What can you do when you the party contracting with you has informed you that they are backing out? Such an event is known as anticipatory breach or repudiation. Here’s a quick snippet on the law on anticipatory breach in India and what you can do in such an instance.
In a nutshell – Anticipatory breach or repudiation is a well-recognized concept in Indian courts and the law on it is fairly well settled. In instances of an anticipatory breach, it is at the discretion of the injured party being notified of the breach as to whether it wants to put an end to the contract or keep it alive for its benefit.
The law: Section 39 of the Indian Contract Act, 1872, which speaks of effect of refusal of party to perform a promise wholly, states that when a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promise may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance.
Recourse? On the aspect of recourse to an injured party, if the injured party puts an end to the contract, then it can sue the defaulting party for damages. If however, it chooses to keep the contract alive, then it can claim specific performance.
Case law: The Supreme Court of India in the case of Jawahar Lal Wadhwa vs. Hariprada Chatroberty, AIR 1989 SC 606, has held the following, “It is settled in law that where a party to a contract commits an anticipatory breach of the contract, the other party to the contract may treat the breach as putting an end to the contract and sue for damages, but in that event he cannot ask for specific performance. The other option open to the other party, namely, the aggrieved party, is that he may choose to keep the contract alive till the time for performance and claim specific performance, but, in that event, he cannot claim specific performance of the contract unless he shows his readiness and willingness to perform the contract.”
The author of this article is Pushkar Thakur, a contract expert in Gurgaon and Managing Partner at Corrida Legal. Pushkar is an ex AVP, Legal, Nomura and has led the legal teams at corporates namely Emaar India and Drake & Scull India. He represents clients before all major courts of India and has worked with Kochhar & Co., law firm. Pushkar is an expert in corporate law, contracts, litigation, employment law and data protection. Reach out to him on Linkedin at: https://www.linkedin.com/in/pushkarthakurcom pushkar.thakur@corridalegal.com . In case of urgent issues, you may call him at +91-8826680614.