TORT AFFECTING BUSINESS CONTRACTS

INTRODUCTION:

In the ground laying case of Lumley v Gye heard in 1853, it was observed that a person can claim damages from a party who interjects in the performance of a contract by another entity. In this case, a person Benjamin Lumley engaged a soprano named Johanna Wagner to sing exclusively at Her Majesty's Theatre for three months. The Covent Garden theatre’s manager, Frederick Gye, agreed to pay her extra if she broke her contract with Mr. Lumley. Despite an intervention prohibiting her from performing at Covent Garden, Gye urged her to disregard it.

As a result, Lumley filed a lawsuit against Gye for compensation.



WHAT IS A BREACH OF CONTRACT?

It is a judicial prima facie case and a kind of civil wrong in which one or more parties to a contract fail to fulfill a contractual agreement or bargained-for exchange by failing to perform or interfering with the other party's performance. Breach of contract arises in two cases primarily:


1. Anticipatory breach of contract: A contract breach that transpires before the deadline for performance has passed is known as an anticipatory breach of contract. Anticipatory Breach occurs when the promisor absolutely refuses to fulfill his pledge and expresses his refusal even before the time for performance has arrived. A contract violation that is anticipated can occur in one of two ways:

❖ Words are uttered or written expressly

❖ As an outcome of one of the parties' actions.

Anticipatory breach of contract is protected under Section 39 of the Indian contract act,

1872 which states: “When a party to a contract has refused to perform or disable himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, but words or conduct, his acquiescence in its continuance.”



2. Actual breach of contract: It is a situation of refusing to fulfill the commitment on the specified date, as opposed to an anticipatory breach. The parties to a legal contract are obligated to keep their obligations. A breach is stated to have occurred when one of the counterparties violates the contract by neglecting to fulfill his obligation. In that circumstance, the other contracting party gains the right to sue the person who has failed to keep his pledge.

Actual breach of contract is protected under Section 37 of the Indian Contract Act, 1872 states that the contracting parties are compelled to perform or propose to perform their individual obligations under the contract unless such compliance is waived or pardoned under the Indian Contract Act or any other legislation.



DIFFERENCE BETWEEN DEFAMATION AND MALICIOUS FALSEHOOD:

If a statement tends to lower a person's standing among right-thinking members of society, it is defamatory. Libel occurs when a remark is made in a permanent form, such as written words, images, a broadcast, or on the internet. It is slander if it is spoken. A defamatory remark must be communicated to a third party, contain defamatory language, and be reasonably believed to relate directly or indirectly to the claimant in order for a claim to be made. The claimant does not need to demonstrate that the statement is incorrect, but he must show that the remarks are defamatory to him. Until it is proven differently, a defamatory statement is believed to be false.

Even though both malicious falsehood and defamation claims engage with the publication of false assertions, the primary distinctions are that a claimant in a malicious falsehood claim does not have to prove reputational harm, and the blatant lie does not have to be defamatory. A claim for malicious untruth can be made against a respondent who maliciously publishes a false statement that identifies the claimant, his business, asset, or financial interests, and which can be demonstrated to have resulted in pecuniary loss to the claimant. A claim for malicious untruth frequently emerges when one rival makes an incorrect remark about another's goods or services. In the recent case of Tesla Motors v BBC. The BBC was sued for libel and intentional falsity after making unfavourable comments about an electric car. Tugendhat J denied the claimants' request to alter their Particulars of Claim during the most recent interlocutory battle. The most recent verdict effectively terminates the Tesla actions, which had previously been dismissed.


TORT AFFECTING CONTRACTUAL AND BUSINESS RELATIONS:

A malicious statement made by the defendant regarding the plaintiff’s business being closed down will result in the plaintiff losing his customers this will be termed as a pecuniary loss to the plaintiff. This is a malicious falsehood for which the defendant would be held liable. The Defamation Act, 1952 (English) provides that it is not necessary to prove the special damage to bring an action for malicious falsehood.

CONCLUSION:

Tort like malicious Falsehoodhave a huge importance in the field of tort law as these are the wrongs which interfere in the contractual and business relations and consequently injure the pecuniary interests of the person i.e., business in relation to the actual/potential loss of clients, new business opportunities, existing and new business partners, etc resulting in huge financial loss. These wrongs are tortious as well as criminal in nature and have various aspects related thereto and therefore require many reforms for becoming much more ascertainable.



This article is written by Janhavi  Singh Chauhan, of Kirit P. Mehta School of Law, NMIMS.

Recent Posts

See All

Introduction Section 262 defines one person company as meaning a corporation which has only one person as a member section 3(1)(c) provides for incorporating such a company by saying that a company ma

“Where there is a right, there is a remedy” In order to provide relief in cases relating to breach of contracts and in the cases relating to law of torts Specific Relief Act, 1877 was enacted which wa