Law o f Contract 57

Mistake o r C o e r c io n
A person to whom m oney has been paid, o r anything delivered, by mistake or under
coercion, must repay or return it (Sec. 72).
Illustrations: (a) A and B join tly o w e Rs. 100 to C. A alone pays the amount to C,
and B, not knowing this fact, pays Rs. 100 over again to C. C is bound to repay the
amount to B.
(b) A railway com pany refuses to deliver up certain g o o d s to the consignee,
except upon the payment o f an illegal charge for carriage. The con signee pays the
sum charged in order to obtain the goods. H e is entitled to recover so much o f the
charge as was illegally excessive.
In Sales Tax Officer v Kanhaiya Lai S a r a f (AIR 1959 SC 135), it has been held
that the m oney paid under mistake is recoverable whether the mistake be o f fact or
o f law. And the term ‘mistake’ has been used without any limitation under Sec. 72.
In this case, a certain amount o f sales tax w as paid b y a firm under the U.P. Sales Tax
laws on its forward transactions. Subsequently to the payment the Allahabad High
Court ruled the levy o f sales tax on such transactions to be ultra vires. The firm
sought to recover back the tax money. The Supreme Court allow ed it. The court
observed: Payment ‘by mistake' in Sec. 72 must refer to a payment w hich was not
legally due and which could not have been enforced; the ‘mistake’ is thinking that the
m oney paid was due when, in fact, it was not due.
In Tilok Chand M oti Chand v Commr. o f Sales Tax (AIR 1970 S C 898), a firm
paid sales tax in respect o f sales to consumers outside the State o f Bom bay and which
were, therefore, not liable to any sales tax. The firm had itself collected the tax money
from its customers. The amount was ordered to be refunded to the customers. The
firm paid back the amount, however, the A ct under which the recovery was made
from the firm w as declared to be ultra vires. The firm sought to recover back the
m oney as having been paid under either mistake o f law or coercion. The Supreme
Court held that the firm did not suffer from any “m istake" under Sec. 72. The court,
however, held that the payment was m ade under coercion and w ould have been
recoverable under Sec. 72.

IO. REMEDIES FOR BREACH OF CONTRACT

A ‘breach o f contract’ occurs when-

(i) a party renounces his liability' under the contract, or
(ii) by his ow n act makes it im possible that he should perform his obligations
under the contract, or
(iii) totally or partially fails to perform his part o f the contract.
The law tries to giv e an appropriate remedy for every type o f breach. But even
so the maxim ubi ju s ibi remedium (‘where there is a right, there is a rem edy’) is not
wholly true. There are cases, for example, where a contract has been broken and the
58 Law Guide for Competitive Examinations

plaintiff has suffered no loss, according to a few decisions o f the Suprem e Court,
damages would not be allowed.
The remedies for breach o f contract are: R escission and Dam ages; S pecific
Performance and Injunction; and, Quantum Meruit.

[A] D am ages for Breach

It is the most common remedy. The party who is injured by the breach o f a contract
may bring an action for damages. ‘Damages' means compensation in terms o f m oney
for the loss suffered by the injured party. Applying to the court for ‘rescission o f the
contract’ is necessary for claiming damages for breach. However, in certain cases a
suit for ‘rescission’ may be filed even when no damages are to be claimed.
In every case o f assessment o f damages, there are two problems: (1) Rem oteness
o f damage, and (2) Measure o f damages.

