltd. v. Newman Industries Ltd., it was determined that the respondent knew the truth. To determine the damages that will be paid in this case, the case was submitted to the official Referee.
5. Quantum Meruit: This remedy entitles the injured party to compensation for any portion of the contract obligations that have already been fulfilled before the breach happened.

  The party who is not in default may assert a claim for quantum meruit since it can only be made after the initial contract is discharged.

Case Law:

One notable case related to anticipatory breach of contract is K. R. Bala Subramaniam v. K. S. Rangachari (1968). In this case, the plaintiff had entered into a contract with the defendant for the sale of land. The defendant had paid a part of the purchase price, and the plaintiff had executed a sale deed in favour of the defendant. However, before the final payment was made, the plaintiff informed the defendant that they had sold the land to a third party. The defendant sued the plaintiff for breach of contract. The court held that the plaintiff’s communication amounted to an anticipatory breach of contract, and the defendant was entitled to terminate the contract and claim damages.

One notable case related to the anticipatory breach of contract is Satyabrata Ghose v. Mugneeram Bangur & Co. (1954). In this case, the plaintiff, Satyabrata Ghose, entered into a contract with the defendant, Mugneeram Bangur & Co., for the supply of jute. The contract provided for a shipment of jute from Calcutta to London. Due to the outbreak of World War II, the shipment was delayed, and the plaintiff terminated the contract. The defendant sued the plaintiff for breach of contract. The court held that the contract had been frustrated, and it was not possible to perform it due to the outbreak of the war. Therefore, the plaintiff was not liable for breach of contract.

Another case is Kedar Nath v. Gorie Mohammad (1883) where the defendant agreed to purchase certain goods from the plaintiff on credit. The plaintiff sent the goods to the defendant, but before the defendant could pay for them, he became insolvent. The plaintiff sued the defendant for the price of the goods, but the court held that the defendant’s insolvency was a repudiation of the contract, and the plaintiff was entitled to treat the contract as discharged

Conclusion:

In conclusion, an anticipatory breach of contract occurs when one party to a contract makes it clear to the other party that they do not intend to perform their obligations under the contract. The innocent party has the right to terminate the contract immediately and claim damages.

An anticipatory breach of contract occurs when one party to a contract indicates, either by words or actions, that they will not fulfill their obligations under the contract. The other party to the contract can treat this as a repudiation of the contract and can bring an action for damages. The Indian Contract Act, 1872, provides for remedies in case of anticipatory breach of contract, including the right of the aggrieved party to sue for damages.