CHANAKYA NATIONAL LAW UNIVERSITY

A PROJECT OF
CONTRACT-I
ON
DISCHARGE OF CONTRACT BY BREACH

SUBMITTED TO: SUBMITTED BY:

Mrs Sushmita Singh Abhishek Singh
Faculty of Contracts 1 Roll No. - 1606
Semester 2nd
B.BA LL.B
Session 2016-2021
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 DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the BB.A. LL.B (Hons.) Project Report entitled
DISCHARGE OF CONTRACT BY BREACH submitted at Chanakya National Law
University, Patna is an authentic record of my work carried out under the supervision of
Mrs. Sushmita Singh. I have not submitted this work elsewhere for any other degree or
diploma. I am fully responsible for the contents of my Project Report.

(Signature of the Candidate)

ABHISHEK SINGH
Chanakya National Law University, Patna
20/04/2017

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 ACKNOWLEDGEMENT

IF YOU WANT TO WALK FAST GO ALONE

IF YOU WANT TO WALK FAR GO TOGETHER

A project is a joint endeavor which is to be accomplished with utmost compassion, diligence

and with support of all. Gratitude is a noble response of ones soul to kindness or help
generously rendered by another and its acknowledgement is the duty and joyance. I am
overwhelmed in all humbleness and gratefulness to acknowledge from the bottom of my
heart to all those who have helped me to put these ideas, well above the level of simplicity
and into something concrete effectively and moreover on time.
This project would not have been completed without combined effort of my revered
Contract-I teacher Mrs SUSHMITA SINGH whose support and guidance was the driving
force to successfully complete this project. I express my heartfelt gratitude to her. Thanks are
also due to my parents, family, siblings, my dear friends and all those who helped me in this
project in any way. Last but not the least; I would like to express my sincere gratitude to our
Contract-I teacher for providing us with such a golden opportunity to showcase our talents.
Also this project was instrumental in making me know more about the term wrongful act and
how it is a major constituent of a tort claim. This project played an important role in making
me understand more about the discharge of contract by breach. It was truly an endeavour
which enabled me to embark on a journey which redefined my intelligentsia, induced my
mind to discover the intricacies involved in laws related to discharge of contract by breach.

Moreover, thanks to all those who helped me in any way be it words, presence,
Encouragement or blessings...

- Abhishek Singh
- 2nd Semester
- B.BA LL.B

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 CONTENTS
Acknowledgement..3

Table of Contents...4

Research Questions...5

Aims and Objectives..5

Hypothesis..5

Research Methodology..5

Limitations.5

Review of Literature...6

1. Introduction...7-8

2. Discharge of Contract..9-14

3. Discharge of Contract by Breach..15-16

4. Consequences of Anticipatory & Actual Breach..17-21

5. Conclusion22-23

Bibliography24

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 RESEARCH QUESTIONS
1. What is coercion?
2. What is duress?
3. What are the similarities between coercion and duress?
4. What are the differences between coercion and duress?
5. Comparative analysis of coercion under Indian law and duress under English law.

HYPOTHESIS

Breach occurs where one party to a contract fails to perform its contractual obligations, or the
performance is defective. A breach of contract does not per se bring a contract to an end. The
breach may give to the aggrieved party the right to terminate the contract but it is for the non-
breaching side to decide whether or not to exercise that option. The aggrieved party has a
right of election; that is to say, it can choose either to affirm the contract or to terminate it.
However, once that decision has been taken, it is, in principle, irrevocable.
A Breach may be anticipatory or actual.

RESEARCH METHODOLOGY
For this study, primary research method was utilised. Various articles, e-articles, reports and
books from library were used extensively in framing all the data and figures in appropriate
form, essential for this study.
The method used in writing this research is primarily analytical.

LIMITATIONS
The presented research is confined to a time limit of one month and this research contains
only doctrinal works which are limited to library sources.

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 REVIEW OF LITERATURE
Following are the literary works used in this project:

1. Dr. R.K. Bangia, Contract-I (Allahabad Law Agency)

This book helped to a great extent as the book consisted of the basic information about the
subject matter of this project Discharge of Contract by breach. The book had most of the
introductory matter and the facts relevant for the project. It also consisted of important
judgements and case laws from both Indian and English laws relevant for the project. But the
matter in this book was very concise and not enough for the project, hence, some other books
needed to be consulted.

