SESSION 2022-23

Law of Contract
Project on

Anticipatory Breach of Contract

SUBMITTED UNDER SUPERVISION; SUBMITTED BY:

Dr. Varsha Dhabhai

Md Khatib Ali Khan
Faculty of law
BA LLB, 1st Semester
Jagannath University, Jaipur
Roll no: 13
Enrollment no : 501230013

Date of Submission: 26-12-2023

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 DECLARATION

I declare that the project entitled Anticipatory Breach of Contract is the outcome of my own
work conducted under the supervision of Dr. Varsha Dhabhai at Jagannath University,
Jaipur.

I further declare that to the best of my Knowledge the project does not contain any part of any
work, which has been submitted for the award of any degree either in this University or in
another University / Deemed University without proper citation

Md Khatib Ali Khan

Date: 26-12-2023

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 CERTIFICATE OF THE SUPERVISOR

This is to certify that the research work entitled Anticipatory Breach of Contract is the work
done by Md Khatib Ali Khan under my guidance and supervision for the Partial fulfillment
of the requirement of BA LLB degree at Jagannath University.

To the best of my Knowledge and belief the project:

1. embodies the work of the candidate himself;
2. has been duly completed; and
3. Is up to the standard both in respect of contents and language for being referred to the
examiner.

Dr. Varsha Dhabhai

Faculty of Law
Supervisor

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 ACKNOWLEDGEMENT

I would like to express profound gratitude to Dr. Varsha Dhabhai, for his invaluable support,
encouragement, supervision and useful suggestions throughout this research work. His moral
support and continuous guidance enabled me to complete my work successfully. His
intellectual thrust and blessings motivated me to work rigorously on this study. In fact this
study could not have seen the light of the day if his contribution had not been available. It
would be no exaggeration to say that it is his unflinching faith and unquestioning support that
has provided the sustenance necessary to see it through to its present shape.

Among those who have sustained me over the years with their loyalty and friendship, I would
particularly mention my friends Md Sohel have always taken a special interest in my work and
unconditional support at each turn of the life.

I express my deep sincere gratitude towards my parents for their blessing, patience, and moral
support for this project.

Md Khatib Ali Khan

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 TABLE OF CONTENTS
S. NO. CONTENTS PAGE NO.

1. Declaration 2

2. Certificate of the supervisor 3

3. Acknowledgement 4

4. Table of contents 5

5. Introduction 6

6. What is a breach of contract 6

7 What is an anticipatory breach of contract 6-7

8 Statutory provisions related to anticipatory breach of 7-8

contract

9 Essentials of anticipatory breach of contract 8

10 Effect of anticipatory breach of contract 8-9

11 Remedies 9

12 Compensation to aggrieved party 9-10

13 Compensation to the party causing anticipatory breach 10

14 Specific Performance of the Contract 11

15 Invoking writ jurisdiction in cases of anticipatory breach 11

16 Important case laws 11-12

17 Difference between anticipatory and actual breach of 12-14

contract

18 Conclusion 15

19 Reference 15

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1. Introduction
Lord Stowell, in the case of Dalrymple v. Dalrymple (1811), very succinctly held that
“contracts should not be the sport of an idle hour, a mere matter of pleasantry and badinage,
never intended by the parties to have any serious effect whatsoever.” The given statement
brings out the seriousness behind the legal relationships that are created by contracts. It helps
to highlight the primary object of contract law, which is to ensure that the contracting parties
abide by all the duties imposed upon them by the contract and to provide for remedies in case
of breach of the given duties. Contract law, being based on principles of equity, does not only
provide remedies for actual breaches but also remedies where the breach of contract is
anticipated by the promisee. Thereby, contract law does not expect the promisee to wait until
the actual date of performance of the contract to witness the inevitable breach of contract. In
such a case, an important doctrine in contract law, namely the doctrine of anticipatory breach
of contract, is invoked, which empowers the promisee to seek the remedy before the actual date
of performance in cases where the promisor has, due to his wilful conduct, made the contract
impossible to be performed on the actual date of its performance.

