The Effect Of Breach Of Contract On Ongoing Commercial Relationship
- IJLLR Journal
- Dec 16, 2025
- 2 min read
Shreya Sharma, Symbiosis International University, Pune
1. INTRODUCTION
Converting informal conversations to a formal legally binding agreement, Contracts have been playing a significant as well as a critical role in commercial relationships, commanding over business’s commercial, financial and legal matters. Thus, “ Commercial contracts are those legally binding agreements commanding business transactions, timelines, obligations and repercussions in case of the party fails to keep up with the terms and agreements of the contract reducing the levels of risk to a business ensuring minimum disputes amongst the parties.”
Nevertheless, if one of the agreed parties fails to keep up with the agreed terms , then it results in negative ramification to the party, and therefore such breaches and issues and breaches are governed by Indian Contract Act, 1872. “A breach of contract occurs when a party thereto renounces his liability under it, or by his own act makes it impossible that he should perform his obligations under it or totally or partially fails to perform such obligations.” There are types of contracts:
Actual Breach- When one of the agreed parties fails to perform the obligations according to the contractual terms and agreements. It can be due to non performance or delay in performance from either side. Therefore, the injured party can claim for remedy.
Anticipatory Breach- When a party declares or informs the other party its failure and incapacity to comply its actions with the contractual terms prior to its performance date.
Minor breach- When a party fails to perform a very small or insignificant part of the contract that does not affect the party and the contract at large and hence, the injured party cannot terminate the contract but still demand for the estimated compensation which are usually settled without intervention of court.
Material Breach- When a party fails to perform a very significant obligatory part of the contract which affects the other party at large that it dissolves the whole purpose of the contract and refrains the other party to benefit from the same. Therefore, the injured party can terminate the contract.
Mutual Breach- Where all the parties mutually fails to perform the terms and agreements of the contract. However, a sole party is not at fault and hence, the contract can be declared void and the parties can enter into a different new contract altogether.