2. Avtar Singh, Contract & Specific Relief (Eastern Book Company), Twelfth
Edition
This book by Avtar Singh was also a great help. This book consisted of a lot of information
which the first book did not have. It consisted some more information about discharge of
contract by breach. The information about coercion was almost the same only the number of
cases in this book was more than the previous one. The judgements and rulings of this case
were very helpful. Also this book consisted a lot of information about the various types of
discharge of contact, which was a great help indeed.

3. J. Beatson, Ansons Law of Contract (Oxford University Press), 28th Edition

This book was the best for this project. It consisted of all the information which the other two
books did not have. The other books also had relevant information but this book had enough
information for this project. Also this book contained abundant number of cases which was a
great help for the completion of this project.

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 INTRODUCTION
A contract means an agreement which is enforceable by law. An agreement consists of
reciprocal promises between the two parties. In case of contract each party is legally bound
by the promise made by him. A contract or an obligation to perform a promise may arise in
the following way-
I. By agreement and Contract;
II. By standard form of contract; and
III. By Promissory Estoppel.

The most common way of making a contract is through an agreement. The two parties may
agree to something through mutual negotiations. When one party makes an offer and the
other party accepts the same, there arises an agreement, which may be enforceable by law.
In the modern age some persons, institutions or establishments such as Railways, Insurance
Companies, Banks, manufacturers of various goods etc. may have to enter into a very large
number of contracts with thousands of persons. They cannot possibly negotiate individually
with the persons with whom the contracts are to be made. Contracts with pre-drafted matters
are generally prepared by one party, which the other has to agree to. As a general rule, such
Standard forms of contracts are as much valid as those entered into through due negotiations.
Different situations and problems arising in such contracts have been discussed here under.
Sometimes there may be no agreement and contract in strict sense of the term, but a person
making a promise may become bound because of the application of the equitable doctrine of
estoppel.
According to Section 2(h) of the Indian Contract Act, 1872, An agreement enforceable by
law is a contract.
When an agreement, which was binding on the parties to it, ceases to bind them, the contract
is said to be discharged. A contract may be discharged in the following ways-
(1) By performance of the Contract
(2) By breach of the contract
(3) By impossibility of performance
(4) By agreement and Novation

Discharge of a contract implies termination of contractual obligations. This is because when

the parties originally entered into the contract, the rights and duties in terms of contractual
obligations were set up. Consequently when those rights and duties are put out then the

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contract is said to have been discharged. Once a contract stands discharged, parties to it are
no more liable even though the obligations under the contract remain incomplete.
The law of contracts forms a substantial part of our various relationships that can have some
sort of influence over us on an almost daily basis even when there is no physical contract in
front of us we may still be privy to some sort of contractual obligation. Alternatively, if
youre a fan of social theorists such as Jean-Jacques Rousseau, you may argue that were also
bound by the social contract, but we digress. Getting back to our original point, the law of
contracts plays an enormous role in many of our interactions and for the most part, there may
be no real concern in regards to the performance of a contract and an agreement will be
completed accordingly. However, this does not mean that issues wont arise within a
contractual relationship, and there may be circumstances where you may need to discharge a
contract which can be done by either one, or all of the parties to the agreement, and can be
discharged by either:
1. performance;
2. agreement;
3. subsequent agreement;
4. operation of law;
5. election after breach;
6. frustration.

Before exploring the general ways in which a contract can be discharged, the most obvious
way in which a contract will come to an end, is when all parties fulfil their contractual
obligations and the contract has been discharged via performance.

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 DISCHARGE OF CONTRACT
Discharge of a contract implies termination of contractual obligations. This is because when
the parties originally entered into the contract, the rights and duties in terms of contractual
obligations were set up. Consequently when those rights and duties are put out then the
contract is said to have been discharged. Once a contract stands discharged, parties to it are
no more liable even though the obligations under the contract remain incomplete.
A Contract is deemed to be discharged, that is, concluded and no longer binding, in the
following circumstances:

Discharge by performance.
Discharge of Contract by Substituted Agreement.
Discharge by lapse of time.
Discharge by operation of law.
Discharge by Impossibility of Performance.
Discharge by Accord and Satisfaction.
Discharge by breach.

