Breach of contract is defined is a legal cause of action in which a binding agreement or bargained for exchange is not honoured by one or more parties to the contract by non-performance or interference with the other party’s performance. It the party does not fulfil his contractual promise, or has given information to the other party that he will not perform his duty as mentioned in the contract or if by his action and conduct he seems to be unable to perform the contract, he is said to be breach of contract.
Thus when a party having a duty to perform a contract fails to do that, or does an act whereby the performance of the contract by him becomes impossible, or he refuses to perform the contract, there is said to be a breach of contract on his part. On the breach of contract by the one party, the other party is discharged of his obligations to perform his part of the obligations.
Breach of a contract does not discharge the contract, thereby automatically terminating the obligation of the innocent party. It gives an opinion to the innocent party to regard itself as discharged. The innocent party rescinds the contract, the primary obligation of both the parties is over, but the defaulting parties become liable for payment of compensation for the breach. The innocent party may also waive the defective performance and elect to accept damages instead of ending the contract.
The breach of contract may be either:
- actual, i.e. non-performance of the contract on the due date of performance, or
- Anticipatory, i.e. before the due date of the performance has come.
Thus, when the party to the contract refuses to do an act or does an act at the time of the performance of the contract then it is said to be the actual breach of the contract, but when the party to the contract refuses to do an act or does an act before the time of performance by which the performance of the contract is not possible, the such breach is known as the anticipatory breach of contract.
Fundamental Breach of Contract:
In today’s globalized world, thousands of companies engage in business which involves millions of consumers. Thus, it would be difficult for these companies to draw up separate contract with every individual, they came out with Standard Form Of Contract, whereby a standard form with a large number of terms and conditions are there restricting the liability of the party to the contract .The individuals can hardly bargains with the massive organizations and therefore the only option available to them is either to accept it or reject it. The doctrine of “Fundamental Breach” in the Law of Contract has developed mainly in the areas of sale (and hire-purchase), bailment and carriage.