unit-iv

REMEDIES FOR BREACH OF CONTRACT

Introduction
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. A breach of contract can be Anticipatory or Present. Breach of
Contract leads to the infringement of the rights of the non-breaching party and the breaching
party suffers a loss. Hence, his rights are needed to be restored and he must be reimbursed. For
this various remedies are available to the aggrieved party. Remedies for breach of contract is
based on the Latin maxim ‘Ubi jus, ibi remedium’ denotes ‘where there is a right, there is a
remedy’.
So, in case of breach of contract, the aggrieved party would have one or more, remedies against
the guilty party.
i. Suit for rescission
ii. Suit for damages
iii. Suit for specific performance
iv. Suit for injunction
v. Suit for quantum meruit

MEANING OF REMEDY
The manner in which a right is enforced or satisfied by a court when some harm or injury,
recognized by society as a wrongful act, is inflicted upon an individual, it is called remedy.
Remedies may be considered in relation to:
1. The enforcement of contracts.
2. The redress of torts or injuries.
The remedies for the enforcement of contracts are generally by action. The form of these
remedies depends upon the nature of the contract.
Meaning of “Breach of Contract”
Breach of contract is failing to perform any term of a contract, written or oral, without a legal
excuse. According to Black Law Dictionary: - “Breach of contract means failure to live up to the
terms of a contract.” Therefore, breach of contract is a legal term that denotes a violation of a
contract or agreement in which one party fails to fulfil its promises. In order to upheld a case of
breach of contract the court must satisfy itself of all the following requirements:-
❖ The contract must be valid; it means, it must contain all the essential elements of the
contract so that it can be heard by a court. If all the essentials are not present, the contract
is not considered as a valid contract; hence no suit shall lie in the court.
❖ The plaintiff must show that the defendant has broken the contract.
❖ The plaintiff did everything required for the performance of the contract.
❖ The plaintiff must have given a reasonable notice to the defendant of such breach. If the
notice is in writing, this will prove to be better than an oral notification.

REMEDIES AVAILABLE FOR THE BREACH OF CONTRACT

SUIT FOR RESCISSION

In contract law, the term rescission refers to the undoing, or unmaking of a contract between
parties. The breach of contract no doubt discharges the contract, but the aggrieved party may
sometimes need to approach the court to grant him a formal rescission, i.e. cancellation, of the
contract. This will enable him to be free from his own obligations under the contract.
The basic reasons for rescission can be stated as follows:-
1) Innocent or Fraudulent representation; or
2) Mutual mistake; or
3) Lack of capacity to contract; or
4) An impossibility to perform a contract not contemplated by the parties; or
5) Duress; or
6) Undue influence.
A party can rescind a contract because of a breach by another party, but the breach must be so
substantial that it defeats the purpose of the contract. One can also rescind a contract by
agreement. If all parties to a contract agree to cancel it, they can do so.
SUIT FOR DAMAGES

Meaning and definition of Damages

The theory of damages is that they are a compensation and satisfaction for the injury
sustained, i.e. the sum of money to be given for reparation of the damages suffered should as
nearly as possible, be the sum which will put the injured party in the same position as he would
have been if he had not sustained the wrong for which he is getting damages.
The word “damage” is simply a sum of money given as compensation for loss or harm of any
kind. The term “damages” in general sense, is compensation for causing loss or injury through
negligence or a deliberate act, or an estimate of court or award of a sum as a fine for breach of a
contract or of a statutory duty. It is the amount of money which the law awards or imposes as
pecuniary compensation. Damages are a monetary payment awarded for the invasion of a right at
common law.
Justice Greenwood defines the term as: “Damages generally refer to money claimed by, or
ordered to be paid to, a person as compensation for loss or injury.”
Black’s law dictionary: “Damages are the sum of money claimed by or ordered to be paid to a
person as compensation for loss or injury.”
According to Frank Graham: “Damages are the sum of money which a person wronged is
entitled to receive from the wrong doer as compensation for the wrong.”
Damages may be defined as the disadvantage which is suffered by person as a result of
the act for default of another. “Injuria” is damage which gives rise to a legal right to recompense;
if the law gives no remedy, there is absque injuria, or damage, without the right to recompense.
Therefore, the meaning of “damage” in a statute is a matter of great concern. Remedy by way of
damages is the most common remedy available to the injured party. This entitles the injured
party to recover compensation for the loss suffered by him due to the breach of the contract, from
the party who causes the breach. The quantum of damages is determined by the magnitude of
loss caused by breach.