Discharge by performance
Where both the parties have either carried out or tendered (attempted) to carry out their
obligations under the contract, is referred to as discharge of the contract by performance.
Because performance by one party constitutes the occurrence of a constructive condition, the
other partys duty to perform is also triggered, and the person who has performed has the
right to receive the other partys performance. The overwhelming majority of contracts are
discharged in this way.1

Discharge of Contract by Substituted Agreement

A contract emanates from an agreement between the parties. It thus follows that; the contract
must also be discharged by agreement. Therefore, what is required, inevitably, is mutuality.
Discharge by substituted agreement arises when a contract is abandoned, or the terms within
it are altered, and both the parties are in conformity over it.

1
http://gradestack.com/Mercantile-Law-for-the-CA/Discharge-of-Contract/Discharge-by-operation-of/22685-
4473-55986-study-wtw

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For example, A and B enter into some agreement, and A wants to change his mind and not to
carry out his terms of the contract. If he does this unilaterally then he will be in breach of
contract to B. However, if he approaches B and states that he would like to be released from
his liabilities under the contract then the latter might agree. In that case the contract is said to
be discharged by (bilateral) agreement. In effect B has promised not to sue A if he does not
perform his part of the contract and the consideration for his promise is As promise not to
sue B. Discharge by agreement may arise in the following ways.

Novation
The term novation implies the substitution of a new contract for the original one. This
arrangement may be either with the same parties or with different parties. For a novation to
be valid and effective, the consent of all the parties, including the new one(s), if any, is
essential. Moreover, the subsequent or second agreement must be one capable of enforcement
in law, the consideration for which is the exchange of promises not to enforce the original
contract.

Rescission
This refers to cancellation of all or some of the material terms of the contract. If the
contracting parties mutually decide to do so, the respective contractual obligations of the
parties stand terminated.

Alteration
This refers to a change in one or more of the terms of a contract with the consent of all the
contracting parties. Alteration results in a new contract but parties to it remain the same. Here
the assumption is that both the parties are to gain a fresh but different benefit from the new
agreement.

Remission
This means the acceptance (by the promisee) of a lesser sum than what was contracted for, or
a lesser fulfilment of the promise made. As per Section 63, every promisee may (a) remit or
dispense with it, wholly or in part, or (b) extend the time of performance, or (c) accept any
other satisfaction instead of performance.

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Waiver
The term waiver implies abandonment or relinquishment of a right. Where a party
deliberately abandons its rights under the contract, the other party is released of its
obligations, otherwise binding upon it.

Discharge by lapse of time

A contract stands discharged if not enforced within a specified period called the period of
limitation. The Limitation Act, 1963 prescribes the period of limitation for various contracts.
For instance, period of limitation for exercising right to recover an immovable property is
twelve years, and right to recover a debt is three years. Contractual rights become time barred
after the expiry of this limitation period. Accordingly, if a debt is not recovered within three
years of its payment becoming due, the debt ceases to be payable and is discharged by lapse
of time.

Discharge by Impossibility of Performance

Sometimes after a contract has been established, something might occur, though not at the
fault of either party, which can render the contract impossible to perform, or illegal, or
radically different from that originally undertaken.
However, if whatever happens to prevent the contract from being performed has not been
caused by either party could not have been foreseen, and its effect is to destroy the basis of
the contract then the courts will, generality, state that the contract has become impossible to
perform. If that happens then the contract is discharged and neither party will have any
liability under it. Section 56 of the Indian Contract Act clearly provides that an agreement to
do an act impossible in itself is void.
The performance of a contractual obligation may become subsequently impossible on a
number of grounds. They include the following.
Objective impossibility of performance
Commercial impracticability
Frustration of purpose
Temporary impossibility
Discharge of operation of law

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A contract stands discharged by operation of law in the following circumstances.

Unauthorized material alteration of a written document

A party can treat a contract discharged (i.e., from his side) if the other party alters a term
(such as quantity or price) of the contract without seeking the consent of the former.

Statutes of Limitations
A contract stands discharged if not enforced within a specified period called the period of
limitation. The Limitation Act, 1963 prescribes the period of limitation for various contracts.
For instance, limitation period for exercising right to recover an immovable property is
twelve years and right to recover a debt is three years. Contractual rights become time barred
after the expiry of this limitation period. Accordingly, if a debt is not recovered within three
years of its payment becoming due, the debt ceases to be payable and is discharged by lapse
of time.2

Insolvency
A discharge in bankruptcy will ordinarily bar enforcement of most of a debtors contracts.

