REMEDIES OF BREACH OF CONTRACT

When a contract is broken the party who suffers from such breach is entitled to
the following relieves:
1. Rescission of the contract: He would not be required to perform his
promises. Example: A, an advocate promises to plead B’s case in the court of
law if B gets him (A) a table before the date of hearing. B does not deliver a
table to A. A can rescind the contract and becomes free from the obligation of
pleading B’s case.
2. Suit for Damages: The injured party can also file a suit for compensation for
the loss it has suffered because of the breach of the contract. Example: A
contracts to buy B’s car for Rs. 60,000 but B breaks his promise. B must pay to
A, by way of compensation, the excess, if any, of the contract price which B can
obtain for the car at the of the breach of promise.
3. Suit upon Quantum Meruit: The expression ‘Quantum Meruit’ means ‘as
much as earned’, i.e. reasonable remuneration for the services performed. The
rule is invoked where there is no agreement for remuneration for the work done.
Thus where a party to the contract has performed part of his promise and is
prevented by the act or conduct of the other party, from completing it, he may
sue on a Quantum Meruit. Example: A agreed to write a story for B, which B
would publish in iinstalments in his weekly magazine. B agreed to pay a lump
sum amount for the entire story. After a few instalments were published, B
abandoned the magazine. Held A could recover on Quantum Meruit for the
work done under the contract.
4. Suit for Specific performance of the contract: Specific performance means
the actual carrying out of the contract. In certain cases the court may direct the
party in default to fulfill his promise. This remedy may be granted to the injured
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party instead of or in addition to the awarding of damages. It is usually granted
where monetary compensation is not an adequate remedy. But it would not be
granted if the court cannot supervise the contract (e.g. mining operations)or if
the contract is for personal services. Example: A, a renowned painter agrees to
paint a picture for B. Later on he refuses to do so. B pleads with the court that he
cannot get such a painting with any amount of money. Even if court is satisfied
with the plea of B, it cannot grant specific performance because A cannot be
compelled to paint a picture.
5. Suit for Injunction: Injunction is the specific performance of the negative
terms of the contract. It is an order of the court prohibiting a party from doing
something. Example: A agrees to do a musical programme at the theatre of B on
the eve of the Christmas and also agrees not to perform in any other theatre on
that day. Later on a agrees to perform in the theatre of P.B cannot enforce a
specific performance of A’s musical programme in his theatre. (because court
cannot effectively supervise it) but he can ask the court to restrain A from
performing in P’s theatre.
RULES REGARDIG DAMAGES
Damages under Contract act are awarded by way of compensation for loss to the
plaintiff only and not by way of punishment to the guilty party. Following are
the rules for the damages:
(1) When a contract is broken, only those damages “which naturally arose in
the usual course of things from such breach” can be recovered. These are
known as general or ordinary damages.
(2) In certain cases even special damages can also be recovered. Special
damages are those ‘which the parties knew, when they made the contract
to be likely to result from the beach of it.’ (Sec. 73)
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(3) Compensation for the breach of quasi contract would be the same as the
compensation for the breach of contract.
(4) “… In estimating the loss of damage, arising from a breach of contract, the
means which existed of remedying the inconvenience caused by the nonperformance
of the contract must be taken into account”.
(5) Under a contract for the sale of goods the measure of damages is the
difference between the contract price and the market price at the date of
breach.
(6) Damages are not awarded with a view to punishing the defendant except
(a) for a breach of promise to marry and (b) for a wrongful dishonour by
the banker of cheque of the customer. These are known as Exemplary or
Vindictive Damages.
(7) In case the court finds that though the defendant has been guilty of a
breach of contract, the breach has not caused any appreciable loss to the
plaintiff, it awards only nominal damages, like costs of the suit etc.
(8) Even if the parties agree about damages for breach of contract, only actual
damages, not exceeding the agreed amount, can be recovered. These are
known as liquidated damages (Sec.74)
(9) Plaintiff would not be denied damages for the loss suffered on the ground
that the assessment of damages is difficult. (Sec.75).
(10) Mitigation of loss: it is the duty of the plaintiff to take steps to minimize
the loss resulting from breach.
(11) Cost of suit: The plaintiff can recover not only damages for the loss
sustained but also costs of getting the decree of damages.
(12) Interest as damages: As regards breach of contract of sale, the court is
empowered to award interest, at such rate as it thinks fit, on the amount of
the price.
KINDS OF DAMAGES
(1) General or Normal Damages: The amount of general or ordinary
damages is restricted to only that loss which arises:(a) naturally and (b) in the
usual course of things from such breach (Sec. 73)
(2) Special Damages means loss which would result not in the ordinary
course, but because of special circumstances and the parties know, at the time
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when they entered into the contract, that this is likely to result from the breach of
it.
(3) Liquidated Damages: (Sec. 74) “When a contract has been broken, if a
sum is named in the contract as the amount to be paid in case of such breach, or
if the contract contains any other stipulation by way of penalty, the party
complaining of the breach is entitled whether or not actual damage or loss is
proved to have been caused thereby, to receive from the party who has broken
the contract reasonable compensation not exceeding the amount so named or, as
the case may be, the penalty stipulated for”.
Example: A contracts with B to pay B Rs.10000, if he fails to pay B Rs. 9000 on
a given day. A fails to pay B Rs.9000 on that day. B is entitled to recover from
A such compensation, not exceeding Rs. 10000, as the court considers
reasonable.
(4) Vindictive or exemplary Damages: As explained earlier, damages for
breach of contract are granted to compensate for the loss suffered by the plaintiff
and not with a view to punish or penalize the wrong done by the defendant.
Hence the damages granted are not vindictive, exemplary or ‘punitive’.
However there are following two exceptions to this general rule.
(i) In case of a breach of promise to marry. (ii) In case a banker,
wrongfully, dishonouring the cheque of a customer having sufficient funds to his
credit. The rule of damages’. “A stipulation for increased interest from the date
of default may be a stipulation by way of penalty” [Sec.74].
(5) Nominal Damages: Where the aggrieved party does not suffer any monetary
loss, sometimes the Courts grant a nominal amount like cost etc. just to establish
that the plaintiff has won the case against the defendant