Kinds Of Damages

The damages which may be awarded to the injured party may be of the following kinds:
Ordinary damages
When a contract has been broken, the party who suffers by such breach is entitled to receive,
from the party who has broken the contract, compensation for any loss or damage cause to him
thereby, which naturally arose in the usual course of things from such breach, or which the
parties know, when they made the contract, to be likely to result from the breach of it. Such
compensation is not to be given for any remote and indirect loss or damage sustained by reasons
of the breach. In Hadley vs. Baxendale, The crankshaft broke in the Claimant’s mill. He engaged
the services of the Defendant to deliver the crankshaft to the place where it was to be repaired
and to subsequently return it after it had been repaired. Due to neglect of the Defendant, the
crankshaft was returned 7 days late. The Claimant was unable to use the mill during this time and
claimed for loss of profit. The Defendant argued that he was unaware that the mill would have to
be closed during the delay and therefore the loss of profit was too remote. Held: The court held
that claimant was entitled only to ordinary damages and defendant was not liable for the loss of
profits because the only information given by Claimant to Defendant was that the article to be
carried was the broken shaft of a mill and it was not made known to them that the delay would
result in loss of profits.

Special damages
Special damages would be the compensation for the special losses caused to the aggrieved
party by the special circumstances attached to the contract. At the time of making the contract, a
part may place before the other party some information about the special circumstances
affecting him and tell him that if the contract is not performed properly, he would suffer some
particular types of losses because of those special circumstances. If the other party still proceeds
to make the contract, it would imply that he has agreed to be responsible for the special losses
that may be caused by an improper performance of his obligation. Compensation for such special
losses is called special damages. In the case of Simpson v. London & North Western Railway
Company, Plaintiff, a manufacturer, used to exhibit his samples of his equipment at agricultural
exhibitions. He delivered his samples to Railway Company to be exhibited at New Castle. On the
occasion he wrote “must reach at New Castle on Monday certain”. On the account of negligence
on the part of Railway Company, the samples reached only after the exhibition was over.
Plaintiff, claimed damages from Railway Company for his loss of profits from the exhibition.
Held: The court held that the railway company was liable to pay these damages as it had the
knowledge of special circumstances, and must have contemplated that a delay in delivery might
result in such loss. In Govind Rao v. Madras Railway Company, Govind Rao was a tailor and
consigned through rail some sewing machines to a place in Tamil Nadu. He planned to take part
in a village fair, where he hoped to stitch garments and make profits. However, the train reached
the town, after the fair concluded. Hence, Govind Rao could not participate in the fair. He sued
the railway company for the loss of profits. It was held that he could not recover, as the special
circumstances were not brought to the notice of the Railway company in the beginning itself.

Vindictive or Exemplary damages

At time breach of contract by one party not only results in monetary loss to the injured party
but also subjects him to disappointment and mental agony. In such cases monetary compensation
alone cannot provide an appropriate remedy to the sufferings of the injured party. Thus there is a
need for vindictive damages. These may be taken as an exception to the general principle that
damages are awarded only for the financial loss caused by breach of contract.

Nominal damages
Nominal damages are awarded where the plaintiff has proved that there has been a breach of
contract but he has not in fact suffered any real damage. It is awarded just to establish the right to
decree for the breach of contract. The amount may be a rupee or even less.

