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Breach of a contract

‘Breach of a contract’ means the failure of a party to perform his obligations. The party who fails to perform his obligations is said to have committed a breach of contract. A breach of a contract discharges the aggrieved party from performing his obligations. Breach of a contract is of the following two types:
  • Actual breach of contract: It occurs when, on the due date of performance or during the course of performance, a party refuses or fails to perform his obligations. The actual breach may be expressed or implied. Thus, the actual breach of contract may be discussed under the following two heads:
    • On due date of performance: If any party to a contract refuses or fails to perform his part of the contract at the time fixed for performance, it is called an actual breach of contract on the due date of performance. In such cases, the other party is discharged from the performance of his obligations, and can hold the guilty party liable for the breach of contract.
Example

Amar agreed to sell his car to Akbar on 14th June. But on 14th June, Amar refused to sell the car to Akbar. On Amar’s refusal to sell the car, there occurred a breach of the contract, and Akbar can hold Amar liable for the breach of the contract.

  • During the course of performance
     
    If any party has performed a part of the contract and then refuses or fails to perform the remaining part of the contract, it is called an actual breach of contract during the course of performance
     
    Sometimes, one party, no doubt, performs his obligations but not strictly according to the contract. It is also an actual breach of contract. This type of breach of contract occurs when the party performing the contract commits a breach of the essential conditions to the contract

Note: However, the breach of non-essential terms does not discharge the contract. It only entitles the aggrieved party to claim damages from the defaulting party.

 

Example

Robin, a shoe manufacturer, contracted to supply 500 pairs of shoes to Uttapa, a dealer in shoes, at a certain price. The shoes were to be delivered in instalments. After the supply of 200 pairs of shoes, Uttapa told Robin that no more shoes are required. In this case, the breach of contract was committed during the course of performance of the contract.

Consequences of actual breach of contract

  • If time is the essence of the contract
    • The contract is voidable at the option of the aggrieved party
    • The aggrieved party can claim the compensation for the loss on non performance
    • The aggrieved party cannot reject the transaction when he accepts delayed performance
If time is not the essence of the contract
  • The contract is not voidable
  • The aggrieved party can claim compensation for any loss caused delayed performance




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