Make and document the election
Under section 60 of the Sale of Goods Act, 1930, when either party repudiates before the delivery date, the other can keep the contract in force and wait until delivery falls due, or treat the contract as rescinded and sue for damages for breach. First identify a concluded sale contract, an ascertainable delivery obligation and evidence of repudiation. A request for more time or revised terms does not by itself establish refusal to perform. Where the position is unclear, seek a prompt clarification and preserve the rights and remedies under the contract.
Read the applicable text: India Code: Sale of Goods Act, 1930, section 60 India Code: Indian Contract Act, 1872, sections 39 and 73.
Check who said what and which obligation it affects
Reconstruct the events from the accepted purchase order, amendments and communications. Identify the sender’s authority, the quantities or delivery instalments affected, and any termination, cure or notice procedure. Section 39 of the Indian Contract Act, 1872 addresses refusal or self-disablement to perform a promise in its entirety and the effect of acquiescing in continuation. Check the interaction with the specific sale-of-goods provision and contract terms rather than labelling any operational delay a final repudiation. For separately payable instalments under a sale contract, section 38(2) distinguishes a breach of the whole contract from a severable breach of an instalment, depending on the contract terms and circumstances. Identify whether the refusal reaches the remaining instalments before applying the section 60 election.
Keep subsequent conduct consistent
If accepting repudiation, document the effective decision and what work or purchasing should stop, and coordinate a reasonable cover purchase or alternative sale. If treating the contract as subsisting, record the outstanding obligations and your own performance readiness, and monitor communications through the due date. Do not casually issue an acceptance of cancellation while instructing the other party to proceed on the original terms. Escalate changed circumstances, continued deliveries or a purported withdrawal of the refusal for review.
Build the mitigation record separately from the election
Section 73 of the Indian Contract Act limits recovery to compensable loss, excludes remote and indirect loss and takes account of available means of reducing loss. Collect prices for comparable goods and terms, preserve the timing of each alternative and record reasonable savings and incremental costs. Depending on who refused performance, assess the applicable damages remedy for non-acceptance or non-delivery under sections 56 and 57 of the Sale of Goods Act. Section 75 of the Contract Act addresses compensation on rightful rescission. The examples illustrate simple workings using assumed facts; identify the relevant valuation date and recoverability from the contract, circumstances and remedy selected. Keep advances and credits separate from the loss measure. Section 61(1) of the Sale of Goods Act preserves the right to recover money paid where the consideration for that payment has failed, as well as interest or special damages where otherwise recoverable. Check the contract and legal basis for each amount to avoid duplicate recovery.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Unclear delay versus delivery due
A seller writes on 5 October 2026 asking to move delivery from 20 to 27 October. The proposed shift is seven days; the request comes 15 days before the existing deadline. Record the original date and seek clarification rather than treating the proposed date as an agreed amendment or definitive repudiation.
Illustrative example 2: Buyer covers a refused supply
A seller unequivocally refuses an order of 250 units at ₹1,200 each before the due date. The buyer elects to treat the contract as rescinded and reasonably secures equivalent supply at ₹1,260 on like terms. The illustrative price difference is ₹15,000; preserve the comparable offers and review the recoverable measure.
Illustrative example 3: Seller reroutes goods after buyer refusal
A buyer repudiates an undelivered lot of 180 units priced at ₹950 each. The seller elects to treat it as rescinded and reasonably places the units at ₹920 on comparable terms. The starting spread is ₹5,400 before other supported costs or credits.
Illustrative example 4: Keep the continuing quantity visible
For a severable order of 600 identical units in three independent instalments, a clear repudiation affects only one 200-unit instalment on the assumed facts. Separate those 200 from the 400 units still scheduled. Do not apply a one-lot calculation to the entire order.
Illustrative example 5: Compare alternatives on matched terms
Replacement offer A is ₹830 ex works plus ₹40 incremental freight per unit; B is ₹855 delivered on otherwise equivalent terms. For 100 units B costs ₹1,500 less. Record feasibility and timing before attributing a loss to the original breach.
Illustrative example 6: Prevent an advance from inflating the claim
A buyer’s recoverable cover difference is assumed to be ₹28,000. The buyer separately seeks to recover an original ₹35,000 advance, of which ₹10,000 has already been returned. If the remainder is recoverable, the two lines are ₹28,000 damages and ₹25,000 net refund, or ₹53,000 together before any other adjustment.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Verify the concluded sale | Accepted order, contractual terms and approved amendments. |
| 2 | Identify the delivery obligation | Due dates, instalments and any severability terms. |
| 3 | Preserve the alleged repudiation | Original message and sender authority. |
| 4 | Distinguish refusal from a request | Clarification correspondence and relevant conditions. |
| 5 | Review notices and cure periods | Contract clauses and actual communications. |
| 6 | Record the election | Decision, effective date and notice evidence. |
| 7 | Align operations with the decision | Purchase, production and dispatch instructions. |
| 8 | Compare mitigation alternatives | Contemporaneous comparable offers and feasibility. |
| 9 | Reconcile the claim and recoveries | Loss working, savings, deposits and credits. |
| 10 | Preserve the final chronology | Approvals, performance evidence and settlement file. |
Sixteen practitioner FAQs
1. Can either party use section 60?
Yes. It addresses repudiation by either party before delivery is due.
2. Does an indicative delay notice always amount to repudiation?
No. Read its terms, authority and context before making an election.
3. What does treating the contract as subsisting involve?
Keep track of both sides’ outstanding obligations and your own readiness until the contractual due date.
4. Can I assume the deal ended when the other party wrote?
Record whether and how you accepted the repudiation and review the legal effect.
5. Can conduct matter as much as a letter?
Yes. Continuing performance or inconsistent instructions can affect the analysis; preserve both.
6. What if the seller refuses one instalment only?
Review the contract’s treatment of instalments and whether the refusal reaches the remaining obligations.
7. Is an unauthorised supplier employee’s message conclusive?
No. Verify authority and seek confirmation as appropriate.
8. May the innocent party sue without waiting for delivery?
Section 60 provides that option if it treats the contract as rescinded following pre-delivery repudiation.
9. Is every lost downstream order recoverable?
No. Check causation, knowledge at contract formation and the bar on remote or indirect loss.
10. How do I compare replacement quotes?
Match quality, quantity, timing and freight terms before comparing totals.
11. Does the first available quote always fix damages?
No. Assess the relevant date, market evidence and reasonable mitigation on the facts.
12. Does section 60 create a right to the full original price?
No. It addresses the election and a damages action; examine any price claim separately.
13. Can I include a returned advance in the unpaid balance?
No. Give credit for amounts already returned.
14. What if prices move while the contract remains alive?
Keep dated market records and obtain advice on the relevant valuation date and causation.
15. Does accepting repudiation justify stopping work on unrelated contracts?
No. Identify the contract and obligations affected before giving operational instructions.
16. What is the most useful settlement attachment?
A dated chronology with the election, contractual delivery terms, mitigation comparators and a separate bridge for deposits and recoveries.
Official sources
India Code: Sale of Goods Act, 1930, section 60 India Code: Indian Contract Act, 1872, sections 39 and 73