In construction contracts, if one of the parties fails to perform the obligations that he had promised to perform, then this may constitute a breach of contract on his part.
The following are examples of breach of contract by owner:
A. Delay in handing over possession of site
B. Delay in release of drawings and design
C. Delay in making payments
D. Delay in shifting of utilities
Whereas, some examples of breach of contract by contractor are as follows:
A. Not completing the work on time
B. Not mobilizing enough men and machinery
C. Abandoning the work
Sections 37, 51-54, 73 and 74 of the Indian Contract Act also deals with breach of contract.
Section 37 of the Indian Contract Act mandates that every party to a contract must perform or offer to perform their part of the contract unless they are discharged of the obligation.
Section 51 states that when a contract consists of reciprocal promises to be simultaneously performed, no promisor needs to perform his promise unless the promisee is ready and willing to perform his reciprocal promise.
Section 52 provides that where the order in which the reciprocal promises are to be performed is expressly fixed by the contract, they shall be performed in that order and when the order is not fixed by the contract, they shall then be performed in the order required by the transaction.
Section 53 stipulates that when a contract contains reciprocal promises and one party to the contract prevents the other party from performing his promise, the contract becomes voidable at the option of the party so prevented and he is entitled to compensation from the other party for any loss he may have sustained in the consequences of the non performance by the other party.
Section 54 provides that when a contract consists of reciprocal promises, such that one of them can not be be performed or that it’s performance can not be claimed till the other has been performed and the promisor of the promise last mentioned fails to perform it, such a promisor can not claim the performance of a reciprocal performance and must make compensation to the other party to the contract for any loss which the other party may sustain by non performance of the contract.
Section 55 mandates that when a party to a contract promises to do a certain thing at or before a certain specified time or certain things at or before specified times and fails to do any such thing at or before the specified time , the contract or so much of it that has not been performed becomes voidable at the option of the promisee ,if the intention of the parties was that time should be essence
Effect of failure when time not essence – if it was not the intention of the parties that time should be the essence of the contract, then the contract does not become voidable by the failure of to do such a thing on or before the specified time, but the promisee is entitled to compensation for any loss occassioned to him by such failure.
Sections 73 and 74 of the Indian Contract Act provides for compensation in case of breach of contract. Section 73 provides for unliquidated damages while Section 74 provides for liquidated damages.
Section 73 states that when a contract has been broken, the party who suffers such breach,is entitled to receive from the party who has broken the contract compensation for any loss or damage caused to him thereby, which naturally arose in the usual cause of things from such a breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it,such compensation not to be given for any remote or indirect loss or damage sustained by the breach.
Section 74 stipulates that when a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such a breach,or if the contract contains any other stipulation by the way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract, reasonable compensation not exceeding the amount so named or as the case may be, the penalty stipulated for.
There also exists material and non material breach of contract. A non material breach of contract is not a very serious breach and is a minor breach and will not affect the contract. For example, if the contract specified green colour cables and yellow colour cables are used instead and such change doesn’t have any adverse effect on the contract either financially or with respect to time involved, then this type of breach constitutes a non material breach.
A material breach, on the other hand, is one which affects the performance of a contract. It is usually the failure to perform an essential condition or multiple conditions of the contract. This breach seriously affects the performance of the contract and excuses the non breaching party from performing his part under the contract and entitles him to terminate the contract and claim damages from the breaching party.
Thus, to sum up, a breach of contract is a violation of the terms of the contract wherein the non breaching party is given the right to terminate the contract or claim damages owing to the beach