Termination for breach: the prospects of the Unidroit Principles of International Commercial Contracts to interpret and supplement the Indian law of contract

Abstract

Abstract Predicated on English law, termination for the breach of contract in India is regulated by the Indian Contract Act, 1872 and the Sale of Goods Act, 1930. However, these legislations do not adopt uniform criteria while stipulating the circumstances in which the parties may exercise their right to rescind the contract for breach. The complex nature of the rules on termination for breach has rendered the Indian law of contract unsuitable to govern domestic or transnational agreements. This article examines the plausible role of the International Institute for the Unification of Private Law’s (Unidroit) Principles of International Commercial Contracts (PICC) in developing the Indian law of contract. It argues in favour of a complete overhaul of the legal principles on which the parties’ right to rescind a contract for breach is based on the ground that these reflect a pro-termination instead of a favor contractus approach. Consequently, the author urges Indian lawmakers to consider employing the provisions of the PICC on the subject as a model to develop the law of the Republic to foster international trade and facilitate justice among litigants. Although an amendment to the Indian law of contract would be ideal, the judiciary should, in the meantime, refer to the PICC while adjudicating disputes arising from the breach of contracts to interpret and supplement the Indian law according to well-defined and internationally accepted standards.