A Breach of Contract occurs when a party fails or refuses to perform their obligations under the contract without a valid legal excuse.
1. Anticipatory Breach of Contract (Section 39)
An Anticipatory Breach occurs when a party explicitly announces, through words or conduct before the due date of performance, that they will not perform their promise.
Under Section 39, the aggrieved party has two immediate options:
- Treat the contract as ended immediately: File a lawsuit for damages right away without waiting for the due date.
- Keep the contract alive (Treat it as operative): Wait until the due date to see if the other party changes their mind and performs. However, if they wait, the contract remains alive for the benefit of *both* parties. If a frustrating event occurs in the meantime (e.g., a war breaks out making performance illegal), the contract is discharged by frustration, and the breaching party escapes liability.
2. Actual Breach of Contract
An Actual Breach occurs when a party fails to perform their promise on the actual due date of performance, or during the course of performance itself.