2. What is a breach of contract

A contract consists of a promise or a set of reciprocal promises that are legally enforceable by
law. Section 37 of the Indian Contract Act, 1872, provides that it is mandatory for parties to
perform the promise or at least offer to perform the promise made by them in a contract.
Thereby, when any of the parties refuses or fails to fulfil the promise made by him, it is said to
be a breach of contract. The contract generally specifies a time period within which the promise
is to be performed, and if there is no such time period provided, then the promise is to be
performed within a reasonable period of time. However, on the expiration of such a period, if
the act or abstinence promised in the contract remains unperformed, the contract is said to be
breached.

3. What is an anticipatory breach of contract

The doctrine of anticipatory breach of contract is based upon equity. It enables the promisee to
seek a remedy before the actual breach occurs. An anticipatory breach of contract occurs when
the promisor creates a self-induced impossibility for the performance of his promise. The
promisor, through his conduct, creates such circumstances that it would become obvious to any
reasonable person that the contract has become impossible to be performed on or till the actual

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date of its performance. In the case of Hochster v. De La Tours (1853), the plaintiff engaged
the defendant to accompany him on a tour commencing from 1st July, 1832. The defendant
refused to accompany the plaintiff as agreed one month before the commencement of such a
tour. In the suit brought against the defendant, the defendant contended that a suit for breach
of contract cannot be brought before the actual date of commencement. Lord Campbell in the
given case held that it cannot be laid down as a universal rule that, where a contract is for the
performance of an act in the future, the suit cannot be brought until the date of the performance
arrives. The suit can be brought before the date of performance if the promisor refuses to
perform his part before such a date or when he creates such circumstances that disable him
from performing the contract on the actual date of performance. Thereby, it was made clear
that in cases of anticipatory breach of contract, the suit can be instituted before the actual date
of performance has arrived.

As a general rule, to file a suit, we need a right, and that right has to be infringed to give rise to
a cause of action. When such a cause of action arises, a suit can be filed. In the case of contract
law, the parties create their contractual rights and obligations, which are given the force of law
by the contract law. In such cases, the suit is filed when the contractual right of a person is
infringed or when an obligation cast upon a person is left unfulfilled on the date prescribed by
the contract for performance. The doctrine of anticipatory breach of contract is an exception to
the given rule. Herein, the promisee becomes sure that the contract is going to be breached on
the date of performance due to the promisor’s refusal to perform or due to his self-imposed
inability to perform the contract. Equity dictates that the promisee cannot be made to sit and
spectate until the actual date of performance while he incurs loss due to the promisor’s conduct.
Thereby, in the case of anticipatory breach of contract, the suit is brought before there is an
actual accrual of the cause of action; however, to institute a suit, it must be proved that the
cause of action would have surely arisen on the actual date of performance prescribed by the
contract.

4. Statutory provisions related to anticipatory breach of contract

In India, the doctrine of anticipatory breach of contract has been embodied in Section 39 of the
Indian Contract Act, 1872, and Section 60 of the Sale of Goods Act, 1930. Both Sections
provide that the consequence of the anticipatory breach of contract will be to make the contract
voidable at the instance of the promisee, wherein the option of repudiating the contract can be

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exercised by the promisee until the actual date of performance. Section 39 of the Indian
Contract Act provides that the promisor is said to have caused an anticipatory breach of contract
when he refuses to perform his promise in its entirety or disables himself from performing the
promise in its entirety. On such conduct by the promisor, the promisee can either repudiate the
contract or continue with it. If the promisee expressly or impliedly acquiesces to the
continuation of the contract, he forfeits his right to repudiate the contract.

The Indian Contract Act is a general law applicable to all kinds of contracts, whereas the Sale
of Goods Act is a special law applicable only to contracts related to the sale of movable
property. Section 3 of the Sale of Goods Act provides that the provisions of the Indian Contract
Act will supplement the provisions of the Sale of Goods Act in so far as they are consistent
with each other. Thereby, even if Section 60 were to have been omitted from the said Act, the
doctrine of anticipatory breach of contract would have applied through Section 39 of the Indian
Contract Act. Section 60 of the Sale of Goods Act provides that where, before the date of
delivery, either party repudiates the contract, the other party has the option to wait until the
date of delivery, or such party can elect to treat the contract as rescinded and sue for damages
even before the date of delivery arrives. Both the provisions, namely, Section 39 of the Indian
Contract Act and Section 60 of the Sale of Goods Act, are pari materia to each other.