Merger
A contract also stands discharged through a merger that occurs when an inferior right
accruing to party in a contract amalgamates into the superior right ensuing to the same party.
For instance, A hires a factory premises from B for some manufacturing activity for a year,
but 3 months ahead of the expiry of lease purchases that very premises. Now since A has
become the owner of the building, his rights associated with the lease (inferior rights)
subsequently merge into the rights of ownership (superior rights). The previous rental
contract ceases to exist.

Discharge by Accord and Satisfaction

To discharge a contract by accord and satisfaction; the parties must agree to accept
performance that is different from the performance originally promised. It may be studied
under the following sub-heads.
2
http://gradestack.com/Mercantile-Law-for-the-CA/Discharge-of-Contract/Discharge-by-operation-of/22685-
4473-55986-study-wtw

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Accord
An accord is an executory contract to perform an act that will satisfy an existing duty. An
accord suspends, but does not discharge, the original contract.

Satisfaction
Satisfaction is the performance of the accord, which discharges the original contractual
obligation.

If the obligor refuses to perform

The obligee can sue on the original obligation or seek a decree for specific performance on
the accord.

Discharge of contract by breach

Breach occurs where one party to a contract fails to perform its contractual obligations, or the
performance is defective. A breach of contract does not per se bring a contract to an end. The
breach may give to the aggrieved party the right to terminate the contract but it is for the non-
breaching side to decide whether or not to exercise that option. The aggrieved party has a
right of election; that is to say, it can choose either to affirm the contract or to terminate it.
However, once that decision has been taken, it is, in principle, irrevocable.3

A Breach may be anticipatory or actual.

Anticipatory Breach
Also known as breach by repudiation, anticipatory breach occurs when one party states,
before the arrival of the date fixed for performance, without justification that it cannot or will
not carry out the material part of the contractual obligations on the agreed date or that it
intends to perform in a way that is inconsistent with the terms of the contract. This may also
occur where one party by some action makes performance impossible. For instance, A, after
agreeing to sell his car to B on a fixed date, sells it to C. This is anticipatory breach.

3
http://accountlearning.com/discharge-of-a-contract-definition-methods-of-discharge/

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Effect of anticipatory breach
Where there is an anticipatory breach, the non-breaching party may either rescind the
contract, or treat the contract in force and wait for the time of performance. In first case, it
can immediately sue for damages, i.e., it is not required to wait for the time for performance
to expire. For example, [D agreed to employ P] as a courier for three months commencing on
June 1. Before the said date D told P that his services would not be required. This was to be
an anticipatory breach of contract and it entitled P to sue D for damages immediately. If the
non-breaching party elects to treat the contract operative, it waits until the time of
performance and then holds the other party liable for the non-performance. Thus, by doing so
the non-breaching party is giving an opportunity to the breaching party to still perform, if it
can, in order to get a valid discharge.4

Actual Breach
Actual breach refers to the failure to perform contractual obligations when performance is
due. Failure to perform obligations is the most common form of breach, wherein a seller fails
to deliver the goods by the appointed time, or where, although delivered, the goods are not up
to the mark in respect of quality or quantity specified in the contract.

Effect of actual breach

Breach is described as a method of discharge although it may not automatically discharge the
contract. Breach of contract leads to two main remedies:
namely, breach of condition, and breach of warranty.
Breach of a condition
This is a major term, known as material breach, which entitles the injured party to damages,
and gives it an option to treat the contract as subsisting or discharged.
Breach of a warranty
This is a minor term, known as non-material breach, which entitles the non-breaching party to
damages. It does not have the right to repudiate the contract, although a non-material breach
can give it the right to defer performance until the breach is made good. However, once the
breach is remedied, the non-breaching party must go ahead and render its performance, minus
any damages caused by the breach.

4
http://accountlearning.com/discharge-of-a-contract-definition-methods-of-discharge/

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 DISCHARGE OF CONTRACT BY BREACH

