Discharge by Breach
How a contract ends when one party fails to do what they promised.
Introduction
A contract may end if one party fails to do what they agreed. Breach of contract happens when a person does not perform their promise without a legal reason. It is a common reason to claim money (damages) or ask the court to enforce the contract.
Meaning / Definition
Breach of contract means failing to perform any term of a contract, either written or spoken, without a lawful excuse. This may include: not paying on time, not delivering goods, giving lower quality goods, being late, or showing an intention not to perform.
Modes / Types of Breach
Anticipatory Breach
- Happens before the time for performance is due.
- Can be expressed (clearly stated) or implied (shown by actions).
- Section 39 of the Indian Contract Act allows the innocent party to end the contract immediately or wait until the performance date.
- Damages (money to compensate loss) are usually calculated from the date the breach is announced.
Actual Breach
- Happens when a party refuses to perform or performs incompletely on the due date.
- Can be express (clearly refuses) or implied (fails to perform properly).
- Common in contracts with payments or deliveries in parts.
Important Case Law
- Hochster v De la Tour – The court allowed action for anticipatory breach before the performance date.
- Frost v Knight – Action can be taken for anticipatory breach in a contract depending on a future event.
- Ramgopal v Dhanji Jadhavji Bhatia – Damages for anticipatory breach are calculated at the time of breach.
- Avery v Bowden – Waiting after anticipatory breach may result in loss of right if the contract becomes impossible to perform.
Distinction / Comparison
| Feature | Anticipatory Breach | Actual Breach |
|---|---|---|
| Time | Before performance is due | On the due date or during performance |
| Action by innocent party | Can treat as breach immediately or wait | Can act only after breach happens |
| Risk | Waiting may cause loss if contract becomes impossible | No risk; breach already happened |
| Effect | Excuses innocent party from future obligations | Excuses only from obligations on due date |
Practical Example
- Anticipatory Breach: Sam promises to sell a machine to Charlie on August 20. On August 10, Sam sells it to Rainer and informs Charlie. Charlie can immediately sue for breach.
- Actual Breach: On August 20, Sam refuses to deliver the machine to Charlie. Charlie can sue for non-performance.
Summary
- Breach happens when a party fails to perform without legal reason.
- Requires a valid contract, proof of breach, performance by innocent party, and reasonable notice.
- Anticipatory breach: refusal before due date; allows immediate action or waiting.
- Actual breach: failure on the due date or partial performance.
- Remedies include damages (money) or specific performance (court order to perform).
- Minor mistakes do not always count as breach; the refusal must affect the whole contract.
- Damages for anticipatory breach are measured from the time the breach is announced.