REMEDIES AND DAMAGES UNDER THE INDIAN CONTRACT

ACT, 1872

Section 73
Compensation for loss or damage caused by breach of contract- When a contract has been
broken, the party who suffers by such breach is entitled to receive, from the party who has
broken the contract, compensation for any loss or damage caused to him thereby, which naturally
arose in the usual course of things from such breach, or which the parties knew, when they made
the contract, to be likely to result from the breach of it. Such compensation is not to be given for
any remote and indirect loss or damage sustained by reason of the breach.
Remoteness of Damage

The term ‘remoteness of damages’ refers to the legal test used for deciding which type of loss
caused by the breach of contract may be compensated by an award of damages. It has been
distinguished from the term measure of damages or quantification which refers to the method of
assessing in money the compensation for a particular consequence or loss which has been held to
be not too remote. The rules on the remoteness of damage in the contract are found in the Court
of Exchequer’s judgment in Hadley v Baxendale, as interpreted in later cases. In Hadley v
Baxendale, the plaintiff’s mill had come to a standstill due to their crankshaft breakage. The
defendant carrier failed to deliver the broken crankshaft to the manufacturer within the specified
time. There has been a delay in restarting the mill. The plaintiff sued to recover the profits they
would have made if the mill was started without delay. The court rejected the claim on the
ground that the mill’s profits must be stopped by an unreasonable delay in the carrier’s delivery
of the broken shaft to the third person.
The damages which the other party should be entitled to receive in respect of such breach of
contract should either be deemed to have arisen naturally, fairly and reasonably, i.e. according to
the usual course of things, from such breach of contract itself, or as might reasonably have been
deemed to have arisen in the contemplation of the contract. The rule in Hadley v. Baxendale
consists of two parts:

(1) As may fairly and reasonably be considered arising naturally, i.e. according to the usual
course of things from such breach; or;

(2) As may reasonably be supposed to have been in the contemplation of both the parties at
the time they made the contract.

Damage arising in the usual course of things

Under this branch of the rule, compensation can be claimed for any loss or damage that
arose in the usual course of things from the breach of contract. If the loss is one which does not
arise in the usual course of things but in special loss arising out of special circumstances, then the
situation would be covered by the second branch of the rule.

Usual Course of Things

 The first part of this section operates to affix liability on the person who has committed a
breach of those matters as may fairly and reasonably be considered as arising naturally from the
breach. Such matters would include the normal circumstances prevailing within the type of
transaction in question. It is assumed for the purpose that a reasonable businessman must be
taken to understand the ordinary business practices and exigencies of the other’s trade or
business without the need for any special discussion or communication.

Delay in carriage of goods meant for sale

If the carrier causes the delay in delivering the goods at the destination, he can be made
liable to pay the difference between the prices prevailing on the agreed date of delivery and that
date on which the goods are actually delivered, because the loss arising on account of difference
in prices on different dates can be considered to be arising naturally i.e. according to the usual
course of things from the breach. In Wilson v. Lancashire and Yorkshire Railway, The plaintiff,
who was a cap manufacturer, gave a consignment of cloth meant for manufacturing caps to the
defendants for carriage. The defendants made a delay in the delivery of the cloth at the
destination. The plantiff could not execute the orders for caps as the season for the same had
passed away. It was held that the plaintiff could claim only the difference between the value of
the cloth between the agreed date of delivery and the actual date of delivery of the consignment.
The plaintiffs, however, were not entitled to recover compensation for the loss of profits due to
the caps not having been prepared or sold.
Compensation of mental anguish

• Ghaziabad Development Authority v. Union of India, The Ghaziabad development

authority has announced through advertisements scheme for allotment of developed plots.
There was unreasonable delay by the Authority in completing the scheme for
development of plots. It was held that the purchaser could claim the loss of profit which
occurred due to delay by the vendor of the plots. It was held that the buyer of plots could
not claim any compensation for mental anguish caused by the delay in the performance of
the [Link] held that mental anguish cannot be a head of damages for breach of
ordinary commercial damages.
Breach of promise to marry

