A singer contracts with theatre for 2 nights/week for 2 months at Rs. 500/night. On 6th night A willfully absents, B rescinds contract. Rights of parties?

The Singer and the Theatre: Section 39 of the Indian Contract Act, 1872

The problem before us is one of the most celebrated illustrations in Indian contract law appended to Section 39 of the Indian Contract Act, 1872. The facts are these: A, a singer, enters into a contract with B, the manager of a theatre, to sing at his theatre two nights every week during the next two months at Rs. 500 per night. On the sixth night, A wilfully absents herself. B rescinds the contract. What are the rights and liabilities of the parties?

The Governing Provision: Section 39

Section 39 states:

"When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance."

The section captures what the law calls a repudiatory breach — that is, a breach of such a character that it strikes at the root of the contract and demonstrates an intention on the part of the defaulting party not to be bound by the agreement any further. The word "wilfully" in the illustration is key. A's absence is not accidental, not caused by illness or unavoidable circumstance — it is a deliberate act of non-performance. That wilfulness transforms what might otherwise be a mere breach of a single obligation into a signal of the singer's intention not to continue with the contract as a whole.

The critical legal test, as the law has developed through judicial interpretation, is whether the conduct of the party in default is such as to lead a reasonable person to the conclusion that she does not intend to fulfil her part of the contract. A willful absence on the sixth night — out of a sixteen-night engagement spread across two months — carries precisely that message.

B's Right to Rescind: Is It Absolute?

When the promisee (B, the theatre manager) is faced with such a repudiatory breach, the law hands him an option, not an obligation. He may either accept the repudiation and put an end to the contract, or he may signify his acquiescence in its continuance — that is, he may choose to treat the contract as still alive. The section itself acknowledges this bifurcation by the phrase "unless he has signified, by words or conduct, his acquiescence in its continuance."

In the facts given to us, B rescinds the contract. He does not waive the breach. He does not allow A to perform on the seventh night. He chooses to end the agreement. The law, by Illustration (a) to Section 39, explicitly validates this choice: "B is at liberty to put an end to the contract." B's right to rescind is therefore beyond doubt.

The contrast with Illustration (b) is instructive. In that illustration, A wilfully absents herself on the sixth night, but with B's assent, sings on the seventh night. By allowing A to perform on the seventh night, B has signified his acquiescence in the continuance of the contract. He cannot then rescind it. He retains only the right to claim compensation for the damage caused by A's non-performance on the sixth night. Acquiescence, once communicated, is irrevocable.

The Rights of B Upon Rescission

Once B validly rescinds the contract under Section 39, three important legal consequences follow:

First, B is released from any further obligation under the contract. He need not pay A for future performances that will now never take place. The primary obligations of both parties come to an end.

Second, B is entitled to claim compensation for any loss he has suffered as a result of A's breach. This right flows from Section 75 of the Act, which declares that "a person who rightfully rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfilment of the contract." This may include the expenses incurred in arranging an alternative performer, any revenue lost on account of the cancelled night, or any other loss that flows naturally from the breach in the usual course of things — consistently with the principles in Section 73 and the celebrated rule in Hadley v. Baxendale (1854) 9 Ex 341, which the Indian courts have consistently applied.

Third, B must restore to A the benefit received under the contract before rescission. This is the operation of Section 64, which provides that "when a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained of which he is the promisee." The obverse of this is found in Section 65: where a contract becomes void or is rescinded, any benefit received must be restored. Illustration (c) to Section 65 maps directly onto our facts: "If A, a singer, contracts with B, the manager of a theatre to sing at his theatre two nights in every week for two months for hundred rupees per performance and A wilfully absents herself on the sixth night, and B rescinds the contract in consequence, B must pay A for the five nights on which she had sung." B cannot retain the benefit of five nights of performances without paying for them, even though he is the innocent party. Restitution runs alongside rescission.

The Rights of A: What Remains for the Defaulting Party

A wilfully breached the contract. She loses the benefit of the remaining contract — she has no right to demand payment for the performances that never took place after the rescission. However, the law is not indifferent even to the defaulting party's already-performed obligations. A is entitled to be paid for the five nights she did perform, subject to B's right to set off any damages he may claim. This equitable balance — that a party in breach cannot recover for unperformed obligations but retains the right to receive what was earned before breach — reflects the principle against unjust enrichment that runs through the Act.

What if B Had Not Rescinded? The Alternative Path

It is worth pausing to appreciate the alternative scenario, because it illuminates the structure of Section 39. If B had signified acquiescence — as in Illustration (b) — the contract would have continued in full force, and the law would have confined B's remedy to compensation for the loss caused by the one missed night. The famous English decision in Hochster v. De La Tour (1853) 2 E&B 678 — the foundational anticipatory breach case — established that a party faced with repudiation may treat it as an immediate breach and sue at once, or may hold the contract alive and await performance. Our singer's case is the same in structure: B had the choice, and having chosen rescission, he may not revert to the position of affirming the contract.

The House of Lords in White and Carter (Councils) Ltd. v. McGregor AC 413, though decided in England, illuminates the Indian position too. It held that an innocent party, if he does not accept repudiation and instead performs his own part, may claim the full contract price — but this is contingent on the innocent party being able to perform without the co-operation of the defaulting party. In a contract of personal service like singing, that would not be the case; B cannot compel A to sing. Hence rescission and a claim for compensation is the realistic and legally recognised path.

Summary of the Rights of the Parties

To state the position with precision:

• B (Theatre Manager): Has the right to rescind the contract under Section 39, which he has exercised. He is entitled to claim compensation under Section 75 for all losses caused by A's wilful absence and the consequent termination — including the loss from the sixth night and any losses flowing from the inability to arrange the remaining performances. He must, however, pay A for the five performances already rendered under Section 65.

• A (Singer): Has no right to claim for future performances under a contract she has caused to be rescinded by her wilful default. She retains the right to be paid for the five nights she performed, subject to B's right to set off the compensation he is entitled to claim against her for the breach.

The elegant symmetry of the law here is worth noting: rescission terminates the future, but does not undo the past. What was performed must be paid for; what was wrongfully not performed must be compensated. The contract is at an end — but the accounting between the parties continues under the provisions of Sections 64, 65, and 75 of the Act.