Breach of Contract and its types

In this post, we will walk through the concept of breach of Contract, elements of breach of contract, as well as the types of breach of Contract, illustrative examples, and with the aid of recent case laws will be used to help you grasp a clear understanding of the covered concepts.

Hellow Once again my dearest reader and benevolent seeker of legal knowledge to the series of notes on Contract law.

Let us begin right away!

Breach of a contract means failure of a party to a contract to perform his or her obligation enunciated under a contract. Breach of contract may arise in two ways.

First, by failure to perform a contractual duty without justifiable cause. Second, performing a contractual obligation contrary to the required standards, terms and conditions provided in a contract.

Inter Alia, in the case of Legend Aviation (PYI) Limited t/a King Shaka Aviation Vs Whirlwind Aviation Limited, Commercial Case No. 61 of 2013 High Court Commercial Division (unreported). It was stated

“A breach occurs in contract when one or both parties fail to fulfill the obligations imposed by the terms ……………………….”

In order to prove the existence of a breach of contract, there are various elements that need to be taken into consideration, and such elements were also stated in the case of Catic International Engineering (T) Limited v Hans Pope Hotels Limited, Commercial Case No. 52 of 2021, in the High Court of Tanzania (Commercial Division) at Dar es Salaam, it was stated that the elements of breach of contract includes:

i) Existence of a valid contract;

ii) Performance by the Plaintiff or some justification for non-performance;

iii) Failure to perform the contract by the defendant; and the absence of justification for non-performance

iv) Damages

For a person to be able to sue for breach of Contract in Tanzania, then it is a mandatory requirement to able to consider the time limitation, as the Law of Limitation Act [Cap 89 R.E 2019] under the First Schedule requires the plaintiff to be able to sue the defendant for breach of contract under a span of 6 years, which computed after the date such cause of action accrued, or was knowledgeable to the plaintiff.

There are various types of breach of contract.

The variation of breaches of contract affect the legal consequences for parties to the contract as well as remedies the innocent party is entitled in relation to such breach. However, in this post, we will look upon four commonly known types of breach, and these are: –

(i) Actual Breach

Actual breach means breach committed either; (i) at the time when the performance of the contract is due; or (ii) during the performance of the contract.

Example: (i) agrees to supply to B on the 1^st February, 1975, 1000 bags of sugar. On 1^st February, 1975 he fails to supply. This is actual breach of contract at the time when the performance is due. The breach has been committed by A.

(ii) If on 1^st February, 1975 A is prepared to supply the required number of bags of sugar and B without any valid reasons refuses to accept them, B is guilty of breach a contract.

In the case of Pilbrow v Pearless de Rougemont & Co [1999]

The appellant had telephoned a firm of solicitors and asked to make an appointment with a solicitor. The appointment was arranged with an employee who was not a qualified solicitor. He was not informed that the employee was not a solicitor. The appellant was dissatisfied with the quality of the legal services he had received and refused to pay the outstanding fees. The firm sued for their fees. The Court of Appeal accepted that as a matter of fact the standard of legal services provided had been that of a competent solicitor. But it ruled that there had been a contract not just to provide legal services, but to provide legal services by a solicitor. The firm did not perform that contract at all. No legal services were provided by any solicitor; they therefore had no right to any payment. To avoid this problem in future, professionals should always make clear to the client whether their services are being provided by a qualified professional or not.

An actual breach of contract refers to a failure to meet the obligations stated in a contract. This means the failure has already occurred and is not something that is merely anticipated.

A party can breach a contract in a number of ways, from failing to meet contractual deadlines to complete nonperformance.

Fortunately, there are remedies available to help the innocent party get fair compensation for his or her injury or loss. The actual breach implies failure at present and date of performance is reached, without legal excuse, to perform any promise that forms all or part of the contract.

This includes failure to perform in a manner that meets the standards of the industry or the requirements of any express warranty or implied warranty, including the implied warranty of merchantability.

When an actual breach amounts to breach of a warranty, or breach of an innominate term and the consequences of breach are not sufficiently serious to allow for discharge, the injured party is entitled to sue for damages only.

An actual breach of contract happens when a party is unable to fulfill his or her contractual obligations by the deadline for performance or during the course of performance.

When one party in a contract does not fulfill his or her contractual duties by the performance deadline, the other party is not required to perform his or her obligations and can hold the breaching party liable for contract breach.

When one party refuses or fails to perform his or her contractual duties, it results in an actual contract breach during the course of performance.

An actual contract breach also occurs if a party performs his or her obligations but fails to comply with the contract’s terms.

This kind of breach occurs when the guilty party breaches the contract’s essential conditions.

Nevertheless, a breach of nonessential conditions will not cause the contract to be dismissed.

It only gives the innocent party the right to be compensated by the breaching party.

(ii) Anticipatory Breach

Breach of a contract committed before the date of performance of the contract is called anticipatory breach of contract.

The contract in this case is repudiated before the time fixed for its performance arrives and is so discharged. Anticipatory breach is covered under Section 39 of the Law of Contract Act [Cap 345 R.E 2019].

Example: (i) A agrees to employ B from 1^st of March. On 1^st February, he writes to B that he need not join the service, the contract has been expressly repudiated by A before the date of its performance.

(ii) A agrees to marry B. But before the date A marries C. The contract has been repudiated by A by his conduct before the date of its performance.

Anticipatory breach of contract does not give rise to a right of action unless the promisee elects to treat it as equivalent to actual breach.

Refering the case of Frost v Knight [1872]

The defendant had promised to marry the plaintiff once his father had died. He later broke off the engagement while his father was still alive, and when his ex-fiancée sued him for breach of promise (which was a valid claim in those days, though not any longer), he argued that she had no claim as the time for performance had not yet arrived. This argument was rejected and the plaintiff’s claim succeeded.

Anticipatory breach is the repudiation of obligations by one party to a contract before the obligations have been fully performed.

This releases the other party from his or her contractual obligations; one party cannot simultaneously repudiate obligations and demand that the other party perform. Anticipatory breach is either a renunciation or an inability to perform.

If it is a renunciation, it must be a clear and absolute refusal to perform. There must be an intent on the part of the wrongdoer to no longer be bound by the contract. If the anticipatory breach is a demonstrated inability to perform, then intention is less critical and capability is more critical.

 For example, an anticipatory breach occurs if a person contracts to sell his car to A, but sells and delivers it to B before the delivery date agreed with A.

This act of a person selling and delivering his car to B prior contractual to deliver the same car to A shows that the party will not complete the work, hence it is anticipatory breach of the contract.