It is frequently stated that breach of -contract by the plaintiff operates as a discharge of the
defendant.5 However, this seems not to be logically correct, though in some cases it may be
practically correct. The question can arise only in the case of bilateral contracts, where a
promise is given for a promise. If the defendant's promise was offered, not for a return
promise, but for an act or performance, the defendant is not bound by any sort of obligation
until the plaintiff has acted or fore borne as requested. Both thereafter and theretofore, it is
impossible for the plaintiff to commit a breach, because at no time has he made a promise and
at no time has he been under an obligation. The obligation of the contract is wholly unilateral.
In bilateral contracts, sometimes the promises are held to be "independent", meaning that the
liability of each party for non-performance of his promise is not dependent upon whether or
not the other party has performed his part. In modern times it is a very exceptional case where
the promises will be held to be entirely independent. At an earlier stage the contrary was
true.6 But if promises are independent, breach by one party-cannot discharge the other.
Supposing the promises are not independent does a breach by the plaintiff discharge the
defendant? To say that the defendant's promise is dependent means that he will not be liable
in an action until certain things promised by the plaintiff have been performed. Performance
of these things is a condition precedent to the defendant's liability to suit. In cases of non-
performance, the defendant's liability does not accrue. The secondary or remedial obligation
never arises, and hence it cannot be discharged. In this matter, it makes no difference whether
the condition precedent is expressed as such in the contract or is a pure construction of law (a
"condition implied by law" so-called); and it makes no difference whether the condition is the
performance of a thing promised or the happening of a thing not promised. If it was not
promised, of course its not happening is no breach of contract on the plaintiff's part. But in
all these cases alike, the non-fulfilment of the condition prevents the secondary obligation
from arising. It does not discharge it.

But even though the secondary obligation is not discharged, for the reason that it never
existed, may it not be said that the nonfulfillment of that which is a condition precedent to the
existence of the secondary obligation and to the remedy, operates as a discharge of the
primary contractual obligation? It is believed not.

5
Anson on Contracts, 3d Amer. Ed, by Huffcut, p. 356, et seq.
6
Nichols v. Raynbred, Hobart, 88

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Suppose the following bilateral contract: A promises to convey land to B after B shall pay
$1,ooo; and B promises to pay the $1,ooo on March i, if A's title is then perfect. B could not
sue A during February, because of the non-fulfilment of a condition precedent, although B
has committed no breach. A is bound by his primary contractual obligation, but his secondary
obligation to pay damages for breach has not accrued. If B should sue A in April for not
conveying, B not having paid the $I,OOO, the suit will fail for the same reason as before. But
in this latter case, the facts show that B is -liable to suit; he has broken his promise.

It does not follow from this that A is discharged from his primary obligation. The only
express condition precedent to A's liability to action was payment by B, not payment on
March .I. Hence, in case the law should not "imply" payment on March I as a condition, as it
might well not do,7 B could pay later and still hold A to his promise. In any case, B's breach
would operate to give A a right to sue him, but not to discharge A.

If we should suppose that payment on March I by B was a condition precedent to A's

liability, and that the money was not paid, still A is not discharged. His primary obligation
has merely become voidable at his option (as in case of fraud, except that for reason of policy
the burden of proof is different). He may waive the condition and hold B, in which case he
remains bound himself. Or he may refuse-to waive it and avoid the contract. It is A's
avoidance that discharges, and not merely B's breach. But A may "stand pat", merely taking
no action whatever, waiving nothing and avoiding nothing. In such case, B could never
maintain suit on A's promise and as a practical matter A may be said to be discharged,
although theoretically and logically he is not.

7
Constable vs Cloberie, (1626) palmer; 397

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 CONSEQUENCES OF ANTICIPATORY AND ACTUAL BREACH

A breach of Contract takes place when a party corresponding consents formally to abandon
his liability under it, or by his own act makes it impossible that he should perform his
obligations under it or fully or partially fails to perform such obligations. In the case of Food
corporation v. J.P Kesharwani8, where one party making unilateral alterations without any
intimation to the other and then cancelling the contract, this amounted to breach
(repudiation). Therefore it can be correctly stated that, any kind of contract may be examined
as broken once a party refuses to perform under the contract as promised, regardless of when
performance is supposed to occur. This unconditional refusal is known as a repudiation of
contract. The courts generally recognize three different types of repudiation:

When the refusal made to the other party stands positive and unconditional (express
repudiation) in such cases, the renunciation must be clear, straightforward, and directed at the
party thereto in the contract. (for example: A contracts to sell crops to B within a due
date, however before the due date he gives a written application to B saying, Ill not
deliver the crops as promised).

When it comes to repudiation, sometimes action makes it impossible for the other party to
perform. Action speaks as loudly as words. Such a case may be cited with an example, A
being a renowned businessman, was supposed to repay his bank loan. However, just before
the due date he became bankrupt, which made it impossible for him to pay back his loans, his
reckless voluntary actions that led to his insolvency was counted as a repudiation of the loan
agreements.

If the contract is for the sale of property, repudiation occurs when one party transfers (or
makes a deal to transfer) the property to a third party.

