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IAI Actuarial Core Principles · Business Management · Sources of Indian law and valid contracts

Kaveri Re contracted to pay Rohan, an actuary, Rs 4,00,000 for a report. Before the due date Kaveri Re wrote that it would not go ahead and would not accept the report. Rohan had not yet started work. Which course is open to Rohan under Indian contract law?

Rohan may treat the contract as repudiated immediately and sue for damages for anticipatory breach. Alternatively he could wait for the due date. Damages are compensatory, not the full price automatically, and he must take reasonable steps to mitigate his loss.

  1. AHe must wait until the due date before any remedy arises
  2. BHe may treat the contract as ended at once and sue for damages for anticipatory breachCorrect
  3. CHe may only claim the full Rs 4,00,000 as a debt without any duty to mitigate
  4. DHe may force Kaveri Re to accept the report by specific performance in every case
  5. He loses all remedies because he did no work

Explanation

A clear refusal before the due date is an anticipatory breach. The promisee may rescind and claim damages at once, or wait for the due date and keep the contract alive. Damages are compensatory and subject to mitigation, so a full-price debt claim is not automatic.

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