In a breach for promise to marry, there results injury to feelings and disappointment and
for that exemplary damages may be claimed. In Laxminarayan v. Sumitra, After the
engagement, the husband continued to promise to marry the girl and had sexual contact with her,
as a consequence of which she become pregnant. Then he refused to marry her. It was held that
she was entitled to damages on various counts, such as physical pain, agony, indignity, chances
of marriage becoming dim and social stigma. In this case Rs. 30,000 awarded by the lower court,
was affirmed by the M.P. High Court.
Loss arising from the special circumstances
If the loss on the breach of the contract does not arise naturally i.e. according to the usual
course of things but it arises due to some special circumstances, the person making the breach of
contract can be made liable for the same provided than those special circumstances were brought
to his knowledge at the time of making the contract. If he had no knowledge of the special
circumstances which result in the particular loss, he cannot be made liable for the same. Liability
stated to be depending upon some knowledge and acceptance by one party of the purpose and
intention of the other in entering into the contract. The liability of the defendant increases with
the degree of knowledge he possesses.

Measure of Damages

After it has been established that a certain consequence of the breach of contract is proximate
and not remote and the plaintiff deserves to be compensated for the same, the next question
which arises is: What is the measure of damages, for the same, or in other words, the problem is
of the assessment of compensation for the breach of contract. Damages are compensatory in
nature. The object of awarding damages to be aggrieved party is to put him in the same position
in which he would have been if the contract had been performed. Damages are, therefore,
assessed on that basis. In State of Kerala v. [Link], There was a breach of works contract
by the government and the contractor brought an action to recover the loss of 10% profit in that
contract. It was held that generally 10% profit is taken as an element in the estimation of the
contract and the contractor was entitlted to claim compensation on that basis. In a contract for
sale of goods, the measure of damages is the difference between the contract price and the
market price on the date of the breach of contract. The damages are ascertained as on the date of
breach of contract. Thus,
(i) If the buyer makes a breach of contract, the seller can claim damages as arising on the
date of breach of contract, and it is not necessary that the seller should resell the goods on
that date;
(ii) If the seller makes a breach of contract, the buyer can claim damages as arising on the
date of breach of contract, and it is not necessary that the buyer should re- purchase the
goods on that date.

Rules Regarding Award of Damages

(i) Compensation not penalty: The fundamental purpose of awarding damages is to

compensate the aggrieved party for any loss suffered and not to punish the guilty party
for causing breach.
(ii) Limited damages: The aim of the courts, in awarding damages, would be to place the
aggrieved party, as far as money can do it, in the same position in which he would have
been, had the contract been properly performed.
(iii) Damages for attributable losses: Damages are awarded for the losses which can be
attributed to the breach.
(iv) Mitigation of losses: The aggrieved party is expected to make sincere efforts to
minimize the losses that are resulting out of breach of contract.
(v) Damages in case of contracts of sale of goods: The basic idea in this context is that in
case a party breaks a contract for sale of goods, the aggrieved party must take a quick
action to protect itself.
(vi) Stipulation for liquidated damages or penalty: Sometime, the parties to contract may
themselves stipulate an amount in the contract to be payable by the guilty party to the
aggrieved party as damages for breach of contract. This stipulation of the amount may be
by way of liquidated damages or by way of penalty.
(vii) Cost of suit: The breach of contract by a party forces the other to initiate legal action
against the guilty party. This necessarily entails expenditure. This cost of suit can be
recovered from the guilty party only at the discretion of the court.
Liquidated damages and penalty

Liquidated damages are a kind of actual damages. Mostly, the term “liquidated damages” are
found in a contract. In commercial agreements, liquidated damages are a useful contracting tool,
but there is a problem that, if they are not considered properly or drafted correctly, they may be
construed as a “penalty clause” and therefore becomes unenforceable. In Common Law, a
liquidated damages clause will not be enforced if its purpose is to punish the wrong-doer or the
party in breach rather than to compensate the injured party.
“Liquidated Damages” means a sum which the parties have assessed by the contract as
damages to be paid whatever may be the actual damage. The parties to the contract may agree at
the time of entering into the contract that, in the event of a breach, the breaching party shall pay a
stipulated sum of money to the non-breaching party, or may agree that in the event of breach by
one party any amount paid by him to the other shall be forfeited. It is an actual “pre-estimate of
damages” likely to flow from the breach. However, liquidated damage are distinguished from the
term “penalty” which is an amount intended to secure the performance of the contract. If the
compensation to be paid on the breach of contract is the genuine pre- estimate of the prospective
damages, it is known as liquidated damages. If the compensation agreed to be paid in the event
of breach of contract is the excessive and highly disproportionate to the likely loss, the amount
is fixed in terrorem, with a view to discouraging breach of contract, it is known as penalty.
Liquidated damages should be a reasonable estimate of actual damages that might result from a
breach. But if specified sum is disapprotionate to the damages, it is called penalty.
Indian Law: Under Indian law, the position is somewhat different. In India, in every case of a
stipulation of amount of damages in the contract, the court will work out the amount of loss
suffered by the aggrieved party and award that as damages subject to the maximum of the
stipulated amount.