(I) Remoteness o f Damage

Theoretically the consequences o f a breach may be endless (e.g. loss o f profits, loss
o f social prestige and o f business reputation), but there must be an end to liability.
The defendant cannot be held liable for all that follow s from his breach. In other
words, the compensation is not to be given for any remote or indirect loss or damage
sustained by reason o f the breach.
The decision in Hadley v Baxendale (1854) 9 E x 341, laid dow n two rules:
(i) General damages- those which arise naturally in the usual course o f
things from the breach itself. This rule is ‘objectiv e’ as it makes the
liability to depend upon a “reasonable man’s foresight” o f the loss that
will naturally result from the breach.
(ii) S pecial damages- those w hich arise on accoun t o f the un usual
circumstances affecting the plaintiff. They are not recoverable unless the
special circumstances are brought to the knowledge o f the defendant so
that the possibility o f the special loss was in the “contemplation o f the
parties”. This rule is ‘subjective’ as the extent o f liability depends upon
the actual knowledge o f parties at the time o f the contract about the
likely result o f breach.
In Heron II, Koufos v Czarnikow Ltd., (1967) 3 All ER 686, the decision also
laid emphasis upon the “contemplation o f the parties”, as laid down in H adley case.
In Hadley case, the plaintiff’s mill had been stopped due to the breakage o f a crankshaft.
The defendants, a firm o f carriers, were engaged to carry the shaft to the manufactur ers.
The plaintiff’s servant told the defendants that the mill was stopped, and that the shaft
must be sent immediately. But the defendants delayed the delivery. The action was
brought for the loss o f profits arising out o f the delay. The defendants w ere held not
liable for the loss o f profits, as the fact that the mill was out o f action fo r the want
o f shaft was a ‘special circumstance’ affecting the plaintiff’s mill and the sam e should
have been pointed out to the defendants in clear terms.

In British Columbia Saw Mills v Nettleship (1868) LR 3 CP 499, also, lack o f

knowledge o f special circumstances once again prevented recovery o f special damages.
The court gave an illustration: “I f a banister on his way to practice at the Calcutta
 Law o f Contract 59

Bar, where he may have a large number o f briefs awaiting him, got stranded in the
Suez boat through the default o f Peninsular and Oriental Company, is the com pany
to be responsible for that, because they happened to know the purpose for w hich the
traveller w as goin g?”

In Simpson v London & North Western Railway Co. (1876) 1 Q B D 274, held that
if the special circumstances are already within the knowledge o f the party breaking the
contract, the formality o f communicating them to him may not be necessary. The plaintiff
was in the habit o f exhibiting samples o f his implements at cattle shows. H e delivered
his samples to the defendant company for consignment to the show ground at N ew
Castle. The consignment note said: “must b e at N ew Castle on Monday certain”.
Due to defendant’s negligence, the g o o d s reached the destination only after the
exhibition was over. It was held that since the defendant com pany was having the
know ledge o f the special circum stances that the plaintiff’s g o o d s were bein g sent for
the N ew Castle show, they were liable for the lo ss o f profits resulting from the late
arrival o f goods. However, in M adras Railway Co. v G ovinda Rau (1898) 21 M ad
172, such dam ages were not allow ed as the ‘special p u rp ose’ was not communicated.

S e ctio n 73, C o n tr a c t A ct
Com pensation f o r loss o r dam age ca u sed by breach o f contract- "W hen a contract
has been broken, the party w ho suffers by such breach is entitled to receive, from the
other party w ho has broken the contract, com pensation for any loss o r dam age caused
to him thereby, which naturally arose in the usual course o f things from such breach,
or which the parties knew, when they m ade the contract, to be likely to result from
the breach o f it.
Such com pensation is not to be given for any rem ote and indirect lo ss or
damage sustained by reason o f the breach.”
Thus, Sec. 73 is declaratory o f the com m on law as to dam ages (i.e. rule o f
H adley v Baxendale). The section also provides that the sam e p rinciples w ill apply
in relation to breach o f a quasi-contract.
Illustration (i) (D elay cau sed by carrier)- A delivers to B, a com m on carrier, a
machine, to be conveyed without delay, to A’s mill, inform ing B that his m ill is
stopped for want o f the machine. B unreasonably delays the delivery o f machine, and
A in consequence, loses a profitable contract with the Government. A is entitled to
receive from B, by way o f compensation, the average amount o f profits w hich w ould
have been made by the w orking o f the m ill during the time that delivery o f it w as
delayed, but not the loss sustained through the lo ss o f the Governm ent contract (This
illustration is a H adley v Baxendale module). A is entitled to profit as A has brought
to the know ledge o f B the ‘special circum stance’ affecting him i.e. m ill is stop p ed for
want o f machine. A is not entitled to lo ss sustained through the lo s s o f Governm ent
contract as this fact was not brought to the kn ow ledge o f B.
In D om inion o f India v A ll India R eporter Ltd. (AIR 1952 N ag 32), the lo s s
by railways o f three volum es o f a set o f b o o k s without which the set o f 8 volu m es
becam e useless, recovery allow ed only for the lost volumes. Sin ce the fact that the
loss o f three volum es w ould render the w hole set useless w as not brought to the
know ledge o f the defendant, the value o f w hole set cou ld not be claimed.
60 Law Guide for Competitive Examinations

