Fundamentals of Business Laws and Business Communication · Discharge of Contracts

Discharge by Breach and Anticipatory Breach of Contract

Updated 10 October 2026 · Fact-checked

A contract is discharged by breach when one party fails or refuses to perform. Actual breach happens at or after the due date. Anticipatory breach happens before the due date, when a party declares it will not perform. The other party may rescind the contract and sue for damages at once, or wait until the due date.

Understand Discharge by Breach and Anticipatory Breach

A contract creates duties. When a party does not do what the contract requires, that is a breach of contract. The other party is called the aggrieved party or innocent party. Breach does not end the contract by itself. It gives the aggrieved party a choice about what to do next.

There are two kinds of breach. Actual breach occurs when a party fails to perform on the due date, or fails during performance. Example: Ravi agrees to deliver 100 bags of rice to Meena on 1 March and does not deliver on that day. Anticipatory breach occurs when, before the due date, a party declares that they will not perform, or makes performance impossible by their own act. Example: on 10 February Ravi writes that he will not deliver the rice on 1 March.

Anticipatory breach can be express or implied. It is express when the promisor clearly says, in words, that they will not perform. It is implied when the promisor does something that makes performance impossible. Example: Ravi agrees to sell his car to Meena on 1 March, but sells it to Suresh on 15 February.

The rule on anticipatory breach is in Section 39 of the Indian Contract Act, 1872. When a party has refused to perform, or disabled themselves from performing, the promisee may put an end to the contract, unless the promisee has by words or conduct signalled that they accept the contract as continuing. The English case Hochster v De la Tour is the well-known illustration of the principle: the aggrieved party was allowed to sue before the date of performance arrived.

The aggrieved party therefore has two options. First, treat the contract as rescinded and sue at once for damages. Second, wait until the due date and keep the contract alive. If the aggrieved party waits, the contract stays alive for both sides. The party in breach can still perform, and can also take advantage of any event that releases them from the contract.

Key formulas to remember

Actual breach: Failure to perform on or after the due date, or during performance; The aggrieved party can sue for damages from the time of breach.
Anticipatory breach: Refusal or self-disablement before the due date; Can be express (clear refusal) or implied (act making performance impossible).
Section 39 rule: Promisor refuses or disables themselves → promisee may end the contract, unless promisee has signalled by words or conduct that the contract continues; The right is an option, not an automatic ending.
Option 1 of the aggrieved party: Rescind the contract + sue for damages immediately; No need to wait for the due date.
Option 2 of the aggrieved party: Keep the contract alive and wait for the due date; Both parties remain bound. The party in breach may still perform, or take advantage of any event that discharges the contract (e.g. frustration), and the aggrieved party cannot then claim damages for the breach.

How to solve Discharge by Breach and Anticipatory Breach questions

Use this method for any question on breach or anticipatory breach.

1Find the due date for performance in the facts.
2Note when the refusal or the failure happened. Before the due date means anticipatory breach. On or after it means actual breach.
3If it is before the due date, decide whether it is express (clear words) or implied (an act making performance impossible).
4Check what the aggrieved party did. Did they accept the refusal and rescind, or say they will wait?
5Apply the options: rescind and sue at once, or wait for the due date.
6If the aggrieved party waited, remember the contract stays alive for both sides.
7Match your conclusion to the option wording.

Quickest way: Date check in three questions

When to use it: Use for MCQs that give a short fact situation and ask the type of breach or the right of the aggrieved party.

Ask: was the refusal before or after the due date? Before means anticipatory.
Ask: were words used (express) or did an act make performance impossible (implied)?
Ask: can the aggrieved party sue now? Yes, if they rescind. They may also wait, and the contract then continues.

Common mistakes in Discharge by Breach and Anticipatory Breach

Calling any refusal an anticipatory breach.
Students ignore the timing of the refusal.
Fix: Anticipatory breach needs refusal before the due date. After the due date it is actual breach.
Thinking the contract ends automatically on anticipatory breach.
The word breach suggests the end of the contract.
Fix: The aggrieved party has an option. They may rescind or wait. The contract ends only if they choose to rescind.
Believing the aggrieved party must always wait for the due date before suing.
Students confuse it with actual breach.
Fix: After anticipatory breach, the aggrieved party may rescind and sue at once for damages.
Forgetting implied anticipatory breach.
Students look only for a written or spoken refusal.
Fix: An act that makes performance impossible, such as selling the promised goods to someone else, is also anticipatory breach.
Ignoring what happens if the aggrieved party waits.
Students treat waiting as a free choice with no effect.
Fix: If the aggrieved party waits, the contract continues for both sides. The party in breach may still perform on the due date.

Worked examples

Example 1

On 1 April, Asha agrees to sell 50 quintals of wheat to Bharat for delivery on 30 June. On 10 May, Asha tells Bharat in writing that she will not deliver. Which statement is correct? (a) It is actual breach and Bharat must wait till 30 June to sue. (b) It is anticipatory breach and Bharat may rescind and sue at once. (c) There is no breach until 30 June and Bharat has no right. (d) The contract ends automatically on 10 May.

Show the solution

The due date is 30 June.
The refusal was on 10 May, which is before the due date.
So it is anticipatory breach. The refusal was in words, so it is express.
Bharat has an option. He may rescind and sue for damages at once, or wait until 30 June.
Option (a) is wrong because the breach is not actual. Option (c) is wrong because Bharat has a right now. Option (d) is wrong because the contract ends only if Bharat chooses to rescind.

Answer: (b) It is anticipatory breach and Bharat may rescind and sue at once.

Example 2

Kiran agrees to sell his shop to Latha on 1 December. On 15 November, Kiran sells the shop to Manoj. Latha learns of this. What is the position?

Show the solution

The due date is 1 December. The act happened on 15 November, which is before it.
Kiran's sale to Manoj makes his performance to Latha impossible. This is self-disablement.
So it is implied anticipatory breach under Section 39.
Latha may treat the contract as rescinded and sue Kiran for damages at once.
Latha may instead wait until 1 December, in which case the contract continues for both sides.

Answer: It is an implied anticipatory breach. Latha may rescind and sue for damages immediately, or wait until 1 December.

Exam tips

Always compare the date of refusal with the due date first. This decides the type of breach.
Learn the two options of the aggrieved party in exact words: rescind and sue now, or wait.
Watch for the words express and implied in the options. Match them to words versus acts.
When an MCQ says the contract ends automatically on breach, treat it as a trap.
Link this topic with Section 39 and with damages. The remedies are tested together.

Practice questions from Discharge of Contracts

Discharge by Breach and Anticipatory Breach in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Discharge by Breach and Anticipatory Breach: frequently asked questions

What is anticipatory breach of contract?

It is a refusal to perform, or an act that makes performance impossible, before the due date. The aggrieved party may rescind and sue at once, or wait for the due date. Section 39 of the Indian Contract Act covers this.

What is the difference between actual breach and anticipatory breach?

Actual breach happens on or after the due date, or during performance. Anticipatory breach happens before the due date. In anticipatory breach, the aggrieved party can sue before the due date if they rescind.

What is Hochster v De la Tour about?

It is an English case on anticipatory breach. The aggrieved party was allowed to sue before the time for performance came, after the other side refused to go on with the contract. It is used to explain why the aggrieved party need not wait.

What happens if the aggrieved party waits after anticipatory breach?

The contract continues for both parties. The party in breach can still perform on the due date. The aggrieved party also keeps the right to sue if performance does not happen.