Breach of Contract
and
Remedies of Breach
of Contract
Section -39,
“Breach of Contract means refusal of
performance by a party, where a party to a
contract has refused to perform or disabled
itself from performing promise”.
The person who refuses to perform is called
“Defaulting Party”.
The person who suffers from loss is “Injured party” or
“Aggrieved Party”.
There fore if the defaulting party fails to
perform the promise the injured party has a
right to move to the court of law for enforcing
the contract.
In this case the aggrieved party become entitled
to one or more of the following rights or
remedies:-
Remedies for breach of contract
Whenever there is breach of a contract, the injured
party becomes entitled to any one or the following
remedies against the guilty party:
1. Rescission of the contract.
2. Suit for damages.
3. Suit upon quantum meruit.
4. Suit for specific performance of the contract.
5. Suit for an injunction.
1-Rescission of the contract
When there is a breach of contract by one party,
the other party may rescind the contract and need
not perform his part of obligations under the
contract and may sit quietly at home if he decides
not to take any legal action against the guilty
party.
Otherwise when the court grants rescission,
the aggrieved party is freed from all his obligations
under the contract.
2-Suit for Damages
Damages are a monetary compensation allowed to
the injured party for the loss or injury suffered by
him as a result of the breach of contract.
As a general rule, “compensation must be
commensurate with the injury or loss sustained,
arising naturally from the breach”.
“if actual loss is not proved, no damages will be
awarded”.
Different kinds of damages.
Damages may be of four kinds:
1- Ordinary or general or compensatory damages (i.e.,
damages arising naturally from the breach).
2- Special damages (i.e., damages in contemplation of
the parties at the time of contract).
3- Exemplary, punitive or Vindictive damages.
4- Nominal damages.
1-Ordinary damages
When a contract has been broken, the injured party
can, as a rule, always recover from the party ordinary or
general damages.These are such damages as may fairly
and reasonably be considered as arise naturally and
directly in the usual course of things the breach of
contract itself.
1-Ordinary damages are restricted to the ´direct or
proximate consequences of the breach of contract.
2-Remote or indirect losses, which are not the natural
and probable consequence of the breach of
contract, are generally not regarded.
e.g.,
Contracts to buy B’s ship for Rs 60,000, but breaks his
promise. As a consequence of breach B sold the ship in
the open market and he could only get Rs 52,000 for the
ship. B can recover by way of compensation Rs 8,000,
the excess of the contract price over the actual sale
price.
2-Special Damages
Special circumstances affecting the plaintiff.
In other words, they are such remote losses which are
not the natural and probable consequence of the breach
of contract.
Special damages cannot be clamed as a matter of right.
3-Exemplary or Vindictive damages
These are such damages which are awarded with a view to
punishing the guilty party for the breach and not by way of
compensation for the loss the suffered by the aggrieved party.
Exemplary damages have no place in the law of contract and are
not recoverable for a breach of contract.
a. Breach of a contract to marry. In this case the
amount of the damages will depend upon the extent
of injury to the party’s feelings. One may be ruined,
other may not mind so much.
b. Dishonour of a cheque by a banker when there are
sufficient funds to the credit of the customer.
“The smaller the cheque, the greater the damage”.
4) Nominal damages
Nominal damages are those which are awarded only
for the name sake.
These are neither awarded by way of compensation
to the aggrieved party nor by way of punishment to
the guilty party.
These are awarded to establish right to decree for
breach of contract when the injured party has not
actually suffered any real damage and consist of a
very small sum of money, say a rupee or two.
For example
Where in a contract of sale of goods, if the contract
price and the market price is almost the same at the
date of breach of the contract, then the aggrieved
party is entitled only to nominal damages.
3-Suit for Quantum Meruit-(Section 65 and 70)
The 3 rd remedy for breach of contract available at
injured party against the guilty party is to file a suit
upon quantum meruit.
The phrase quantum meruti means “as much as is
earned” or in proportion to the work done.
This right arises where after part performnance of the
contract of one party,there is a breach of contract.
4-Specific Performance:-
Specific performance means the actual carrying out of
the contract as agreed.
Under certain situations an aggreived party may file a
suit for specific performance.
For decree by the court directing the defendant to
actually perform the promise that he has made.
5-Suit for Injunction:-
