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A short note on Anticipatory breach of contract

A special case arises under sec.39 when an integral part of a contract is repudiated by a promisor, before the due date of performance has arrived. This is called an “Anticipatory breach of contract”. In such a case two remedies are open to the promise: (i) he may treat the repudiation as a breach of the contract and sue for the same at once, i.e. he may accept the breach, or (ii) he may wait till the due date of performance arrives and then, if the contract remains unperformed sue for the breach, i.e. waive the breach an keep the contract open for the performance.

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In the last case, however a special rule is to be observed. Where the promisee keeps the contract alive, he keep it alive not only for the benefit of himself but also for the benefit of the other party. The result is that if, during the interval special circumstances intervene, which operates for the benefit of the other party, the latter would, in law, be entitled to take full advantage of them.

In the leading case on the subject, the defendant had engaged the plaintiff as courier for a three months’ continental tour from 1st June at $10 per month. Before 1st June the defendant cancelled the contract. The plaintiff sued the defendant before 1st June. Held, the suit was justified. As illustrating the last rule, may been mentioned the Odessa Wheat Case where a charter party was repudiated by the shipper, before the due date of shipment arrived. The ship-owner, however allowed the contract to continue. War between England and Russia was declared before the due date arrived. The contract thereby became impossible of performance. Held the shipper was discharged from all liability under the contract.

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A party is deemed to have incapaciated himself from performing his part of the contract , not only when he deliberately push it out of his power to perform his part of the contract but also when by his own act or default, circumstances arise which render him unable to perform his side of the contract or some essential part thereof. Thus where a charterer had delayed loading cargo for such a prolonged period that the object of the venture would have been defeated, even if demurrage had been paid, held, the ship owner was entitled to treat the conduct of the charterer as an anticipatory breach and to rescind the contract on that ground.

Held further that though the obligation to load during lay days is not a condition but a warranty, if the delay is some great as to go to the root of the contract and lead to inevitable frustration of the venture , the ship owner is entitled to rescind the contract as on an anticipatory breach.

Notice that insolvency of the promisor does not amount to repudiation. This is because the Official Assignee may decide to carry out the contract for the benefit of the estate. Further, even when an anticipatory breach of contract is accepted as a breach, the measure of damages is not different between the contract price and the market price of the date of the breach. The measure of the damages is the same as in other cases, viz. the difference between the contract price and the price prevailing on the day the performance was fixed.

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