National Law University, Orissa

Breach of Contract
Abhik Majumdar M L Shankar Kaarmukilan

Section 39.Effect of refusal of party to perform promise whollyWhen 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.

Section 39.Effect of refusal of party to perform promise whollyWhen 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 . . . his acquiescence in its continuance.

Three types of breach: 1. Renunciation of liabilities by one party 2. Impossibility of performance created by partys own act 3. Total or partial failure of performance

Every breach of contract does not discharge the innocent party from performance of his part. Repudiation does not discharge the contract, only gives option to the innocent party to regard itself as discharged. Repudiation: When one party refuses to honour its terms in a contract Renunciation: When one party refuses to performs his obligations in some essential respect, either expressly, or by words or conduct demonstrating intention not to perform Universal Cargo Carriers v. Citati (1957) 2 All ER 70 If the threat (i.e. refusal) is reasonably understood by the other party as likely to deprive him of substantially the whole benefit of the contract, and it is unjustified, it constitutes repudiation V L Narasu v. P S V Iyer AIR 1953 Mad 300 Mere failure to perform a contract does not amount to repudiation, unless it express intention of not going with the contract

Renunciation may be express or implied Purshotamdas Tribhovandas v. Purshotamdas Mangaldas (1897 Bom HC) Custom of caste girls married betweeen ages 12 and 15 P betrothed to Ds daughter P asked D to fix a date before Sinhast year (no marriages during this period of 18 months) after this period daughter would cross age 15 Ds daughter said she was unable to get married for three or four more years D said he could not force his daughter Held: This practically a repudiation of contract P entitled to damages

The previous case may be compared to: Sooltan Chund v. Schiller (1879-80 Cal HC) D agreed to supply to P 200 tonnes of linseed Terms Cash on Delivery Certain deliveries were made P then deposited Rs. 1000 this not anywhere near enough to cover the amount due to D D then wrote to P cancelling the contract, also refusing to make any further deliveries P responded, agreeing to pay if certain adjustments were made regarding the price of gunny sacks etc. D said they would make no further delivery P then sourced linseed from other suppliers, and then sued D

Held: Since P was willing to willing to pay as long as amount adjusted, his actions could not be construed as refusal Hence D not entitled to rescind contract Difference between this case and the previous is that in Purshotamdas Tribhovandas the defendant was not prepared to even discuss or negotiate the possibility of performance. That is why it amounted to a repudiation whereas this did not, even though P failed to fulfil his contractual obligations.

Disability: Purshotamdas Tribhovandas v. Purshotamdas Mangaldas Synge v. Synge (1894 QB) D (husband) engaged to be married P (wife) D promised P that he will make a will leaving a particular house to P for life Marriage took place D then sold the house to third party Held This amounted to a breach, because Performing the contract was now impossible This had been brought about by D himself Kusumpudai Sunandra v. Off. Receiver AIR 1964 AP 299 Mere notice of insolvency does not amount to a declaration not to perform contractual obligations.

In its Entirety Doctrine: Refusal to perform any part of the contract, however small, can amount to a refusal to perform in its entirety However, the kind of refusal contemplated here must affect a vital part of the contract recall Hoenig v. Issacs (1952) 2 All

ER 176 (CA)

Rash Behary Shaha v. Nrittya Gopal Nundy 1906 Cal HC P agreed to purchase sugar from D Supply of sugar in different shipments Cash to be paid before delivery September shipment P asked for extra time to pay D refused, wrote to P saying contract cancelled October shipment P tendered payment, but D refused to accept, saying contract cancelled Held: Mere failure on Ps part to pay did not amount to refusal Hence, D not entitled to rescind the contract and not deliver October shipment

Essential Term: No set rule about what constitutes an essential term Freeth v. Burr (1874-80) All ER Rep 751 Whether the conduct of the party is such as to amount to Abandonment of contract or refusal to perform it, or Evince an intention not to be bound by the contract Test here is reasonability test One view (no substantiation available) is that material intention is not that with which the contract is broken, but that with which it was made In any case, two necessary elements necessary: Term held fundamental Ds refusal to perform that term

Anticipatory Breach Parties to wholly executory contract have right to not only performance, but also maintenance of contractual relationship till the time performance is due Repudiation of obligations, or disabling oneself from performing, before performance is due, constitutes breach Since this is done before performance is due, it is referred to as anticipatory breach Actually, there is nothing anticipatory about it, it is breach in the present repudiation This is because contractual obligations start from the time the contract is entered into, not merely from the time performance becomes due Example of anticipatory breach: Purshotamdas Tribhovandas v. Purshotamdas Mangaldas

Hochster v. De la Tour (1853 QB) D engaged P as his courier on continental tour Tour to start from 1 June Before 1 June, D changed his mind, repudiated contract P immediately sued D D contended that P cannot sue before 1 June, when performance becomes due Held: P can sue before 1 June also

Recission and Frustration: Recission right of one party when other party breaches contract, or contract is voidable etc Frustration implied term or condition to the effect that in certain conditions, the contract stands breached this based on what the parties would themselves have added to the contract if it had occurred to them Breach by Both Parties State Trading Corporation of India v. M Golodetz Ltd (1989) Order in which breaches occur is important to ascertain damages If A breaches (repudiates) first, then B also repudiates, then B is entitled to rescind the contract. Hence if he accepts the repudiation, his own conduct will not amount to repudiation. But if B does not accept As repudiation, then his own conduct = repudiation, and then A will have right to terminate contract