Illustration (n) to Sec. 73 reads: A contracts to pay a sum o f m oney to B on a sp ecific

day. A does not pay money on that day. B, in consequence o f not receiving the m oney
on that day, is unable to pay his debts, and is totally ruined. A is not liable to make
g oo d to B anything except the principal sum he contracted to pay, together with
interest upto the date o f payment.

Loss o f Profits is a Special Loss

The loss o f profits, which were to accrue upon resale, cannot b e recovered unless it
is communicated to the other party that the g o o d s are for resale upon a special
contract.
Illustration (f) (knowledge o f resale, loss o f profit)- A, having contracted with B to
supply B with 1,000 tons o f iron at 100 R s./ ton, to be delivered at a stated time,
contracts with C for the purchase o f 1000 tons o f iron at 80 Rs./ ton, telling C that
he does so for the purpose o f performing his contract with B. C fails to perform his
contract with A, who cannot procure other iron, and B in consequence, rescinds the
contract. C must pay to A Rs. 20,000, being the profit, which A w ould have made
by the performance o f his contract with B.

Illustration (k) (Where no knowledge o f resale agreement, no more than market

difference recoverable)- A contracts with B to deliver to B, by a fixed day, for a
specified price, a machinery. On A’s failure to do so, B is obliged to procure another
piece at a higher price, and is prevented from performing a contract which B had
made with a third person at the time o f his contract with A (but which had not been
communicated to A), and is com pelled to make compensation for breach o f that
contract. A must pay to B the difference between the contract price o f the p iece o f
machinery and the sum paid by B for another, but not the sum paid by B to the third
person by way o f compensation
In almost all sale transactions, which fail to g o through, the normal yardstick
for working out the sum o f money to which the aggrieved party is entitled is the
difference between the contract and market/current price. Thus, i f A breaks his prom ise
to sell and deliver certain g oo d s to B, B is entitled to receive from A the difference
between the contract and market price o f goods.

(2) Measure o f Damages

Once the extent o f recoverable loss is determined, it has to be evaluated in terms o f
money. It may be noted that the fact that damages are difficult to assess d oe s not
prevent the injured party from recovering them.

(a) Damages are Compensatory, not Penal

Damages are compensatory in nature. The object o f awarding damages to the aggrieved
party is to put him in the same position in which he w ould have been i f the contract
had been performed. Motive for and the manner o f breach are not taken into account
because generally “punitive damages” are not recoverable for the breach o f contract.

Where the plaintiff suffered no loss the court may still award him nom inal
damages (small sum o f money) in recognition o f his right. However, Sec. 73 d o e s not
give any cause o f action unless and until damage is actually suffered. “I f actual loss
is not proved, no damages will be awarded.”
 Law o f Contract 61

But the inconvenience caused by the breach may b e taken into account. Thus,
in Hobbs v L ondon & South-Western Rly. Co. (1875) LR 10 Q B 111, due to the
negligence o f the defendant railway company, the plaintiff and his family w ere set
down at a w rong station. Neither any nearby hotel accom m odation nor any conveyance
was available to them, and they had to walk several m iles in rain. The plaintiff's w ife
caught cold. The plaintiff was entitled to substantial dam ages for inconvenience to the
family. But, n o dam ages were awarded on account o f m edical expenses incurred for
treatment o f the p la in tiffs w ife and her loss due to pay-cut in office.