5. Essentials of anticipatory breach of contract

Section 39 of the Indian Contract Act lays down the following essentials for anticipatory breach
of contract:
i. There should be a contract with a future date for performance.
ii. Either of the parties should either refuse to perform the promise made on their part or
should have wilfully induced such circumstances that the performance of the promise
becomes inevitable.
iii. The performance of the promise should not merely be unlikely or economically
infeasible; rather, it should have become impossible.
iv. Such refusal or self-induced impossibility should occur before the actual performance
date.
v. Refusal can be expressed or implied.

6. Effect of anticipatory breach of contract

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 It is imperative to discuss the illustrations provided by Section 39. The illustrations
cogently bring out the effect of anticipatory breach of contract. In both illustrations, the
terms of the contracts are the same, wherein a singer ‘A’ contracted with ‘B’ who is the
manager of a theatre. The contract is for ‘A’ to sing at the theatre for two nights every week
for a period of two months. It is stipulated that ‘A’ will get paid Rs. 100 for each
performance. Thereby, as per the contract, ‘A’ is to sing for sixteen nights, but ‘A’ wilfully
absents herself on the sixth night. In the given case, the word ‘wilful’ clearly manifests that
it is a self-induced impossibility on the part of ‘A’. Thus, ‘B’ can elect to repudiate the
contract by virtue of Section 39 on the sixth night itself without waiting for the end of the
sixteenth night, as has been provided in illustration (a).

In Illustration (b) the circumstances are the same; however, ‘B’ here decides to acquiesce
to the singing of ‘A’ on the seventh night. By allowing ‘A’ to sing on the seventh night,
‘B’ has forfeited his right to repudiate the contract as per Section 39. Herein, ‘B’ will not
be able to end the contract now; however, he will be entitled to claim compensation for the
damage sustained by him due to the wilful absenteeism of ‘A’ on the sixth night. It is
pertinent to note that Section 39 omits to provide for compensation. However, by using
illustration as an internal aid to interpretation, we can deduce that even on acquiescence by
the aggrieved party to the continuance of the contract, the aggrieved party is entitled to
compensation for damages caused to him due to the conduct of the promisor.

7. Remedies
In cases of contracts, the parties themselves carve out their rights and liabilities, and it is
the Indian Contract Act that legally enforces such contracts. To effectively follow the
principle of ubi jus ibi remedium, i.e., where there is a right, there is a remedy, the Indian
Contract Act is read with the Specific Relief Act, 1963, for remedying cases of breach of
contract. In the general case of breach of contract, the person aggrieved claims the relief of
specific performance of the contract under Section 10 of the Specific Relief Act and claims
compensation under Section 73 of the Indian Contract Act, alternatively or additionally.

8. Compensation to aggrieved party

A. When elects to repudiate the contract

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 It is clear from Section 39 that a person aggrieved by an anticipatory breach of
contract can either repudiate the contract or continue the contract. If the person
repudiates the contract, he will be entitled to be compensated for his loss under
Section 75 of the Indian Contract. The illustration of Section 75 is based on the
same facts as that of illustration (a) of Section 39. The given illustration provides
that ‘B’ is entitled to claim compensation for damages sustained by him in breach
of such a contract. Thereby, if ‘B’ repudiates the contract, he will not only be
entitled to claim compensation for the sixth night but for all the consecutive nights
on which ‘A’ was supposed to perform.

B. When elects to continue the contract

As per illustration (b) of Section 39, the aggrieved party, even if elected to continue
the contract, will become entitled to be compensated for damages caused to him
due to an anticipatory breach of contract. Thereby, even if ‘B’ allows ‘A’ to sing
for all the successive nights after the sixth night, he will be entitled to be
compensated for the wilful absence of the sixth night. Apart from this, ‘B’ will have
no liability to pay ‘A’ for the sixth night.

