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IAI Actuarial Core Principles · Business Management · Implied terms, exclusion of liability, contractual remedies and damages

Arjun Analytics agreed to build a mortality dashboard for Lotus Pensions for a fixed price. Halfway through, Lotus Pensions refused to give Arjun the access to its data that the contract required, so Arjun could not continue. Arjun then stopped work. What is Arjun's best position under the Indian Contract Act?

Arjun may treat the contract as voidable and claim compensation. When one party prevents the other from performing, the prevented party can end the contract and recover loss caused by the obstruction. Arjun is therefore not in breach simply because it stopped work.

  1. AArjun is in breach because it stopped work before completion
  2. BArjun may treat the contract as voidable and claim compensation for loss from Lotus's non-performance of its reciprocal promiseCorrect
  3. CArjun must continue the work and recover costs only at the end
  4. DArjun has no remedy because the data access was only a minor term
  5. Arjun may only recover the price if the work is fully completed

Explanation

Where a party prevents the other from performing a promise, the contract becomes voidable at the option of the party so prevented. That party may also claim compensation for loss sustained. Lotus's refusal prevented Arjun's performance, so Arjun is not in breach.

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