BREACH OF

CONTRACT & ITS

REMEDIES
BREACH OF CONTRACT
Breach means non-performance by the party
to the contract. When a party either fails to
perform or same does act because of which the
performance becomes impossible or refuses to
perform the contract.
 REMEDIES
 Cancellation or Recession
Restitution
Specific Performance
Injunction
Quantum Meruit
Damages
 RECESSION/CANCELLATION
It means revocation of contract.
It is the way by which a contract maybe
discharged.
It is right given to an aggrieved party to avoid
the contract, Where one party commits
breach.
Thus in case of rescission of contract, the
aggrieved or injured party is discharged from
all his obligations of the contract.
The Court may grant recession of Contract
 The court may however refuses to
rescind the contract-

a) Where the plaintiff has expressly or impliedly

ratified the contract; or
b) Where owing to the change of circumstances the
parties cannot be restored to their original
positions; or
c) Where third parties have, acquired rights in good
faith and for value ; or
d)Where only a part of the contract is sought to be
rescinded and such part is not severable from the
rest of the contract
Ex: Singer & Theatre Manager
 RESTITUTION
It means to put the parties into the original
position as they were before entering into the
contract.
It means return the benefit received by one
party to the contract from the other party
under a void contract. If some loss was suffered
,the loss must be compensated.
Ex: A pays B Rs.10,000 in consideration of B’s
promising to marry C, A’s daughter C is dead
at the time of promise. The agreement is void
 SPECIFIC PERFORMANCE
"Specific performance" means actual carrying out of
the promise. In certain cases, the Court may direct the
party in breach of contract for the actual carrying out
of the promise, exactly according to the terms of the
contract. This is called specific performance of the
contract.
The aggrieved party does not want any compensation
for non-performance of contract but want the other
party should perform what he was supposed to
perform in the contract.
Ex: A painter agreed to paint the picture of Z & in
return he will pay Rs.50000 in advance, but A refused
Cases Where Specific Performance is
enforceable
1.Where monetary consideration is not an
adequate remedy for the breach of a
Contract .
2.When there exists no standard for
ascertaining the actual damage caused by
the non-performance of the act.
Cases where Specific Performance shall not
be granted
1.Where the contract is of personal nature.
 INJUNCTION
It means demanding court’s stay order.
 An order of the court which prohibits a
person to do a particular act.
 A party to a contract does something which
he presumed not to do , the court may issue an
order prohibiting him from doing so.
It is a preventive relief.
Ex: Warner Bros. v. Nelson( N ,film actress
agreed with W for one year. But she also
contracted to act for X.)
 QUANTUM MERUIT
It means ‘payment in proportion to the amount
of work done’.
Right to ‘Quantum Meruit’ literally means a
right to claim the compensation for the work
already done.
Ex: A engages B a contractor, to build a three
storied house. After a part is constructed ‘A’
prevents ‘B’ from working any more. ‘B’ the
contractor, is entitled to get reasonable
compensation for work done under the doctrine
 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.

The fundamental principle underlying

damages is not punishment but to compensate
the aggrieved party for the loss suffered by
him in the original position as he would have
been
Remedy of Damages is available when:
1) A party to contract commits breach of Contract.
2) The aggrieved party must suffers a loss due to the
breach by other party.
3) No compensation is given for remote losses.
4) The damages to be awarded should be fair &
reasonable.
 Kinds of Damages
1) General Damages:
Ordinary damages are. those which naturally arise in the usual course of
things from such breach. The measure of ordinary damages is the difference
between the contract price and the market price on the date of the breach.
They are awarded with a view to compensate the injured party & not with a
view to punish the party at fault.
Ex: A contracts to deliver 100 bags of rice at Rs. 100 per bag on a future date.
On the due dates he refuses to deliver. The market price on that day is Rs. 110
per bag. The measure of damages is the difference between the market price on
the date of the breach and the contracted price i.e., Rs. 110-100 = Rs. 10
Ex: A contracts to pay Rs.5, 000 to B on a specified day. He does not
pay the money on that day. So B is unable to pay his debts, and is
totally ruined. A is not liable to make good to B anything except the
principal sum he contracted to pay together with interest upto the
day of payment.
Compensation cannot be claimed for any remote indirect loss
Ex: A Railway passenger's wife i caught cold and tell ill due to her being asked
to get down at a place other than the Railway Station and she had to walk a
long distance in drizzling night to reach home. In a suit by the plaintiff
against the railway company, it was held that damages for the personal
inconvenience of the plaintiff alone would be granted, but not for sickness of
the plaintiff's wife because it was very remote consequence (Hobbs v. London
and S).
 Kinds of Damages
2) Special Damages:
Special damages are awarded to the plaintiff in special
circumstances for sustaining loss as a breach of the
contract. But such damages are recoverable only when the
special circumstances were brought to the knowledge of
the defendant.
Ex: A, a builder contracts to finish a house by the 1 st Jan in
order that B may give possession of it at that time to C. It is
informed to A.
 Kinds of Damages
Ex: A contracted with B to supply steel rails who had in his turn
contracted to supply the same to a railway company at a very high
profit. At the time of entering into the contract, B’s contract with the
railway company was made clear to A. A committed a breach of
contract. B can claim not only the difference between the market
price and the contracted price on the delivery date, but will also be
entitled to the profit which he would have made and the damages
which he would have to pay to the railway company.
 Kinds of Damages
3) Exemplary or Vindictive Damages
These damages are awarded against the party who has committed a
breach of the contract with the object of punishing the defaulting
party and to compensate the aggrieved party. Generally, these
damages are awarded in case of action on lost or breach of promise.
E.g., breach of contract to marry, dishonor of cheque by the bank
without any proper reason.
Such damages are awarded due to its difficulty in measuring the amount of the
mental suffering or the extent of the injury to the feelings of the aggrieved
party.
 Kinds of Damages
Ex: The bank disobeyed the customer’s order to stop payment of a
particular cheque and as a consequence another cheque for £
25,000 was dishonored due to inadequate funds. The court awarded
£ 250 as damages to the plaintiff.
Ex: A libel was committed by an author and its publisher against a
distinguished naval officer. The officer sued for damages. He was
awarded £ 15, 000 compensatory and £ 25, 000 exemplary damages
against both defendants.
 Kinds of Damages
4)Nominal Damages
Nominal damages are awarded to the aggrieved party when there is
only technical violation of the legal rights. Here no substantial loss is
caused. These damages are very small in amount. They are awarded
simply to recognize the right of the party to claim damages for the
breach of the contract.
Ex: A contracted to purchase a Scooter from B, a dealer. But he failed
to purchase the scooter. However, the demand for the scooters far
exceeded the supply, and B could sell the scooter agreed to be
purchased without loss of profit. B is entitled only to nominal
damages.
Principles regarding measure of
damages
1) Damages to be assessed on the basis of Restitution:
The injured party is entitled to be placed in
the same position as if the contract had
been performed.
agrees to supply watch on 1st Jan
Rs.1000
Ex: B K
B fails to Supply on that date & the Market
price increased to Rs.1200
2) Damages are compensatory
in nature, not penal
3)Damages are not given for
any remote or indirect losses.
4)Duty to mitigate the damages
suffered.(reduce the loss,pain)