S om etim es the expenditure incurred by on e party to the contract before the

contract was entered into is wasted because o f breach o f contract by other party. Such
p re-con tract expenditure m ay b e re co v e re d as dam ages i f it w as within the
contemplation o f the parties. However, in such cases, the plaintiff can either claim for
his loss o f profits or his wasted expenditure. H e cannot claim both.

(b) Mental Pain and Suffering

The position today is that in every proper case dam ages for mental distress can be
recovered. Thus, in Westesen v Olathe State Bank (1925) 78 C o lo 217, the defendant,
a banking corporation, agreed to loan plaintiff m oney for a trip to California by
crediting his account with such sum s as he might need there. The plaintiff reached
California, but the defendant refused to giv e him the prom ised credit. The court
allow ed dam ages for humiliation and mental suffering.
Where a photographer failed to appear at wedding, as a result the bride had no
photographs o f her wedding, she was allow ed dam ages for the resulting injury to her
feelings. Similarly, the court allow ed dam ages when the hotel management cancelled
the contract two days before the w edding and the plaintiff was forced to organize only
a sim ple function for his only daughter’s w edding reception (H otson & H otson v
Payne (1988) CLY 1047). In R aj Kishore v B in od (AIR 1989 Pat 111) there was a
contract to purchase an American car, which the seller failed to supply. T he court
allow ed com pensation for pain and agony.

(c) Exemplary or Vindictive Damages

These are awarded with a view to punishing the guilty party for the breach and not by
way o f compensation. Thus these damages have no place in the law o f contract. There
are, however, certain exceptional cases, viz. breach o f a contract to marry, dishonour o f
a cheque by a banker when there are sufficient funds to the credit o f the customer.

(d) Duty to Mitigate

Explanation to Sec. 73 says: In estimating the loss or dam ages arising from a breach
o f contract, the means, which existed o f rem edying the inconvenience caused by the
non-performance o f the contract, must b e taken into account.

Thus, the injured party has to make reasonable efforts to avoid the losses
resulting from the breach s o that his loss is kept to the minimum. The onus o f p ro o f
is on the defendant to show that the plaintiff has failed in his duty o f mitigation and
the plaintiff is free from the burden o f proving that he tried his best to mitigate the
loss. The loss to be ascertained is the loss at the date o f the breach o f contract. If
at that date the plaintiff could do something to mitigate the damage, the defendant is
entitled to the benefit o f it. However, the rule in regard to mitigation must be applied
62 Law G u id e for C om p e titiv e E xa m in a tion s

w ith d iscretion and a m an w h o has already put h im s e lf in the w ron g b y brea k in g h is

con tract has n o right to im p o se n ew and extraordinary duties o n the a g g riev ed party
( P ollock and Mulla).
T h e m ost frequent application o f this rule takes p la ce in contracts for sale o r
purchase o f goods. O n the buyer's refusal to take delivery, the seller co u ld resell the
g o o d s at the prevailing market price. I f the seller d o e s not resell the g o o d s and his lo s s
is aggravated b y the falling market, he cannot re co v e r the enhanced loss. Similarly,
w here the seller refuses to p erform the contract, the bu yer sh ould bu y the g o o d s i f they
are available from any alternative sou rce and cannot re co v e r any further lo ss that m ay
b e due to his o w n n eglect [Jamal v M o ot a D a w o o d S o n s & Co. (1916) 43 IA 6],