9. Compensation to the party causing anticipatory breach

A. When the person aggrieved elects to repudiate the contract
In cases of anticipatory breach of contract where the aggrieved party elects to
repudiate the contract under Section 39 of the Indian Contract Act, he is also
simultaneously obligated to restore the benefit made to him till the date of such
repudiation under Section 64 of the same Act. The same was held in the case of
Muralidhar Chatterjee v. International Film Co., Ltd., (1942). The illustration
regarding the same has been provided under illustration © of Section 65, which is
a legislative error. The given illustration should be under Section 64, and it is to be
read with illustration (a) of Section 39 as the former is an extension of the latter.
According to the given illustration, even if singer ‘A’ wilfully absents herself on
the sixth night, she will be entitled to claim compensation for all five nights she has
performed in accordance with the contract.

B. When the person aggrieved elects to continue the contract

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 In the case where the aggrieved person elects to continue the contract under Section
39, he will be liable to pay compensation to the person causing the anticipatory
breach as per the same terms agreed between the parties. For example, on the same
facts as that of illustration (b) of Section 39, if ‘B’ agrees to continue the contract,
then the singer ‘A’ will be entitled to be compensated for the five nights she sang
before being wilfully absent on the sixth night and to be compensated for singing
on all ten successive nights. In such a case, ‘A’ will have all the remedies provided
under Section 73 of the Contract Act and Section 10 of the Specific Relief Act.

10. Specific Performance of the Contract

In the case Jawahar Lal Wadhwa v. Haripada Chakroborty (1989), it was held by a three-judge
bench of the Supreme Court that a person who is guilty of anticipatory breach of contract cannot
claim the remedy of specific performance of contract, as in the case of specific performance of
contract, it is mandatory to prove readiness and willingness on the part of the plaintiff as per
Section 16© of the Specific Relief Act.

The court also held that the other party who is aggrieved by the anticipatory breach of contract
cannot claim specific performance if it chooses to repudiate the contract; however, the party
can then sue for damages. The court further held that if the aggrieved party chooses to keep the
contract alive and is able to prove that he is ready and willing to perform his part of the contract,
he can also claim specific performance of the contract.

11. Invoking writ jurisdiction in cases of anticipatory breach

Generally, a suit is filed in such cases; however, in the case of Jakson Engineers Pvt. Ltd. V.
Delhi Development Authority (2003), it was held by the Delhi High Court that in special cases
against the government authorities, the High Courts can also exercise their jurisdiction under
Article 226 of the Constitution of India. In the given case, the Delhi Development Authority,
i.e., DDA, being a public authority, asked the purchaser of a successful bid to pay the purchase
money in full when they themselves were not in a position to hand over possession of the
auctioned plot. The Delhi High Court held that this was a special case where Article 226 could
be invoked.

12. Important case laws

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In the case of Manindra Chandra Nandy and Ors. V. Ashwini Kumar Acharya (1920), it was
held by the court that anticipatory breach of contract takes effect as a premature destruction of
the contract rather than failure to perform it in its terms. The court also observed that in such a
case, the damages are calculated by considering what the injured party would have suffered by
the continuing breach of the other party down to the actual date of performance. The court also
reduced the cost of damages that are mitigated due to repudiation before the actual date of
performance.

In the case of West Bengal Financial v. Gluco Series Pvt. Ltd. (1972), the plaintiff was a private
limited company, and the defendant was a body corporate established under the State Financial
Corporations Act, 1951, which was a financial institute. The defendant granted a loan of Rs.
4,38,000 to the plaintiff. The contract also stipulated that a loan of Rs. 1,62,000 will also be
extended if the plaintiff is able to repay Rs. 60,000 every year. The plaintiff failed to make the
repayment but still insisted that the loan of Rs. 1,62,000 should be extended. The defendant
denied extending the loan. The plaintiff filed the suit, alleging that the defendant is liable for
breach of contract as it failed to provide the loan of Rs. 1,62,000. The court in the given case
held that the contract between the parties could be severed into two contracts. One contract is
for a loan of Rs. 4,38,000, which was successfully granted by the defendant and accepted by
the plaintiff. The court held that the second contract was to extend the loan of Rs. 1,62,000.
The second contract was breached by the plaintiff as it failed to make yearly payments of Rs.
60,000. Thereby, as per Section 39 of the Indian Contract Act, the plaintiff caused the
anticipatory breach of contract. The defendant, in furtherance, elected to repudiate the given
contract, and thereby, the defendant was right in doing so.