A breach of contract maybe of two types, viz,

(1) Anticipatory breach of contract,

(2) Present breach.

8
1994 Supp (1) SCC 531

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The failure to perform the obligations may take place at the time of performance or at a date
even before that. Examples given below may be cited to explain it,

If A enters into a contract to sell 200mtrs of cloth to an XYZ garment manufacturing firm,
on say, May 15th and eventually on April 17th A corresponds saying he has changed his
mind and declines his services, and thereby his contract. Then the said situation leads to an
anticipatory breach of contract. And in such cases the aggrieved or injured party may sue him
for damages for breach. The injured party has the option to sue immediately or till the time
the act was to be performed. This was an anticipatory breach of contract by express
repudiation.

If X promised to assign G, within seven years from the date of his promise, all his interest
in a lease for the sum of Rs. 80,000/- . Before the end of seven years he assigned his interest
to another person. Held, this was anticipatory breach of contract by implied repudiation.

Anticipatory breach of contract is a declaration made by one of the contracting parties of his
intention not to fulfill the contract. And proclaim that he will no longer remain bound by it.

The anticipatory renunciation or repudiation that has affected and gave away immediate
rights of action upon the contracting parties thereto, was recognized as early as 1853 in the
case of Hochester v. De La Tour9, where in April, De La Tour engaged Hochester as his
courier for three months from 1st June 1852 onwards, and was told to accompany him to a
tour around the European Continent. However on the 11th of May of that year, (De La Tour)
the defendant had written to say that the plaintiffs services were no longer required. Thus on
May 22nd Hochester sued. The defendants counsel very powerfully argued that Hochester
was still under an obligation to stay ready and willing to perform till the day when the
performance was due and there could commence no action before. But Lord Campbell CJ
ruled out the objection, and allowing the claim pointed out that a contract is contract from the
date it is made and not from the date that its performance is due.

However the principle also applies to contingent contract, as was the case in Frost v Knight 10.
The defendant promised to marry the plaintiff on the event of the death of his father. The
father was then still living and the defendant proclaimed his intention that he would not fulfill
his promise on the event of his fathers death off the engagement. The plaintiff did not wait

9
(1853) 2E &B 678:95RR 747: 118Er 922: 22LJQB 455
10
(1872) 7Exch 111

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for the death of the father, but immediately brought an action for the breach of contract. He
asserted that the breach could arise only on the contingency taking place. But CockBurn CJ
held that the case falls within the principle of Hochester v. De La Tour, hence the option is
with the aggrieved party to sue immediately or wait for the performance.11

In 1957 case, Universal Cargo, Justice Delvin said:

Anticipatory breach means that a party is in breach from the moment that his actual breach
becomes inevitable. Since the reason for the rule is that a party is allowed to anticipate an
inevitable event and is not obliged to wait till it happens, it must follow that the breach which
he anticipates is of just the same character as the breach which would actually have occurred
if he had waited.

A failure to perform a contract whether it is total or a partial failure will not constitute an
anticipatory breach of contract. The reason for this is that, this breach can only take place
once performance of the contract is due. Accordingly this will constitute an actual breach of
contract rather than an anticipatory breach of contract.12

Renunciation is the main avenue by which a party can show that there has been an
anticipatory breach of the contract.

The following four key factors will be taken into consideration in determining whether there
has been a dismissal of a contract amounting to an anticipatory breach:

If there has been a clear case of refusal to perform contractual obligations that it goes to the
root of the contract.

The renunciation or repudiation to perform a contract cannot be conditional on certain

circumstances taking place. The refusal, therefore should be absolute.

When deciding whether there has been a sufficient refusal to perform contractual obligations,
it must be judged according to whether a reasonable person in the position of the innocent
party would regard the refusal as being clear and absolute.

11
http://gradestack.com/CA-CPT-Exam-Prep-by-AOC/Breach-of-Contract/Effect-of-Anticipatory/14449-2914-
1175-study-wtw
12
https://blog.ipleaders.in/anticipatory-breach-contract-law-india/

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There are however some consequences of not accepting the repudiation. If the aggrieved or
injured party does not accept the repudiation and lets the contract remain alive the
consequences will be as follows:The party, repudiating the contract may nevertheless opt to
perform when the time arrives and the promisee will be bound to accept the same.