L iq u id a te d D a m a g e s
S om e tim e s the parties to a contract, at the lim e o f m ak in g the contract, a g re e d to the
am ount o f co m p e n sa tio n paya ble in the event o f the breach o f contract. S u ch amount,
w h ich has b e e n a g re e d beforehand, m ay b e eith er liquidated d a m a ges o r penalty. I f
the su m to b e paid o n the brea ch o f contract is the gen u in e pre-estim ate o f the
p r o sp e ctiv e dam ages, it is kn ow n as liq u id a te d dam ages. I f such sum is e x c e s s iv e and
h igh ly d isp ro p o rtion a te to the lik ely loss, viz. the am ount is fix e d in terrorem , with
a v ie w to d isco u ra g in g breach o f contract, it is kn ow n as penalty. ‘P enalty’ as a rule
is n ev er aw arded as d a m a ge in the la w o f contract (dam age w ill then b e ca lcu la ted
a c c o r d in g to the ordin ary prin ciples); w h ile the w h o le o f liq u id ated d a m a g e is
reco v e ra b le (English law).
T h e stipulation con ta in ed in a contract, w h ich s p e c ify the d a m a g es o r p en a lties
to b e p a id b y the party in breach to the other party, reflects g o o d b u sin ess s e n s e and
is advan tageous to both parties. In D u n lo p P n eu m atic Tyre Co. Ltd. v N ew G a r a g e
& M o to r Co. Ltd. (1915) A C 79, the court laid d o w n that the e x p re ssio n u se d b y the
parties is n ot con clu siv e. T h e cou rt m ust find out w hether the paym en t stip u lated is
in truth a penalty o r liquidated dam ages.
A n illustration o f ‘liquidated dam ages' is D u n lo p P n eu m a tic Tyre Co. case, in
w h ich a m anufacturer o f tyres su p p lied a quantity o f tyres on the co n d itio n that they
w o u ld n ot b e s o ld b e lo w the list p ric e s and that liq u idated dam ages, n ot penalty, o f
£ 5 w ou ld b e p a y a b le fo r ev e ry tyre s o ld in breach o f the agreem ent. H e ld that the
stipulated sum w as intended to b e gen u in e co m p e n sa tio n fo r the lo s s suffered, and
thus liqu idated dam ages.
A n illustration o f ‘penalty’ is F o r d M o to r Co. v A rm stron g (1915) 31 T L R 267,
in w hich the defendant, a retailer, re ce iv e d from the plaintiffs, su p p lies o f cars and parts
and agreed not to sell any item b e lo w the listed price. A sum o f £ 250 w as p a ya ble for
every breach as “agreed d am ages” . H eld that the sum fix ed w as penalty as it m ight
happen that a part s o ld in breach w as o f le sse r value than the d a m a ges payable. T h e
sum b o re n o relation with the d e g re e o r extent o f breach. Similarly, w here two-third o f
the price w as m ade payable in the event o f a default, it w a s h eld to b e penalty.

S e c t io n 74, C o n t r a c t A c t
S ectio n 74 o f the Indian C ontract A ct lays d o w n a slig h tly differen t rule:

C o m p en sa tion f o r brea ch o f co n tra ct w here p e n a lty stip u la te d fo r - W h en a con tra ct

 Law o f C ontract 63

has b een broken, i f a sum is nam ed in the contract as the am ount to b e p aid in case
o f su ch breach, o r i f the contract contains any other stipulation b y w ay o f penalty, the
party co m p la in in g o f the breach is entitled, whether or not actual dam age o r lo s s is
p ro v ed to have been cau sed thereby, to receiv e from the party w h o has broken the
contract reason able com pen sation not e x ce e d in g the amount s o nam ed or, as the case
m ay be, the penalty stipulated for.
E xplanation- A stipulation for increased interest from the date o f default m ay b e a
stipulation b y w ay o f penalty. It m ay b e n oted that unless the parties have m ade a
stipulation for the payment o f interest, o r there is a usage to that effect, interest cannot
b e re co v e re d lega lly as dam ages, generally speak in g (Afahabir P ra sa d v D u rga Datta
A IR 1961 S C 990).
Illu stration (a)- A contracts with B to pay B Rs. 1000 i f he fails to pay B Rs. 500
on a g iv en day. A fails to pay B Rs. 500 o n that day. B is entitled to recov er from
A su ch com pen sation , not e x ce e d in g Rs. 1000. as the court con sid ers reasonable.
Illu stration (e)- A, w h o o w e s m on ey to B, a m oney-lender, undertakes to repay him
by deliv erin g to him 10 m ou n ds o f grain on a certain date, and stipulates that, in the
event o f his not deliverin g the stipulated am ount by the stipulated date, he shall be
liable to deliv er 20 mounds. T h is is stipulation b y w ay o f penalty and B is only
entitled to reason able com pen sation in ca se o f breach.
C o m p a riso n with E n glish law- Sec. 74 dispen ses with the requirement o f distinguishing
liquidated dam ages from penalty. Further, unlike English law where the court must
either a ccep t the amount in w h ole o r reject it in whole, the court m ay either accept the
amount or reduce it to what appears reasonable. The named sum constitutes the maximum
limit o f liability. T he court cannot order dam ages beyon d that. Further, the actual loss
o r dam age suffered by the party is immaterial. Thus, even if the actual loss ex ce e d the
liquidated dam ages, the dam ages payable w ill not ex ce e d the stipulated sum.
H ow ever, like the E n glish law, under Sec. 74 the amount contem plated by the
patties w ill b e red u ced only i f it appears to b e b y w ay o f ‘penalty'. O therw ise the
w h ole o f it is recoverable as liquidated damages. Further, by providing for com pensation
in ex p re ss term s the right to cla im d am ages under the general law is n ecessarily
excluded. Thus, excep tion to Sec. 74 p ro v id es that w hen any p erson enters into any
bail-bond, recogn iza n ce, etc., o r under the p ro v isio n s o f any law o r under the
G ov ern m en t’s order, g iv e s any b o n d for the perform ance o f any p u b lic duty/ act, he
shall b e liable to pay the w h ole sum m en tioned therein up on breach o f the con d ition
o f any su ch instrument.

