MAJOR REMEDIES FOR BREACH OF CONTRACT

There are certain remedies in place which are aimed at providing adequate compensation to the
aggrieved party and attempt to bring the party to its prior position, i.e., its position before the
breach of contract. There are five major types of remedies available:

1. Suit for Damages or Compensation

2. Suit for Injunction
3. Suit for Rescission of Contract
4. Suit for Quantum Merit
5. Suit for Specific Performance

1. Suit for Damages or Compensation

If contract is broken, the injured party has a remedy to claim for damages and losses suffered by
it. The aim of this remedy is to ensure that the injured party is placed at the same financial
position, in which it would have been had the contract been performed. S.73 and S.74 of
Contract Act, 1872 have been framed in this context. The damages would be awarded only if the
aggrieved party is able to prove actual loss.

Damages are classified into three types.

(i) Ordinary or General Damages

These are the damages which arise naturally or directly out of the breach of contract. The remote
and indirect losses, which are not proximate and direct consequences of the breach of contract,
cannot be taken into account.
For example, if X fails to pay the due amount to Y on the specified day, and as a consequence, Y
is unable to pay his debts and suffers a loss; X is liable to pay the due amount as well as the
interest on it.

(ii) Special Damages

Special Damages can be claimed only if special circumstances which would result in a special
loss in case of breach of contract are brought to the notice of the party. These damages arise on
account of the special or unnatural circumstances attached to the contract. The parties should
have knowledge about these special circumstances while entering into the contract as their
subsequent knowledge will not create any special liability.
For example, the loss of profits suffered by a party in case of delay in arrival of equipments or
machinery in the factory or workplace.

(iii) Exemplary or Punitive Damages

These damages are aimed at punishing the guilty party for the breach and not at compensating
the aggrieved party. They are meant to discourage the defaulting party from engaging in a similar
behavior in the future. They take into account the mental and emotional suffering of the
aggrieved party. The requisite is that the aggrieved party has to prove that the defaulting party
has acted in a fraudulent or malicious manner. Exemplary damages are awarded in case of breach
of contract to marry and dishonor of cheque by the banker when there are sufficient funds in the
account of the customer.
2. Suit for Injunction
Injunction is an order of the court which prevents a wrongful act or restrains the performance of
a particular act. An injunction may be filed against an act which is involved in a breach of
contract. For example, if X is doing something which it promised or agreed on not doing, then an
injunction may be filed against X. It may also be given in case of anticipatory breach of contract.
The right to relief by way of injunction is contained in part III of the Specific Relief Act, 1963.
Section 36 provides that preventive relief may be granted at the discretion of the court by
injunction, temporary or perpetual.

3. Suit for Rescission of Contract

When one party to the contract breaches the contract, the other party will be discharged from
performing his part of the obligations. The aggrieved party may rescind the contract and file a
suit for damages as per S.75 of Contract Act, 1872. This remedy might be available when the
contract was based on fraud or a mistake by one or both of the parties. It is also available if both
parties prefer to cancel the contract and return any money that had been advanced as part of the
contract.

4. Suit for Quantum Merit

Quantum Merit is Latin for “what one has earned”. The aggrieved party can file a suit upon
quantum merit and may claim payment in proportion to work done or goods supplied.
For example, if X and Y have agreed to construct a building together. X has performed part of
the contract but Y has not. Then, X is entitled to receive award as per to the work done by him.
This would be a claim Quantum Merit.
Sections 65 to 70 deal with the provisions relating to suit for Quantum Merit.

5. Suit for Specific Performance

Specific Performance means the actual carrying out of the duties as agreed in the contract. The
Court may grant for specific performance where it is just and equitable to do. Such a suit may be
filed either instead of or in addition to a suit for damages.
Specific Performance may be granted under the following grounds.
Lack of standard for ascertaining the damages
Where compensation is not adequate relief
Where substantial work has been done by the plaintiff.
The Court cannot grant the remedy of specific performance in the following situations.
Where monetary compensation is an adequate relief
Where the Court cannot supervise the actual execution of the work
When one of the parties is a minor
Where the Contract is not enforceable by either party against the other.