Difference between Liquidated Damages and Special Damages

It also needs to be understood that liquidated damages are different from special damages.
Special damages are a compensation determined by court for the types of losses stipulated by the
parties. In other words, the types of losses likely to result out of breach are pre-determined
without their quantification. Under liquidated damages, the amount of damages itself is pre-
estimated.
Difference between Liquidated Damages and Penalty
Liquidated damages are real or actual, covenanted pre-estimate of damages as mentioned
above. However, A penalty is said to be a sum so stipulated in fear (with the object of
threatening the party to perform the contract), and thus an amount can be said to be a penalty if
the sum named is excessive and unconscionable. It is a penalty if the breach consists in paying of
money and the sum stipulated is greater than the sum which ought to have been paid. Both are to
be so judged on the facts and circumstances of each case. The question whether a particular
stipulation in a contract is in the nature of the penalty has to be determined by the court keeping
in view various relevant factors.
The basic difference between liquidated damages and penalty is as follows:-
➢ When the amount of damages is fixed by the parties on the basis of a reasonable estimate
of the probable actual loss which a party will suffer in case of breach is called liquidated
damages. On the other hand, if the amount of damages is not based upon a reasonable
calculation of actual loss but is fixed by way of punishment and as threat is called
penalty.
➢ In case of liquidated damages the court allows only the amount stipulated, never more or
less even though the actual loss is different from the amount mentioned. In case of
penalty the court allows only reasonable compensation by way of damages but not
exceeding the amount mentioned.
➢ In case of penalty, the court has a discretionary power to grant or not to grant the amount
mentioned in the contract. But in case of liquidated damage the court has no such option
and the court is bound to grant the entire amount to the plaintiff.
Thus, mentioning the liquidated damages in commercial contracts is a very popular way of
dealing with the possibility of breach of contract. The essence of liquidated damages is
that the party in breach of its obligation under a contract is bound to pay a particular sum
by way of compensation for that breach. And the sum, so payable, is fixed in advance
and is written into the contract.

Advantages of Liquidated Damages

Liquidated damages are generally recommended in commercial context. The courts have
recognised the advantages of liquidated damages for both the parties, as these are related to the
general principle of freedom of contract which led to a general view on the part of the courts that
these damages should be upheld, especially, where the parties are seen as free to apportion the
risks between them. However, liquidated damages which constitute a penalty will not be
enforceable. The advantages of liquidated damages can be concluded as:-
1) The most important advantage of such damages is that the sum so specified is payable, when
the breach occurs, without the need to wait for the loss to crystallise. The time and expense
of the injured party is spared of a common law action for damages for breach of contract.
2) Another important thing is: the party is not under any obligation to mitigate the losses, as it
would be in an ordinary claim.
3) Remoteness of damages has always been an issue in a contractual damages claim. However,
where the innocent party rely on liquidated damages, no question of remoteness arises.
4) The basic problem of under-compensation for the injured party may be avoided, especially
where significant consequential losses result from the breach.
5) An extra degree of certainty is brought to the parties as they know in advance their potential
exposure on a breach.
6) Liquidated damages can be proved to be a very practical and workable method of dealing
with minor breach is throughout a long-term contract.
7) Because of liquidated damages, despite an element of past poor performance, the parties
often find it possible to continue their commercial relationship going forward.
• Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd , The claimant, Dunlop,
manufactured tyres and distributed them to retailers for resale. The contract between
Dunlop and New Garage contained a clause preventing new garage from selling the tyres
below list price. The agreement said that, in the event of such a dispute arising, New
Garage would pay ‘by way of liquidated damages and not as a penalty’, a sum of £5 per
tyre. The defendants sold some tyres below the list price and the claimant brought an
action for damages based on the amount specified in the contract. The defendant argued
that the relevant clause was a penalty clause and thus unenforceable. The £5 sum was
held by the judge to be enforceable; however, the Court of Appeal held that it was a
penalty. Dunlop appealed this decision. The House of Lords held that Dunlop were
entitled to enforce the agreement as it was a “genuine pre-estimate” of their potential loss
as opposed to being a penalty. The court held that if the sum is not genuine, or of an
 unconscionable amount, it may be considered a penalty by the courts and so will be
unenforceable.