F o rfe itu re o f E a rn e st M o n e y o r D e p o sit

Today, m any com m ercia l contracts in volve either ‘earnest m on ey ’ o r ‘security d ep osit’
as a way o f ensuring the prom isor's seriousn ess tow ards the contract. In the application
o f Sec. 74 to forfeiture clause in the contract, a distinction has been drawn betw een
earnest m on ey and security deposit. T h e essen ce o f the distinction is the fact that earnest
m on ey is part paym ent o f the purchase p rice w hile security deposit is not. A s a general
rule, the rule o f forfeiture applies to earnest m on ey but not to security deposit.
In M a n ia Bux v U nion o f In dia (1969) 2 S C C 554, the plaintiff con tracted to
su p ply to M ilitary Headquarters with potatoes, e g g s and fish for on e year and deposited
Rs. 18,500 for due p erform a n ce o f the contract. O n breach o f the contract, the
64 Law Guide for Competitive Examinations

G overn m en t forfeited the am ount d e p o s ite d b y the plaintiff. T h e S u p re m e C o u rt in

this ca se laid d ow n that the forfeiture o f earnest m o n e y un der a co n tra ct o f sale, i f
the amount is reason able d o e s n ot fall w ithin Sec. 74 (as it d o e s n o t am ount to
im p o sin g a penalty). B ut i f forfeiture is o f the nature o f penalty i.e. am ount t o b e
forfeited is unreasonable, Sec. 74 applies.
In Shree H anum an C o tton M ills v Tata A ircraft Ltd. (A IR 1970 S C 1986), it
w as h eld that i f a contract requ ires the bu yer to d e p o s it 2 5 % o f th e total value o f the
g o o d s as earnest m on ey w h ile p la cin g the order, w ith a stip u lation that the am oun t
shall b e forfeited in ca se o f default in p aym en t o f p rice, the term is reason ab le and
bin din g on the parties.
It m ay b e n oted that Sec. 74 c o m e s in to o p era tion o n ly w h en there is a ‘b r e a ch ’
o f contract. A ‘d isch a rg e ’ o f contract, on th e oth er hand, n e c e ss a r ily p re su m e s
termination o f contract b y o peration o f la w an d n ot b y breach. T h u s earnest m o n e y
can n ot b e forfeited i f the con tract has b e e n d isch a rg e d b y frustration.

