Page 31 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes discharging the contract legally, the aggrieved party shall lose his right to sue for damages. A
agreed to load a cargo of wheat on B’s ship by a particular date but when the ship arrived, a
refused to load the cargo. B did not accept the refusal and continued to demand the cargo. Before
the last date of loading had expired war broke out rendering the performance of the contract
illegal. Held, the contract was discharged and B could not sue for damages [Avery v. Bowen (1856)
6 E & B 965].

1.9.2 Actual Breach of Contracts

The actual breach can occur by (i) failure to perform as promised, (ii) making it impossible for the
other party to perform. The failure to perform means that one party must not have performed a
material part of the contract by a stated deadline. The actual breach by failure to perform may
take place (a) at the time when performance is due, or (b) during the performance of the contract.
Thus, if a person does not perform his part of the contract at the stipulated time, he will be liable
for its breach.

Example: A, the seller, offers to execute a deed of sale only on payment by the buyer of
a sum higher than is payable under the contract for sale, he shall be liable for the breach. But, if
the promisor offers to perform his promise subsequently, the question arises whether it should
be accepted, or whether the promisee can refuse such acceptance and hold the promisor liable for
the breach. The answer depends upon whether time was considered by the parties to be of the
essence of the contract. Section 55 provides the meaning of ‘time to be the essence of a contract’
and is discussed.
Breach during the performance of the contract. The actual breach of contract also occurs when
during the performance of the contract, one party fails or refuses to perform his obligation under
the contract.

Example: A contracted with a Railway Company to supply it certain quantity of railway
chairs at a certain price. The delivery was to be made in instilments. After a few instilments had
been made, the Railway Company asked A to deliver no more. Held, A could sue for breach of
contract.
How is a contract breached by making performance impossible? Suppose you hire an agency
to clean carpets in your home on Saturday for ` 500. You go out for the day neglecting to make
arrangements to let the agency people into your home to clean the carpets. You have breached
the contract by making performance impossible. You would owe the money since the cleaning
agency could not clean and because the agency probably turned down requests to clean for other
clients.

Partial Breach of a Contract

That happens when a non-material (unimportant) part of the contract gets breached. It may
happen if the contract has several divisible parts each of which you may treat as a separate
contract. Then you could sue for damages even though the breach is not complete. An example
of this would be agreeing to perform a duty once every three months for one year and then not

performing for the final three months.
1.9.3 Remedies for Breach of Contracts

When someone breaches a contract, the other party is no longer obligated to keep its end of the
bargain. From there, that party may proceed in several ways: (i) the other party may urge the
breaching party to reconsider the breach; (ii) if it is a contract with a merchant, the other party

26 LOVELY PROFESSIONAL UNIVERSITY