Sie sind auf Seite 1von 12

BREACH AND SPECIFIC PERFORMANCE: A COMPARATIVE STUDY

Subject

LAW OF CONTRACTS-I

Submitted by

H.Abhinav Srinivasan- BC0180003


B.com .L.L.B (hons)

Course Faculty

K.Govindarajan
Professor of Law
Tamil Nadu National Law University
Tiruchirappalli – 620027

TAMILNADU NATIONAL LAW UNIVERSITY


Tiruchirappalli - 27

1
DECLARATION

I, do hereby declare that the project entitled “Breach and Specific Performance: A
Comparative Study” submitted to Tamil Nadu National law school in partial fulfillment of
requirement of award of degree in undergraduate in law is a record of original work done by me
under the supervision and guidance of Assistant Professor Mr K.Govindarajan, department of
Law, Tamil Nadu National law school and has not formed basis for award of any degree or
diploma or fellowship or any other title to any other candidate of any university.

DATE: 12/10/2018

PLACE: TIRUCHIRAPALLI H.Abhinav Srinivasan

2
ACKNOWLEDGEMENT

First of all, I take this opportunity to thank my Professor Mr K.Govindarajan from the depth of
my heart who has been of immense help during moments of anxiety and extreme difficulty while
the project was taking its crucial shape.

Secondly, I convey my deepest regards to the Vice Chancellor Dr Kamala Sankaran and the
administrative staff of Tamil Nadu National Law School who held the project in high esteem by
providing reliable information in the form of library infrastructure and database connections in
times of need.

Thirdly, the contribution made by my parents and friends by foregoing their precious time is
unforgettable and highly solicited. Their valuable advice and timely supervision paved the way
for the successful completion of this project.

Finally, I thank the Almighty who gave me the courage and stamina to confront and overcome
all hurdles during the making of this project. Words aren’t sufficient to acknowledge the
tremendous contributions of various people involved in this project. I once again wholeheartedly
and earnestly thank all the people who were involved directly or indirectly during this project
making which helped me to come out with flying colours.

3
LAW OF CONTRACTS- I

Breach and Specific Performance: A Comparative Study

I. Introduction:

1.1 Meaning of Contractual Relationship

Section 2(e) of the Indian Contract Act,1872 gives us the definition of an agreement as “Every
promise and every set of promises,forming the consideration for each other,is an agreement”1

Section 2(h) of the Indian Contract Act,1872 furthers the definition of an agreement to define
what exactle a contract is,and reads as “An agreement enforceable by law is a contract”.2

A contractual relationship is one which gives rise to a

a) Binding legal relationship

b) Between the parties which are contracting

A contractual relationship in itself arises between the parties because of voluntary efforts they
take in order to pursue their individual interests.”A contract implies two parties”3The definition
of a contractual relationship is fundamental and sine qua non for understanding the entire Indian
Contract Act.There are a lot of definitions for the meaning of a contractual relationship,and each
brings out certain essentials required for a valid contract.

According to Salmond,he defined contracts as “A contract is an agreement creating and defining


obligation between two or more persons by which rights are acquired by one or more to acts or
forbearance on the part of others”.

1.2 Essentials Of Contractual Relationship

Sir John Salmond defined the law of contracts as “The Law of Contract is one which creates and
defines obligations between the parties”.The Indian Contract Act,1872 gives us the most

1
The Indian Contract, 1872, ss. 2,e

2
The Indian Contract, 1872, ss. 2,h

3
Bouwang Raja Chowdhury v. Banga Behary Sen, AIR 1916 Cal 771.

4
fundamental and important aspect with respect to a contractual relationship,which is the
essentials of a contract.Section 10 of the Indian Contract Act is the part of the act which gives us
the essentials of a valid contract.Section 10 of the Indian Contract Act reads as follows:

“All agreements are contracts if they are made by the free consent of parties competent to
contract, for a lawful consideration and with a lawful object, and are not hereby expressly
declared to be void”4

There are various types of contracts such as

a) Valid Contract- A contract which has all the necessary essential ingredients,recognizable in
the eyes of law and is hence enforceable in a court of law.

b) Void Agreement- It is null before the law because it fails to fulfill the essential conditions.

c) Voidable Contract- “A voidable contract in simple terms,is one that will have all the legal
effects of a valid contract unless it is disputed and pronounced invalid5.”

d) Unenforceable Contract- A contract which cannot be enforced because the specific detail
requirements of a valid contract are found to be missing,even though on the outside it seems like
it has fulfilled the essentials.

The essentials of a contract are specifically stated so that it can be determined as to which of the
contracts qualifies to be valid i.e., enforceable in a court of law.It is an axiom with regards to
contracts that “Every contract is an agreement,but every agreement is not a contract”.An
agreement becomes a contract if the following conditions are satisfied:

a) “There is some valid consideration present”

b)”The parties entering into the contract are competent to contract”

c) “The consent of the parties is free”

4
The Indian Contract, 1872, s.10
5
Frederick Pollock, Principles of Contract at Law and in Equity: Being a Treatise on the General Principles
Concerning The Validity of Agreements,With a Special View to the Comparison of Law and Equity,and With
References to the Indian Contract Act,and Occasionally to Roman,American and Continental Law (Stevens And
Sons,London,1876).