[B] S p e c ific P e r fo r m a n c e a n d In ju n c tio n

S p e c ific p erform a n ce is an equ itable r e lie f g iv e n b y the courts, under the S p e c if ic
R e lie f Act, requirin g the defendant to actually o r exactly p erform the contract a cc o rd in g
to its term s and stipulations.
T h e courts issu e a d e cre e for s p e c ific p erform a n ce o n ly w here it is ju s t and
equitable s o to d o i.e. w here the le ga l re m e d y is inadequate o r in effective. S p e c if ic
p erform an ce is not granted w here m onetary co m p e n sa tio n is an a dequ ate relief, o r
w here the court cannot su p ervise the actual e x e cu tion o f the con tract (viz. a b u ild in g
con stru ction contract), o r w here the contract is fo r p erson al se r v ice s (viz. a con tra ct
to paint a picture). S p e c ific p erform a n ce is usually granted in con tracts w ith lands,
buildin gs, rare articles and un ique g o o d s h avin g s o m e sp e cia l valu e to the party suing.
A n injunction restrains the other party from m ak in g a breach o f the contract. It
is a lso issu ed under the S p e c ific R e lie f Act. It is a preven tiv e r e lie f and is a p p rop ria te
in ca se s o f ‘anticipatory breach o f con tract’ w h ere d a m a g es w ou ld n ot b e an a d eq u a te
relief. It secu res the s p e c ific p erform a n ce o f the n ega tiv e term s o f the con tract (i.e.
w here a party is d o in g som eth in g w h ich he p ro m ise d not to do). In con tra cts fo r
person al services, an injunction is gran ted in p la c e o f s p e c ific perform ance.

[C] Q u a n tu m M eru it
It literally m eans “as m uch as is earn ed” o r “in p ro p o rtio n to the w ork d o n e ” . It is
an o b lig a tion o r debt im p o se d b y o p era tion o f law w h ich arises in the d efen d a n t
having taken the ben efit o f the w ork done, g o o d s su p p lied o r ser v ice s rendered. W h en
the injured party has p erform ed a p a r t o f h is o b lig a tio n under the contract b e f o r e the
breach o f contract has occurred, h e is entitled to re co v e r the value o f what h e h as
done, under this remedy. T h e party in default cannot su e upon quantum m eruit.
It is an action w hich is alternative to an action for the breach o f contract. W h e r e
the injured party, desp ite a breach b y the oth er party, co m p le te d the w ork u n d e r th e
contract, this action w ill not lie. T h is action in e sse n ce is on e o f restitution, p u ttin g
the party injured by the breach o f con tract in a p o sitio n in w h ich he w ou ld h a v e b e e n
had the contract not been entered into.
 Law o f C ontract 65

In P la n c h e v C o lb u r n (1831) 8 B in g 14, the defen dan ts co m m e n c e d the

p u b lica tio n o f a p e rio d ica l entitled 'Juvenile Library1. T h e p la in tiff w as e n g a g e d to
w rite a v o lu m e o n C o stu m e and A n cien t Arm our, and h e w a s to b e p a id £ 100 o n the
co m p le tio n o f the jo b . A fter the p la in tiff had already c o lle c te d the m aterial and
written a part o f the b o o k the defendants discon tin ued the publication o f the periodical.
It w a s h eld that the origin a l con tract h avin g b een disch a rged b y the breach o f contract
b y the defendants, the p la in tiff w a s en titled to re co v e r £ 50 b y w a y o f rem uneration
fo r the part o f the j o b he has already p erform ed.
T h e real nature o f the re m e d y is quast-contractual. T h e rem edy has, therefore,
b e e n h eld to b e av ailab le w hen the w ork has b e e n d o n e b y the p lain tiff un der a v o id
agreem ent. T h o u g h the rem ed y is in dep en den t o f contract, but the contract, i f any,
shall n ot b e w h o lly irrelev a n t Thus, w h ere a sh ip w a s d e liv e re d for repair and the
contract u se d m o re e x p en siv e m aterial than that auth orised b y the co n tr a ct h e c o u ld
n ot r e c o v e r under the con tract b e ca u se h e had n ot carried it ou t precisely, n or under
gwas/'-contract, b e ca u se the oth er party had n o ch a n ce to re je ct the ex p en siv e material
[Farm an & Co. L td v The L id d e sd a le (1900) A C 190 PC].