Breach of Contract: Types and Procedure

Breach of contract in Indian Law: 

Breach of contract is a violation of the conditions given under a contract between two or more parties. Thus it arises where a contractual obligation is not met or fulfilled on time by the defaulting party due to any act of omission or refusal. In India, breach of contract is governed by the Indian Contract Act, 1872. 

Breach of contract can have serious consequences for both parties involved. In the case of a breach, the non-defaulting party may be entitled to damages suffered as a result of the breach. These damages can include compensation for any financial losses incurred, as well as any other losses that may have been caused by the breach. It is important to note that the specific consequences of a breach of contract will depend on the terms of the contract itself, as well as the laws governing contracts in the relevant jurisdiction.

Ingredients of breach of a contract:

The elements that must be present in order for a party to a contract to claim damages over a breach of contract are: 

• Existence of a Valid and Enforceable Contract: (Terms and Conditions) 
  • • Offer and acceptance: The contract must have a clear offer made by one party and an acceptance of that offer by the other party.
    • Consideration: The contract must involve some form of consideration, which is usually in the form of money or something of value.
    • Capacity: The parties to the contract must have the legal capacity to enter into the agreement.
    • Legality: The contract must be for a legal purpose and not violate any laws.
    • Performance: The parties must perform their obligations under the contract as agreed upon.
    • Termination: The contract may have provisions for termination, which may be due to breach of contract or other reasons.
• Failure by one party to fulfill their obligations: This can include failing to deliver goods or services on time, not making payments as required, or not meeting other obligations outlined in the contract;
• Failure to perform is a violation of the terms of the contract: Where one party to a contract does not fulfill their obligations as agreed upon in the terms of the contract. The non-breaching party will not be held liable if he/she was unable to fulfill specific tasks because the breaching party had made it impossible to complete.
• Breach of contract causes harm or damages to the other party: Each party’s pledge should be included in the contract they have entered into. The extent of harm suffered will depend on the terms of the contract and the nature of the breach.
• Damages suffered by the other party as a result of the breach: The extent of the harm or damages suffered will depend on the specific terms of the contract and the nature of the breach. In some cases, the non-defaulting party may be entitled to compensation for the harm or damages suffered as a result of the breach.
• Breach is not excused by any legal defenses, such as impossibility or frustration of purpose: The defendant cannot claim that the plaintiff is not entitled to compensation because of his or her own fault.  

Different types of Breach of Contract:

There are several types of breach of contract in India, 

1. Minor breach: occurs when you don’t obtain an item or service before the due date;
2. Material breach: occurs when you obtain something that differs from what was specified in the agreement;
3. Anticipatory breach: occurs when one party indicates that they will not fulfill their obligations under the contract before the time for performance arrives;
   1. Explicit Repudiation: occurs when a party expressly breaches a contract by openly refusing or being hesitant to carry out his or her portion of the deal before the contract’s real date.
   2. Implicit repudiation occurs when a party does not expressly refuse to carry out his or her commitment. Rather, his or her failure to execute the promises before the contract’s due date is implied by his or her words or behaviour or the current situation.
4. Actual breach: occurs when one party fails to fulfill their obligations under the contract at the time for performance;
   1. Due to late performance: occurs when one of the parties fails to meet contractual duties and obligations within the specified time period for conformance.
   2.  During the course of performance: occurs when a party fulfils its responsibilities but refuses or fails to comply with the contract’s key terms and conditions.
5. Partial breach: occurs when one party fails to fulfill some, but not all, of their obligations under the contract.

Where a breach has occurred, the non-breaching party must file a civil suit against the breaching party that breached the contract. The remedies available depend on the type of breach and the terms of the contract. The most common remedies are damages and specific performance.

1. Damages are a monetary award intended to compensate the party that suffered the breach for their losses. The amount of damages awarded depends on the nature and extent of the losses suffered by the party.
   1. 1. There are two types of damages:
         1. 1. compensatory damages are intended to compensate the party for their actual losses;
            2. punitive damages are intended to punish the party that breached the contract.
2. Specific performance is a remedy that requires the party that breached the contract to fulfill their obligations under the contract. This remedy is only available in certain circumstances, such as when damages would not adequately compensate the party that suffered the breach.

Procedure in Civil Suit for Breach of Contract:

The procedure may vary depending on the specific jurisdiction and court involved, but the following are the general steps involved in a civil suit for breach of contract: 

1. Filing of the suit: The non-defaulting party files a civil suit against the defaulting party in the appropriate court.
2. Service of summons: The court issues a summons to the defaulting party, which is served to them to appear in court.
3. Written statement: The defaulting party files a written statement in response to the summons, stating their defense.
4. Evidence: Both parties present their evidence in court to support their claims.
5. Arguments: Both parties present their arguments in court to support their claims.
6. Judgment: The court delivers a judgment based on the evidence and arguments presented.
7. Execution of judgment: If the judgment is in favor of the non-defaulting party, they may take steps to execute the judgment and recover damages.

It is important to note that breach of contract cases can be complex and time-consuming. It is recommended that parties seek legal advice before filing a civil suit. A lawyer can help parties understand their rights and obligations under the contract, as well as the legal process for seeking remedies.

Conclusion:

In conclusion, breach of contract is a serious matter in India. The Indian Contract Act, 1872 governs breach of contract and provides remedies for parties that suffer a breach. The most common remedies are damages and specific performance. Breach of contract cases are typically heard in civil courts and can be complex and time-consuming. It is recommended that parties seek legal advice before filing a civil suit.

Case Law: