What Is Anticipatory Breach of Contract? Rights of the Aggrieved Party Explained

Anticipatory breach happens when one party refuses to perform, or shows it cannot perform, before the date for performance has arrived. In India the idea is linked to Section 39 of the Indian Contract Act, 1872, which deals with a party who "either completely refuses to meet" its obligations. The principle was firmly established in English law by Hochster v. De la Tour (1853).

A caution about the source: the article I could read, a Legal Service India note on Schiller v. Sooltan Chand, does not set out the aggrieved party's rights in a systematic way, and it contains inconsistencies (for example, 200 and 250 tonnes in different places, and two different citations). Where the source is silent, this post says so rather than filling the gap from memory. Check the Act itself for the full text of Section 39.

The case the article uses

Schiller and Ors. v. Sooltan Chand and Ors. (1878) ILR 4 Cal 252 was decided on 22 July 1878 by the Calcutta High Court (Richard Garth, CJ, and William Markby, J.). It was a sale of linseed. The buyers delayed payment. The sellers stopped performance and tried to rescind under Section 39.

The court rejected that. The buyers had not refused to perform. They had only delayed payment. So Section 39 could not be used to rescind. The court cited Freeth v. Burr (1874) LR 9 CP 208, where delay in payment was held not to be a refusal to complete the contract.

Read Blog: Doctrine of Frustration Under Section 56 Explained

Why Section 39 did not apply

The article records these points from the judgments:

·        Mere delay is not refusal. Late payment is not a refusal to perform the whole contract.

·        Mercantile arrangements. Justice Markby said a mercantile arrangement of this kind did not fall under Section 39.

·        Section 51. It would apply only if the seller had insisted on strict performance and prompt payment on delivery. It had not.

·        Section 55. It may suggest that time was of the essence, but the court found this did not apply where prompt payment had not been insisted on.

·        Course of dealing. Earlier deliveries without demanding payment showed that the seller did not treat prompt payment as essential.

Remedy

The article notes that Section 73 provides compensation for loss caused by a breach. In Schiller, damages were measured by the gap between the contract price and the later market price of linseed.

What the source does not cover

The article does not explain whether the aggrieved party may treat the contract as ended or keep it alive and wait for performance. It also has no dedicated section on exceptions. Do not rely on this post for that point, and read Section 39 and standard commentary.

Exam approach

If a question asks you to define anticipatory breach, use the definition above and cite Hochster v. De la Tour (1853). If it gives facts of late payment, use Schiller v. Sooltan Chand to say that delay is not refusal.

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FAQs

What is anticipatory breach?

A refusal or inability to perform before the performance date arrives.

Which Section of the Indian Contract Act is linked to it?

Section 39.

Which English case established the principle?

Hochster v. De la Tour (1853).

Which Indian case does the article discuss?

Schiller and Ors. v. Sooltan Chand and Ors. (1878) ILR 4 Cal 252.

Is late payment an anticipatory breach?

Not by itself. In Schiller, delay in payment was not treated as a refusal.

Which Section provides compensation for breach?

Section 73.

Which judges decided Schiller?

Richard Garth, CJ, and William Markby, J., on 22 July 1878.

Conclusion

Anticipatory breach is easy to define but easy to misapply. The Schiller case reminds you to look for a real refusal, not just delay.

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