Breach of contract

Introduction

Breach of contract occurs where one of the parties to an agreement fails to comply, either completely or satisfactorily, with their obligations under it.

Definitions

Actual breach is where the breach occurs on the due date for performance.

Anticipatory breach occurs where, before the due date for performance, a party shows an intention not to perform their contractual obligations. It is referred to as renunciation. Anticipatory breach may be express or implied.

Express anticipatory breach occurs where one of the parties declares, before the due date for performance, that they have no intention of carrying out their contractual obligations.

Implied anticipatory breach occurs where one of the parties does something which makes subsequent performance of their contractual undertaking impossible.

Omnium D'Enterprises v Sutherland (1919)

Facts: The defendant had agreed to rent a ship to the claimant. Before the hire period commenced the defendant sold the vessel.

Held: The sale of the ship amounted to a clear repudiation of the contract. The claimant could sue for breach of contract.

Anticipatory breach

Anticipatory breach does not automatically bring the contract to an end. The innocent party has two options:

• treat the contract as discharged and bring an action for damages immediately, without waiting for the contractual date of performance, or 
• elect to treat the contract as still valid, complete his side of the bargain and then sue for payment by the other side.

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Tags:	actual breach;anticipatory breach;express anticipatory breach;implied anticipatory breach