Entitlement of compensation for breach of contract

S.74 of the Indian Contract Act, 1872 emphasizes that I case of breach of contract, the party
complaining of the breach is entitled to receive reasonable compensation whether or not actual
loss is proved to have been caused by such breach. The emphasis is on reasonable compensation.
If the compensation named in the contract is by way of penalty, consideration would be different
and the party is only entitled to reasonable compensation for the loss suffered. But if the
compensation named in the contract for such breach is genuine pre- estimate of the loss which
the parties knew when they made the contract to be likely to result from the breach of it, there is
no question of proving such loss or such party is not required to lead evidence to prove actual
loss suffered by him. Burden of proof lies on the other party to lead evidence for providing that
no loss is likely to occur by such breach.

Section 75
Party rightfully rescinding contract entitled to compensation- A person who rightfully
rescinds a contract is entitled to compensation for any damage which he has sustained through
the non- fulfillment of the contract. Illustration: A, a singer, contracts with B, the manager of a
theatre, to sing at his theatre for two nights in every week during the next two months, and B
engages to pay her 100 rupees for each night’s performance. On the sixth night, A willfully
absents himself from the theatre, and B, in consequence, rescinds the contract. B is entitled to
claim compensation for the damage which he has sustained through the non-fulfillment of the
contract.

SUIT FOR QUANTUM MERUIT

Remedy for a breach of contract available to an injured party against the guilty party is to file
a suit upon quantum meruit. The phrase quantum meruit literally means “as much as is earned”
or “in proportion to the work done.” A right to use upon quantum meruit usually arises where
after part performance of the contract by one party, there is a breach of contract, or the contract is
discovered void or becomes void. This remedy may be availed of either without claiming
damages (i. e., claiming reasonable compensation only for the work done) or in addition to
claiming damages for breach (i.e., claiming reasonable compensation for part performance and
damages for the remaining unperformed part).
Claim for quantum meruit

The aggrieved party may file a suit upon quantum meruit and may claim payment in proportion
to work done or goods supplied in the following cases:
a. Where work has been done in pursuance of a contract, which has been discharged by the
default of the defendant.

For example, in the case of Planche v Colburn [1831], Planche agreed to write a volume on
ancient armour to be published, in a magazine owned by Colburn. For this, he was to receive
$100 on [Link] claimant commenced writing and had completed a great deal of it when
the defendant cancelled the series. The defendant refused to pay the claimant despite his
undertaking and the fact that the claimant was still willing to complete. The claimant brought an
action to enforce payment. Held: The claimant was entitled to recover £50 because the
defendant had prevented the performance.
b. Where work has been done in pursuance of a contract which is discovered void’ or
‘becomes void,’ provided the contract is divisible.

For example, in case Craven-Ellis v Canons Ltd., the company accepted the services rendered
by the plaintiff. It was found that if the plaintiff did not perform the services, the company
certainly would have hired some agent to perform those services. Hence, the plaintiff, on the
basis of quantum meruit, succeeded in claiming the remuneration from the company for the work
done regardless of the fact that he failed to obtain his qualification share within two months.
c. When something is done without any intention to do so gratuitously although there exists
no express agreement between the parties.