If while the contract lies open such event occurs which dismisses the contract otherwise than
by repudiation for example , by supervening impossibility or frustration, the promisor would
also be entitled to take advantage of the changed circumstances. The most suitable example
which can be cited is that of Avery v. Bowden13. In this particular case the defendant had
chartered the plaintiffs ship and agreed to load it with a cargo at Odessa within a period of
45 days. On arrival of the ship at that place, the defendant told him that the Captain had no
cargo for him and requested to go away. The Captain however stayed there, having a hope in
his mind that the defendant would fulfill his contract. But before the specified period of 45
days had expired a war broke out which thereby rendered the performance illegal. The
plaintiff then brought about an action for breach. It was held by the court that the contract had
ended by frustration and not by breach.

In case the anticipatory repudiation is accepted, damages for breach would be assessed at the
time when the repudiation takes place. Where the promisee does not accept the repudiation,
damages will be assessed at the time fixed for performance of the contract and the promisee
takes the risk of market rate declining in the mean-time, he will have to take all the
reasonable steps to keep his loss to the minimal.

This law has been explained in plain and simple terms in the speech of Viscount Simon LC in
Heyman v Darwin Ltd14. It has been held by the Supreme Court in State of Kerala v Cochin
Chemical Refineries Ltd AIR 1968 SC 1316 that by refusing to advance the loan which the
state had undertaken to advance, its obligation to purchase groundnut cake from the company
did not come to an end. That repudiation just by one party alone does not bring an end to the
contract. It has to be repudiation, on one side and acceptance of repudiation on the other. This
law was emphasized by Lords in White and Carter (councils) ltd v Mc Gregor 15. A contract
for display advertisement for three years of motor garage business was struck between
advertisement contractors and the agent of the garage owner, but the latter repudiated the

13
(1855) 5 E & B 714: 25 LJ QB 49: 103 RR 695
14
1942 AC 356 at p 361: (1942) 1 All ER 337 at p 341
15
1962 AC 413: (1962) 2 WLR 17: (1961) 3 All ER 1178(HL)

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contract by writing an issuing a letter of cancellation. The contractors, however did not pay
any heed to his request, refused it and subsequently displayed the advertisement. The contract
provided for the annual payments and in event of any default in the payment for all the three
years was to become due. Accordingly the contractors went on to claim full payment. Their
lordships held that the contractors where in the process of only claiming what was due to
them under the contract, and, therefore where entitled to it. In order to lay emphasis upon
another aspect of repudiation, the Supreme Court has thereby observed that whatever be the
implications. The acceptance by the other party may have certain remedial purposes, as far as
the repudiating party is concerned he becomes free from the contract, to the same extent as if
the contract has ended. This disqualification, if any meant for the election purposes by virtue
of the contract would end as soon as the contract is repudiated.

Where the anticipatory breach of contract is established by the innocent party, three essential
remedial measures are made available, first and the most likely remedy is damages. Damages
are a monetary sum to compensate for actual loss suffered taking into account whether the
loss suffered arose naturally from the breach and whether it would have been reasonably
foreseeable to the guilty party.

The other two remedies are specific performance (an order from the court requiring the guilty
party to honour the contract) or an injunction (an order from the court preventing the guilty
party carrying out a specific action) and in practice they are less likely to be used over
damages.

The case of Aslhing v L.S. John16, whereby the respondent who was a party to a subsisting
contract with the government for widening of a road, had written a letter to the concerned
Executive Engineer stating that he was closing the said contract. The appellant contended that
the contents of the letter did not have the effect of putting an end to the contract. In this case
the judgement of the court was delivered by Fazal Ali J. it was argued that the contents of the
said letter made no effect in closing the contract. However after going through the contents of
the letter it was absolutely made clear, that the contractor unilaterally dismissed the contract
and informed the concerned department, also he resigned from the contractors lists of PWD
Manipur. Thus after this letter the contract got repudiated and acceptance of the letter by the
authorities was unnecessary for putting an end to the contract although breach may give rise
to an action for damages.
16
(1984) 1 SCC 205

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 CONCLUSION

In contract law, discharge or end of a contract occurs when the parties have fully performed
their contractual obligations or when events, conduct of the parties or operation of law
releases the parties from performance and some kinds of transaction involve a preliminary
stage in which one party invite the other to make an offer which is called Invitation to treat
that containing general requirements.

The most common way to discharge or to terminate contract, ones contractual duties is by
the performance of those duties. The duties to perform under a contract may be conditioned
on the occurrence or non-occurrence of a certain event or the duty may be absolute

Contract also can be terminated in numerous other ways, including discharge by agreement of
the parties and terminate buy operation of law.

