breach of contract and its remedies

8/7/2019 Breach of Contract and Its Remedies

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Breach Of Contract And Its Remedies

Parties of a lawful contract are bound to perform their

respective obligations.but when one of the party

repudiates the contract, by refusing to perform his

obligation he is said to have committed a breach of the

contract.In case of breach of the contract,the law

provides the following remedies to an injured party.



Remedies For Breech of Contract

Cancellation Or Rescission

Restitution

Specific Performance

Injunction

Quantum Meruit

Damages



Cancellation Or Rescission

Rescission is the revocation of a contract.It is the way by

which a contract may be discharged.where one of the

parties to a contract commits breach,the other party may

treat the contract as rescinded. he is free from all theobligations under the contract

Forms of Rescission

Mutual AgreementBreach

Option Given By Law



Example:

A singer contracts with B,the manger of theatreto sing at his theatre for two nights in every week during

the next two months and B engages to pay her RS. 100

for each night performance.on the sixth night A willfully

absent herself from the theatre and B in consequencerescinds the contract.B is entitled to claim compensation

for the damage which he has sustained through the non

fulfillment of the contract.



Restitution

It means return of the benefit received by one party to thecontract from the other party under a void contract.when a

contract becomes void it need not be performed by either

party.

Section 65 provides that when an agreement is discovered

to be void or when a contract becomes void any person

who has received any advantage under such agreement or

contract is bound to restore it or to make compensation for

it to the person from whom he received it.



This application Applies to contract discovered to be void

and contracts which become void.it does not apply to

contacts which are known to be void.thus if A pays rs200

to B to beat C,the money is not recoverable.

Example : A pays B Rs 1000 in consideration of B¶s

promising to marry C, A¶s daughter.C is dead at time of

promise. The agreement is void But B must Repay A rs

1000.



Specific Performance

Under certain circumstances A person Aggrieved by a breach of contract can file a suit for specific performance

that is for an order by the court upon the party guilty of

breach of contract directing him to perform what he

promised to do so.Cases in which specific performance of the contract may

be enforced are as follows

Where monetary consideration is not an adequate remedy

for breach of a contract.

Where there exists no standard for ascertaining the actual

damage caused by the actual performance of act.



Specific cases when special performance is not allowed

Where compensation in terms of money is an adequate

relief for the non performance of the contract.

Where the contract is of personal nature E.g a contract to

sing a song.

Where the performance of contract requires constantsupervision, and courts cannot supervise the carrying out

the contract.

Where contract is not fair to either party.

Where one of party to contract is not competent tocontract like minor



Injunction

An agreed party can sue for injunction that is an order to

the court restraining the wrong doer from doing or

continuing the wrongful act complained of.injunctions are

usually granted to enforce negative stipulations in cases

where damages are not adequate relief. Injunction is a

preventive Relief.it so particularly appropriate in case of

anticipatory breach of contract.

Example:N,a film actress agreed too act exclusively for

Mr. O.During the year she contracted to act for X.it washeld that she could be restrained by an injunction for

acting for X.



Quantum Meruit

Quantum meruit means payment in proportion to the

amount of work done. A right to sue on a quantum meruit

arises where a contract, partly performed by one party,has

become discharged by the breach of the other party.T

heright is founded not on the original contract, which is

discharged or void, but on an implied agreement to pay

for what has been done.

The principle is that even when contractcomes to a premature end, the party

should get amount proportional to the

work done/services provided/goods

supplied by one party. One party should



Suit For DamagesA person who commits a breach of contract must make

compensation therefore to the injured party.the primary purpose of awarding damages is to put the injured person

in as good a position as he would have been if performance

had been rendered as promised.The term damages is used

to mean compensation in money as a substitute for the promised performance.

Damages for breach of contract are intended to compensate

the injured party so far as money can do so.

Law of contract does not seek to punish the guilty but the

court will compel the party in breach to make good the loss

by paying damage to the other party.

Its purpose is compensation and compensation alone



Damages are of four kind:

General and ordinary damages

Special Damages

Exemplary Damages

Nominal Damages

General and ordinary damages:these damages arethose which arise naturally in usual course of things for the

breach of contract.these include damages which are

natural and probable consequence of the breach of

contract.general damages are such damages which the law presumes from breach of contract.they are awarded with a

view to compensate the injured party and not with a view

to punish party at fault.



Special Damages:

these damages are those which are the result of

unusual circumstances affecting the plaintiff.these are thedamages which the party knew,when they made the

contract,as likely to arise from the breach of contract.the

notice of special circumstances involved in a contract must

be known to the party against whom special damages areclaimed for breach of contract.if he had no knowledge,he is

not answerable.knowledge of special circumstances must

be on the date of contract.subsequent knowledge will not

create special liability.



Vindictive or exemplary damages : they are awarded

with a view to punish the wrong doer and not primarily

with the idea of awarding compensation to the injured party.generally these don¶t form a part of law contract.this

is taken from English law.

There are two kinds of contract where Indian courts

consider awarding vindictive damages:

Breach of contract to marry.

Where a banker refuses to honor the cheque of a customer

while having his money in his hands,and thereby cusyomer suffer a loss of reputation.



Nominal Damages:such damages are awarded simply to

recognize the right of the injured party to claim

damages,and are of very small amount.Example D contracted to purchase scooter from B ,dealer

for Rs 25000.but A failed to purchase the scooter.however

the demand for scooter far exceeded the supply and B

could sell his scooter to Z for rs 25000 without any loss in profit.here B makes a claim upon A for breach of

contract,he will be entitled to nominal damages only.



Principle Regarding Measure of Damages:

Restitution: placed in same position if the contract

performed.General Damages:party who suffers entitled to only

such damages which arise naturally in usual course of

things as a result of such breach.

Special damages:where a party claims special damages

for any loss sustained he must prove that the other party

knew at the time of making the contract that special loss

was likely to result of breach of contract.

Remote damages:law does not award for remote

damages.



Performance of obligation:party who claims for breach

was ever ready for performance.

Mitigation of loss:the person who claims for damagesmust take all reasonable steps to mitigate the loss.

Liquidated damages:not more than agreed amount of

damages.

Vindictive damages:not awarded except two cases.

Damages in quasi contarct: where an obligation created by

the quasi contract is not discharged,the compensation

awarded is the same as damages that would be awarded if were a breech of contract.

Difficulty in assessment.its not a ground for fefusing

damages.court must make an assessment of loss and pass a

order for that.

breach of contract and its remedies

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