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Remedies For Breach of Contract
Remedies For Breach of Contract
right when contract is broken, the injured party has following remedies :
1.
Rescission: when contract broken by one party, the other may treat
contract as rescinded refuse further performance injured party absolved of all his
obligations under the contract however liable to restore any benefits he has received under
the contract also entitled to compensation for any damages sustained by him.
Example : A promises to supply goods to B by a specified date - B agrees to pay the price
after receipt of the goods A fails to supply the goods by the specified date B is discharged
from liability to pay the price.
The Court may grant rescission
(i)
where contract is voidable at the option of the plaintiff, or
(ii)
where the contract is unlawful for causes not apparent on its face and
defendant is more to blame than the plaintiff.
The Court may refuse to grant rescission in following cases :
where plaintiff has expressly or impliedly ratified the contract, or
where owing to changed circumstances (not due to any act of defendant), parties
cannot be restored to their original positions, or
(iii)
where third parties have acquired rights in the subject matter of the contract in good
faith and for value, or
(iv)
Where only a part of contract is sought to be rescinded and such part is not severable
from the rest of the contract.
(i)
(ii)
2.
Ordinary damages arises naturally and directly from breach in usual course of
things.
In contract for sale of goods, measure of damages on breach is the difference between the
contract price and the market price on the date of the breach where goods specially made to
order and not marketable, the price of the goods is the measure of damages.
Example : A contracts to buy rice from B at Rs.950 per quintal no time fixed for delivery
later A informs that he will not buy from B market price on that day was Rs.930 per quintal
B entitled to receive compensation from A at the rate of Rs.20 per quintal.
Example : A contracts to pay a sum of money to B on a specified day A does not pay on
specified day as a consequence, B is unable to repay his debts and is totally ruined A is
not liable to make good to B anything more than principal sum he contract to pay together
with interest upto day of payment.
If promisee neglects or refuses to afford the promisor reasonable facilities for performance of
his promise, promisor is excused from performance.
Nominal damages where injured party has not suffered any loss due to breach, only
nominal damages are awarded only to acknowledge that the plaintiff has proved his case
and won.
Brace V Calder A firm consisting of four partners employed B for a period of 2 years
after six months, two partners retired continuing partners refused to employ B Held, he
was only entitled to nominal damages as he had suffered no loss.
Mitigation of damages ; injured party duty bound to take all reasonable steps to
mitigate the loss caused by the breach cannot claim damages for loss which reasonably
could have been avoided.
Cost of decree aggrieved party entitled to the cost of getting the decree, in addition
to damages allowed at discretion of the Court.
in nature where lower rate is charged if certain conditions satisfied, failure to fulfil the
conditions may entail payment of higher (i.e. normal) rate of interest.
3. Quantum Meruit means as much as earned or as much as merited arises when contract
partly performed by one party and then becomes discharged due to breach by other party party
who has performed the work can claim remuneration for the work done it is claim on quasicontractual obligation
Arises in following cases
(i)
when agreement discovered to be void person who has received advantage under
the contract is bound to restore it or to make compensation for it.
Craven-Ellis V. Cannon Ltd. CE employed as managing director in a company after
three months, found that directors were not qualified to appoint him Held, CE could
recover remuneration for the services rendered by him on quantum meruit.
(ii)
(iii)
(iv)
(v)
When contract is divisible where party not in default has enjoyed the benefit of part
performance, the party in default can sue on quantum meruit
(vi)
4. Specific Performance in cases where damages are not adequate remedy, Court may direct for
specific performance also enforced where no standard for ascertaining the actual damage
caused.
5. Injunction where a party is in breach of a negative term of contract, Court may restrain him
from doing what he promised not to do.
Lumley Vs. Wagner - W agreed to sing at Ls theatre agreed not to sing anywhere else during
that period later, W made contract with Z to sing at another theatre and refused to perform the
contract with L Held, W could be restrained by injunction from singing by injunction from
singing for Z.