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CA Foundation · Business Laws · The Indian Contract Act, 1872

Anita agrees to sell her flat to Bhaskar for Rs 40 lakh. Before the date of completion she sells the flat to another buyer and refuses to perform. Bhaskar wants to treat the contract as ended and claim damages. Under the Indian Contract Act, 1872, what is this situation called?

This is an anticipatory breach of contract. Anita disabled herself from performing by selling the flat to someone else before the due date. Bhaskar may treat the contract as discharged and claim damages immediately, or wait until the performance date. It is not frustration, since no outside event occurred.

  1. AAnticipatory breach of contractCorrect
  2. BActual breach on the due date only
  3. CNovation of the contract
  4. DFrustration of the contract

Explanation

When a party refuses to perform, or disables herself from performing, before the due date, it is an anticipatory breach. Anita's sale of the flat to another buyer shows she has disabled herself from performing. The promisee may rescind and sue for damages at once, or wait until the due date. Frustration needs a supervening event, not a party's own act.

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