Remedies for breach of contract
Obligations enforceable at a court of law are created by a contract. Therefore, the other party has a right to move the court of law for enforcing the contract if a party has,
failed to perform its part. The means given by law for the enforcement of a right is a remedy.
2.The injured party (i.e. the party who is not in breach) has one or more of the following remedies when a contract is
broken Suit for injunction.
1. Rescission of the contract- A party may rescind the contract when there is a breach of contract by the other party.
Under the contract his part of obligations need not be performed. If he decides not to take any legal action against the guilty party he may sit quietly at home. He can file a suit (or rescission of the contract) in case the aggrieved party wants to sue the guilty party. He is absolved (free) from all his obligations under the contract in such a case.
Ex. B and A enter into a contract under which A
is to supply 100 kg of tea leaves for Rs. 8,000 to B on 15 April. There is no need for B to pay the price if A does not supply the tea leaves on the appointed day. The contract may be treated as rescinded by B who may sit quietly at home. a ‘suit for rescission’ may be filed by B and damages claimed.
The contract can be rescinded.
Suit for damages.
Suit upon quantum meruit.
Suit for specific performance of the contracted the Flapp as Filed
Right of rescission is lost in the following cases:
Where the party who is entitled to rescind the contract ratifies it expressly or impliedly i.e. right to rescind is waived off by the party. H
Where the party wants to rescind only a part of the contract as the contract is not divisible.
Where the subject matter has been destroyed or consumed by the party and the parties cannot be placed in the same position in which they were before the breach took place.
Where interest bona fide and for value has been acquired by third parties.
If the contract is rescinded by a party, any benefit he has received under the contract is liable to be restored by him. Damage if any, which he has sustained through nonfulfillment of the contract by the other party, will be compensated by him.
2. Suit for damages: The damages which the court allows to the injured party for the loss or injury suffered by him by the breach of a contract are monetary compensation.
Not punishment but compensation is the fundamental principle of damages. As a general rule, the injury or loss suffered must commensurate compensation.
Thus a party who suffers by breach of contract is
(1) Such damages which naturally arose in the usual course of things from such a breach.
(ii) Which both the parties knew, at the time of making the contract that such damages are likely to be the
iii.result from the breach of the contract.
(iv)Any remote or indirect loss or damage caused due to the breach is not to be compensated for.
A breach of contract and quasi-contract is treated at par, i.e., for purpose of claiming damages compenstion shall be the same for a breach of contract and quasi-contract.
a.Kinds of damages: Damages may be of 4 kinds-
Ordinary or General damages- the damages
are that which arise directly and naturally as a result of a breach of contract are Ordinary damages. Such damages can be anticipated by a reasonable man. Not concerned with remote or indirect losses Ordinary damages are restricted to the direct consequences of the breach of contract.
B is contracted by A who will sell and deliver
50 quintals of Farm wheat at Rs. 475 per quintal, the price to be paid at the time of delivery. A refuses to sell the wheat when the price of wheat rises to Rs. 500 per quintal. At the rate of Rs. 25 per quintal can be claimed by B.
(b) Special damages- another name for Special damages is particular damages. Those damages which do not arise directly due to a breach of contract are Special damages. It is not a matter of right to claim Special damages. One can claim Special damages only if breach of contract results in a special loss under special circumstances.
Ex. his taxi was given by A, a taxi driver to a me-
chanic who was informed that a loss of income of Rs. 25 per day will be suffered in case of an unreasonable delay. The repair of the taxi is unreasonably delayed by the mechanic. A recovery of loss of income at the rate of Rs. 25 per day will become due to A.
(c) Exemplary or Vindictive damages- Exemplary or vindictive damages are awarded when the guilty party is to be punished for the breach of contract. Thus the purview of the Contract Act does not cover such damages.
In the following two cases Vindictive or exemplary damages are generally granted –
(i) Breach of a contract to marry- The amount of the damage in this case depends upon the extent of injury to the party’s feelings. While one may not mind so much the other may be ruined.
(ii) 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.” is the rule of ascertaining damages in this case. Of course, the status of the party decides the actual amount of damages.
(d) Nominal Damages- damages awarded only for the name sake are Nominal damages. The aggrieved party is neither compensated nor the guilty party punished by awarding these. By awarding these the 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 is established. For example, if the contract price and the margin.