Further, in the case of State of Kerala v. Cochin Chemical Refineries Ltd. (1968), the Supreme
Court relied on the case of White and Carter v. McGregor (1962) and held that under Section
39, the contract does not repudiate automatically due to the mere fact that one of the parties
will fail to perform the terms of the contract. Rather, it is mandatory for the other party to elect
in such a case whether the contract is to be repudiated or whether it is to be continued. The
given election should be succinct and clear.

Furthermore, in the case of anticipatory breach of contract, it is pertinent to note that there is
disagreement between the parties regarding the interpretation of the terms of the contract. In
such a case, if the party offers to perform the contract as per his interpretation, it will not amount
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to an anticipatory breach of contract; the same was held in the case of Lowenstein v. Federal
Rubber Co. (1936).

13. Difference between anticipatory and actual breach of contract

Grounds Breach of contract Anticipatory breach of
contract

Breach of contract is due to The doctrine of anticipatory

non-compliance with Section breach of contract is
Relevant Provision 37 of the Indian Contract embodied in Section 39 of
Act, which requires the the Indian Contract Act.
contract to be performed by
the parties to the contract
unless the obligations created
can be dispensed with under
the provisions of this Act or
under any other law.

It is a special situation where,

before the actual date of the
It occurs when any party to performance arrives, the
the contract fails to fulfil the party to the contract refuses
Definition promise made by him on or the performance of the
before the date of contract or wilfully creates
performance of the contract. such circumstances that
make the performance of the
contract inevitable

In the case of anticipatory

Generally, the remedy in breach of contract, Section
cases of breach of contract is 39 provides the aggrieved
to claim specific party the right to elect
performance of the contract whether he wants the
under Section 10 of the contract to be repudiated or

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 Specific Relief Act, 1963, or whether he wants the
to claim compensation under contract to be continued.
Remedies Section 73 of the Indian Where one elects to
Contract Act, 1872. The repudiate the contract, he can
remedies can be stipulated in seek compensation, and if he
the agreement expressly as elects to continue the
well, for example: liquidated contract, the contractual
damages can be provided in relationship will continue
the contract, or in contracts like any other normal case;
of guarantee, the guarantor or however, the aggrieved
the surety can be asked to person will still be entitled to
perform the contract. claim compensation for
anticipatory breach as
inferred from illustration (b)
of Section 39.

In the case of anticipatory

breach of contract, the cause
of action arises on the date
In the case of a breach of when the party expresses its
Cause of Action contract, the cause of action refusal to perform the
arises on the actual date of contract or on the date when
performance. the performance of the
contract becomes inevitable.
There is no need to wait until
the actual date of the
performance.

14. Conclusion
The doctrine of anticipatory breach is primarily based on the broad principles of equity,
justice, and good conscience. The doctrine removes the impediment of seeking remedy only
after the expiration of the actual date of performance, like in a normal contract; rather, it
enables the aggrieved party to seek remedy as soon as the actual performance of the contract

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 becomes an impossible endeavour. The doctrine does not deem that the date of performance
has moved ahead of its time; rather, it deems the refusal or self-induced impossibility of
the contract as non-performance of the actual contract even though it takes place before the
actual date of performance. The doctrine also helps both parties prevent or reduce any loss
that may be caused by an actual breach of contract. This doctrine has been followed by the
Indian courts time and again to secure the ends of justice. It clearly adds to the group of
laws that ameliorate the conditions of business convenience in India.

15. Reference
A. https://ssrana.in/ufaqs/anticipatory-breach-contracts/
B. Avtar Singh’s Law of Contract & Specific Relief (2022), 13th edition
C. Indian Contract Act by Sir Dinshaw Fardunji Mulla (2015), 15th edition.

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