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

Meera, an actuarial consultant, agreed to deliver a pricing report to Sundaram Insurance by 30 June. On 10 June she wrote that she would not deliver the report at all because she had accepted a better assignment. Sundaram wants to act immediately. Which course of action is correctly open to Sundaram?

Sundaram may either treat the contract as ended now and claim damages for anticipatory breach, or choose to keep the contract alive and wait until the due date. Meera's clear refusal before 30 June is a repudiation, so no court declaration or proof of negligence is required.

  1. AWait until 30 June, because breach cannot occur before the due date
  2. BSue for specific performance only, because damages are unavailable before the due date
  3. CTreat the contract as terminated only after obtaining a court declaration
  4. DTreat the contract as discharged now and claim damages for anticipatory breach, or wait until the due date and keep the contract aliveCorrect
  5. Claim damages only if Meera is also negligent

Explanation

Under section 39 of the Indian Contract Act a promisee may put an end to the contract when the promisor refuses to perform in full. This is anticipatory breach. Sundaram can sue immediately for damages, or it can affirm the contract and wait until 30 June, though doing so leaves it exposed to events that may change the position.

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