5
d) “The object of the contract is lawful in nature6”

1.3 Brief Explanation to the Essentials

Section 2(d) defines consideration while section 25 of the Indian Contract Act basically says that
“An agreement without consideration is void except in the case of three
exceptions”7.Consideration in its essence is basically remuneration or the recompese given by
the contracting party to another,known in layman terms as the price of the
promise8.”Consideration is some act promised or done at the desire of the promisor.It is based on
the common moral principle that no act is done for free by anybody and something is expected
out of interactions which result in contracts.Thus a valid consideration is the first essential
element of a contract.”

The Indian Contract Act in simple terms says that “Every person who is of the age of majority is
competent to contract except minors,persons of unsound mind and persons disqualified by the
law to which they are subject”9.”The law considers the age of majority as 18 and for those under
a guardian it is 21 years.Hence,those below it are not allowed to contract.Contracts entered into
by minors are void ab initio except in cases of special exceptions.”A person is declared to be of
sound mind when he is capable of understanding it and be able to make a rational judgement
with regards to his personal interests.When a person enters into a contract when he is not in a
sound state of mind,the contract is void10.”

Free consent is defined under section 14 as follows:

“Consent is said to be free when it is not caused by coercion,fraud,misrepresentation,undue


influence or mistake”11

6
Avtar Singh, Contract and Specific Relief (Eastern Book Company,Lucknow,2013).
7
The Indian Contract, 1872, s. 25

8
Id. at 6.
9
The Indian Contract, 1872, s. 11
10
The Indian Contract, 1872, s. 12
11
The Indian Contract, 1872, s. 14

6
When consent to an agreement is caused by any of the above mentioned factors,then the contract
is voidable at the option of the party whose consent was not free but instead caused by vitiating
factors.12

“The object of an agreement should necessarily be lawful and not be forbidden by law,be of such
a nature that it would defeat legal provisions,be fraudulent,involve injury to another or be
immoral and opposed to public policy”13.This is the last essential element of a valid contract.

Contracts which do not satisfy the essentials are void and do not qualify to become a valid
contract.

1.4 Research Problem

The main aim of this research is to study about the various aspects of a breach of a contract and
specific performance,and develop a comparison between the both through careful analysis of
their elements.

II. Overview:

2.1 Meaning of Breach of a Contract

A breach of contract is one which gives rise to action when one of the parties to a contract is not
able to honour its commitments and fulfill the necessary contractual obligations.Parties under a
contract are under obligation to perform their promises and a contract is said to be breached
when any one of the parties fails or refuses to perform its promise.

Section 37 gives us the information regarding performance of a contract and says that ”The
parties to a contract must either offer to perform or perform their respective promises unless such
performance is dispensed with or excused under the provisions of this act,or of any other law”14

A contractual relationship is legally binding and hence it entails legal action when one party
becomes the victim of another’s inability to fulfill the contractual obligations.

12
Id. at 6.
13
The Indian Contract, 1872, s. 23

14
The Indian Contract, 1872, s. 37

7
2.2 Types of Breach of Contract

The breach of contract can be categorized into four types which go as follows:

a) Minor Breach

b) Material Breach

c) Anticipatory Breach

d) Fundamental Breach

a) Minor Breach – “Also known as a partial breach of contract, this breach is not essentially a
breach but a wrong committed by one party, not so grave only minor in degree and when that
party also meets the necessary obligations required to amount to performance of contract. This
does not affect the terms of the contract.Such a breach does not render the contract invalid and
does not affect the terms of the contract in any way.”

It is important to note that the affected party due to such a breach is generally still pushed to
complete the performance as per the contract and not excused.Such a breach is generally an
unaccepted deviation from performing the promises of the contract.

For eg- Barry agrees to sell music albums to Iris every week and Iris has agreed to buy them
every week as well.In such a case,in a particular week,lets say the 3rd week of the month,Barry
does not sell music albums to Iris.If this is a minor contractual breach,then Iris can sue Barry
only for the minor breach(not selling in the 3rd week) and not terminate the contract as such.

b) Material Breach- “A material breach is a significant breach in a contract caused due to non
performance of the terms of the contract,or in other words,the provisions.This leads to a situation
where it is acceptable for the non defaulting party to abstain from performance of the object of
the contract.”

8
For eg- Vikram asks Vetal to build a cupboard for him made of rose wood and strictly tells him
tom deliver it before march 7th.However Vetal makes it out of a ratio of rose wood pulp and
other wood,and most importantly delivers it on march 9th.Thus he has severely violated the terms
of the contract and this is considered as a fit case of material breach.

c) Anticipatory Breach- “Every contract has a period of performance and there are cases of
breach of contract which can happen during this time of performance.This enables the non
defaulting party to be able to take action and terminate the contract in order to avoid the
unfavourable consequences when it can be anticipated.”