For example, in indian case, Ram Krishna vs Rangoobed , where A ploughed the field of B with
a tractor to the satisfaction of B in B’s presence, it was held that A was entitled to payment as the
work was not intended to be gratuitous and the other party has enjoyed the benefit of the same.
d. A party who is guilty of breach of contract may also sue on a quantum meruit provided both
the following conditions are fulfilled: The contract must be divisible, and the other party
 must have enjoyed the benefit of the part which has been performed, although he had an
option of declining it.

SUIT FOR SPECIFIC PERFORMANCE

Specific performance is an equitable remedy which is provided by the court to enforce the
duty of doing what the plaintiff agreed by contract to do, against a defendant. This remedy is
granted by way of exception. Thus, this remedy is in contrast with the remedy by way of
damages for breach of contract, which gives rise to pecuniary compensation for failure to carry
out the terms of the contract. Both the remedies, Damages and specific performance, are
available upon breach of obligations by a party to the contract. This is an equitable remedy
which is granted at the discretion of the court. So, specific performance is a decree granted by
the court to compel a party to perform his contractual obligations. This remedy is usually
available where damages are not an adequate relief, e.g., where the subject matter of the contract
is unique in nature. In Nutbrown v Thornton, The claimant entered a contract to purchase some
machinery from the defendant. The defendant, in breach of contract, refused to deliver the
machines. The defendant was the only manufacturer of this type of machinery. The claimant
bought an action for breach of contract seeking specific performance of the contract. Held:
Specific performance of the contract was granted. Whilst an award of damages would ordinarily
be given for non-delivery of goods, damages would be inadequate to compensate the claimant
because he would not be able to buy the machines elsewhere. The court has wide discretionary
power to award specific performance and in exercising this discretion, the following factors are
taken into account:
i. Delay in asking for the order.
ii. Whether the person seeking performance is ready to perform his part of the Contract.
iii. The difference between the benefit (the order would give to one party) and the cost of
performance to the other.
iv. Whether the person against whom the order is sought would suffer hardship in
performing.
v. Whether any third party rights would be affected. vi. Whether the contract lacks
adequate consideration (the rule “equity will not assist a volunteer” applies so that
 specific performance will not be ordered if the contract is for nominal consideration
even if it is under seal).

SUIT FOR INJUNCTION

Injunction is an order of a court restraining a person from doing particular act. It is a mode of
securing the specific performance of the negative terms of the contract. To put it differently,
where a party is in breach of negative terms of the contract i.e where he is doing something
which he promised not to do, the court may, by issuing an injunction, restrain him from doing,
what he promised not to do. Thus, injunction is a preventive relief. In Lumley v Wagner, The
defendant Johanna Wagner, an opera singer, was engaged by the claimant to perform in his
theatre for a period of three months. There was a term in the contract preventing her from singing
for anyone else for the duration of the contract. She was then approached by the manager of
Covent Garden Theatre, Frederick Gye, who offered her more money to sing for him. The
claimant sought an injunction preventing her from singing at Covent Garden Theatre. The
defendant argued that to allow an injunction would in effect amount to specific performance of
the contract in circumstances where specific performance would not be available. Held: The
injunction was granted despite it having the effect of forcing the defendant to sing for the
claimant.

CONCLUSION
Due to the aggressive growth in the field of technology, the parties entering into commercial
transactions are more cautious than ever, thus making the parties deliberate even on the minute
details or specifications so as they can best secure their interest. Therefore, contents of a contract
have become highly detailed and elaborate. Particularly, as a measure of safeguarding, securing
and protecting their respective interests in an event of breach of the terms of the contract, parties
generally negotiate and agree upon the various remedies that the injured party can invoke to
mitigate and compensate for the losses it may suffer on account of such breach. Therefore, with
regard to liquidated damages and penalties, the primary conclusions of the court appear to be that
liquidated damages should be regarded as reasonable compensation, while penalties should not.
Further, it also appears to have concluded that in case of a penalty, damages will have to be
proved. The courts in India should interpret the above mentioned sections i.e. sec.73 and 74 very
carefully, so that the ordinary man can be benefited by these principles. Moreover, the law is
made to facilitate the people, not to harass them. So, these principles should be used, not
misused.