In performance there are the conditions which are: qualification, provision, or clause in a
contractual agreement, the occurrence or non-occurrence of which creates, suspends, or
terminates the obligations of the contracting parties.

The contract comes to an end when both sides and parties fulfil their respective duties by
performing the acts they have promised. Performance can also be accomplished by
tender.(tender is an unconditional offer to perform by a person who is ready, willing and able
to do so. Therefore, a seller who places goods at the disposal of a buyer has tendered delivery
and can demand payment according to the terms of the agreement. A buyer who offers to pay
for good has tendered payment and can demand delivery of the goods.

Performance has been tendered; the party making the tender has done everything possible to
carry out the terms of the contract. If the other parties then refuse to perform, the party
making the tender can consider the duty discharged and sue for breach of contract.

Contract that has been fully performed on both sides is called Executed contract. A contract
that has not been fully performed on either side is called an Executory contract.

There are three ways where a contract become to an end.

-Performance.

-Non-performance.

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-Breach of contract.

1) Most contracts are discharged by performance, which means that the parties do what they
agreed to do. When the time for performance is not stated in a contract, it must be performed
within a reasonable time. When the time is started, the court will allow additional time to
perform unless something indicates that time is of the essence. then-time for performance will
be strictly enforced.

Unless the parties agree otherwise, satisfactory performance will be determined by objective
standards. Substantial performance will discharge the agreement with the right to
reimbursement for correcting details that were not completed. Condition may determine the
rights and duties of the parties prior to performance during performance and following
performance.

It is important to make tender of performance to test the other partys willingness and ability
to perform. If neither party makes tender, a breach of contract is not established.

2) Non-performance can also discharge contractual obligations. Not every instance of non-
performance results in a breach of contract. Parties can agree to discharge a contractual
obligation by terms in the contracts, mutual rescission, waiver, novation accord and
satisfaction, and general release. Contractual obligation can also be discharged when it
becomes impossible to perform a contract.

The frustration-of- purpose doctrine releases a party from a contractual obligation when
performing the obligation would be impractical and senseless. These obligations can also be
discharged by operation of law under principles of bankruptcy and the statute of limitation.
When contractual obligations terminate by agreement or by operation of law, no liability falls
to either party. However, when breach of contract comes from a deliberate breach, a
repudiation of contractual obligation, or an abandonment of performance, liability will result.

3) A breach of contract relieves the injured party from any obligation under the contract.

Breach of contract also gives the injured party the right to ask a court of law for a remedy,
usually in the form of damages. Injured parties are required to mitigate their damages when
money will not be sufficient relief, the injured party may ask for specific performance or for
injunctive relief.

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 BIBLIOGRAPHY

Statutes

Indian Contract Act, 1872

Books

1. Dr. R.K. Bangia, Contract-I (Allahabad Law Agency)

2. Avtar Singh, Contract & Specific Relief (Eastern Book Company), Twelfth Edition

3. J. Beatson, Ansons Law of Contract (Oxford University Press), 28th Edition

Websites
1. https://www.lawteacher.net/free-law-essays/contract-law/discharge-or-end-of-a-
contract-contract-law-essay.php
2. https://blog.ipleaders.in/anticipatory-breach-contract-law-india/
3. https://www.quora.com/What-is-a-breach-of-contract-What-are-the-manners-in-
which-breach-of-contracts-can-occur-What-are-the-ways-to-remedy-a-breach-of-
contract
4. http://gradestack.com/CA-CPT-Exam-Prep-by-AOC/Breach-of-Contract/Effect-of-
Anticipatory/14449-2914-1175-study-wtw
5. http://dailyreporter.com/2006/08/03/the-consequences-of-anticipatory-breaches-of-
contracts/
6. http://www.shareyouressays.com/94807/short-notes-on-actual-and-anticipatory-
breach-of-contract
7. http://accountlearning.com/discharge-of-a-contract-definition-methods-of-discharge/
8. http://gradestack.com/Mercantile-Law-for-the-CA/Discharge-of-Contract/Discharge-
by-operation-of/22685-4473-55986-study-wtw
9. http://e-lawresources.co.uk/Discharge-by-breach.php
10. http://www.findlaw.com.au/articles/4551/how-can-contracts-be-discharged-from-
further-perfo.aspx

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