Eg- Vikram asks Vetal to make a cupboard for him and deliver by 7th april,and the contract is
formed on 1st march.On 25th March Vetal tells Vikram that he cannot complete the contractual
obligation,and at this instance Vikram can teminate the contract.

d) Fundamental Breach-“Such a breach is where the non performance of one party results in the
non performance of another and in the end destroys the object of the contract,and basically is
repurcussional.””

2.3 Meaning of Specific Performance

Specific performance is a type of relief given under the Specific Relief Act,1963.In general cases
of damage or loss,any form of compensation may be awarded by the court as a relief to the
aggrieved party.But in certain cases,the monetary compensation might not be adequate and the
aggrieved party can claim for specific performance.The crux of the given contract is unique and
cannot be realized as money alone as compensation,which is when specific performance is
awarded.

2.4 Conclusion

Breach of a contract attracts legal penalty because of non compliance with the terms of the
contract.There are four main types of breach of a contract.These types are based upon the degree
of breach and helps determine

9
III. Comparison:

3.1 Elements of Breach of a Contract

There are three main essential elements of the breach of a contract:

1. Existence of a contract which is valid under the respective law

2. Breach of the terms of the contract by one party

3. Actual damage caused as a result of the breach to the plaintiff

The first and foremost element which is to be considered for a breach of a contract,is whether
there was a valid contract in the first place.”A valid contract is one where the consent of parties
is free,the object is lawful,parties are competent to contract and is not expressly declared
void”15.Thus in any case wherein the contract has all the essential conditions fulfilled,it leads to a
justified action in any case of breach of a contract.Offer and acceptance are main to a contract as
they give an indication of the intention to contract,enter into a legal relationship and to fulfill a
promise.

Breach of a contract as the name suggests gives us the second element where one party has
breached the terms of the contract.Essentially this in simpler terms means that a party has not
been true to the terms and not fulfilled the promises of the contract leading to a violation of the
right of the other contracting party.

The last,but important element is that,actual loss or damage was caused to the plaintiff or
aggrieved party.The loss could be anything from monetary terms to time,energy and opportunity
costs.

15
Id. at 4

10
3.2 Elements of Specific Performance

“Every contract there immediately and directly results an obligation on each of the contracting
parties towards the other to perform such terms of the contract as he has undertaken to
perform16”.

Section 14 of the specific relief act gives us all the contracts which are not specifically
enforeceable and section 15 gives us the list of contracts which are specifically enforceable.The
main element underlying specific performance is that in such unique cases the ordinary money
compensation seems inadequate.There is also a clear case when the amount of damages seems to
be kind of ambiguous or unclear.In such cases also it is sought for specific
performance17.”Specific performance in its essence is a direction by the court to the defaulting
party(one which breaches the terms of the contract) to complete the incomplete part of his
promise and fulfill it.Basically,it implies that the court is ordering the party to stick to the terms
of the contract.The crux of the case for such a specific performance must be unique.”

3.3 Comparative Analysis

The Specific performance is an entirely different concept from the Breach considering the basic
fact that the specific performance is an extended relief unlike the conventional damages which
are usually given as remedies for ay breach of contract. The Breach of the contract is merely
based on factual basis wherein once the judge is convinced or is shown a proof that there is a
breach of legal obligation, he or she will be ordered to take a course of punishment which could
also involve Specific Performance. In short, Specific Performance necessarily needs a breach of
contract or the non performance of the obligation as such which is mentioned in the Contract,
while the Breach of Contract need not have Specific Performance as a remedy. Also, the Specific
Performance is a mere opinion based consdiering the basic fact that it requires showing that the
Monetary damages are inadequate which brings in a question of opinionated differences, while
one judge feels that the specific performance has to be granted, the other might not feel the same
because the concept of sufficiency is not well defined in the Law of Contracts.

16
Kumari Anandan v. T.Balamukunda Rao, AIR 2002 MAD 472
17
Id. at 6.

11
Also, the main aim of the specific performance is to substitute the Damages which are intended
to restore the position of the Plaintiff , however it is not sufficient to determine if the plaintiff’s
position is actually restored when it comes to the relief. When it comes to breach, no one actually
has to determine if it is a breach because of the fact that it is fact oriented and just the breach of
the contract attracts damages.

IV. Conclusion:

The study has examined the intricate details of a breach of contract and specific performance
closely in order to highlight their essential elements.A breach of a contract thus happens only for
a valid contract and needs to show that damage had happened as a result of the act which went
against the terms of the contract.”Specific performance in its essence is mainly a direction by the
court in order to guide the parties towards fulfilling their promises as per the contract.It basically
is telling the defaulting party to complete his portion of work in layman terms”.By comparing the
various elements of both,breach which is a violation of the terms and specific performance which
is a relief analysis has been made to give a new perspective.It is also found out that parties which
breach the contract terms face severe consequences and specific performance can be considered
as one of them.

V. Bibliography:

1) Frederick Pollock, Principles of Contract at Law and in Equity: Being a Treatise on the
General Principles Concerning The Validity of Agreements,With a Special View to the
Comparison of Law and Equity,and With References to the Indian Contract Act,and
Occasionally to Roman,American and Continental Law (Stevens And Sons,London,1876).

2) Avtar Singh, Contract and Specific Relief (Eastern Book Company,Lucknow,2013).

12