10 BREACH OF CONTRACT Meaning When a party to the contract fails to perform his obligations under a _ contract, it 1s called breach of contract. When one party to a contract breaches the contract, the following remedies are available to the aggrieved party against the guity party: 1. Suit for Rescission A rescission means a night not to perform the contract. When one party refuses to perform his obligation, the other party is discharged from his obligation under the contract The aggrieved party can file a suit for rescission of contract against the guilty party for breach of contract. When the court grants rescission, the aggneved party can claim compensation from guilty party. Sec. 75] EXAMPLES | a. A contrads to supply cement to B. B agrees to pay the price on receipt of goods. A does not supply. B is discharge from liabilty to pay. B can rescind and claim damages. ». Apledges omaments to B and gets a loan. A does not retum the loan to B. B may rescind the contract and refuse to return the omaments. 2. Suit for Damages ‘The damages are a monetary compensation awarded by the court to the aggrieved party for the loss suffered by him as a fesult of the breach of contract. ‘The aggrieved party can claim the foliowing kinds of damages: [Sec .73] a. Ordinary Damages These damages arise diteclly as a resuit of breach of contract. The ordinary damages are usually assessed on the basis of actual loss, In contract of sale of goods, the damages payable are the difference between the contract Price and market price at the date of breach. They are also called general damages. (Sec. 73} i [examrte | ‘A agreed to pay Rs. 1 Lacto B on 1st May. A failed to pay on that day. As aneueeites ‘Ais liable to pay B the principal sum and interest on it - Special Damages: ‘The special damages are payable to aggrieved party under some special circumstances. The parties must be avare of the circumstance which may create 82Breacn of Contract Perel = 83 Special damages. These damages inciude indirect loss which may arige dua to Preach of contract. The partes must be aware of the loss which may:anee from breach of contract. The other party must be informed about the possibilty of ‘special damages. [Sec. 73] ([Bxaseeus a A contracts C to buy 1 ton of iron for Rs. 80,000. A also contracts to sell B. 1 ton iron for Rs. 1 lac. A informs C about the purpose of contract. C fails to Supply. As a resuit, A cannot supply to B. C is liable for foss of profit which A would have eamed from 8. b._S delivered his samples io NWR Co. for exhibition at New Castle. $ wrote on consignment “must be at New Castle on Monday certain”. Due to negligence, the goods reached afier the show. NWR Co. was aware of the purpose of carrying the goods. Held, $ could claim spacial damages. (Simpeon vs. London & N.W Railway Co.) & Exemplary Damages ‘The exemplary damages are awarded not to compensate the aggrieved Party, but to punish the guilty party. The breach of contract causes disappointment to the aggrieved party. [Samrce | A agreed to pay Rs. 20,000 as damages to B, if he failed to pay Rs. 5 Lac on a specified day. A failed to pay on that day. B can recover damages not exceeding Rs. 20,000. (@. Nominal Damages These are the damages which are awarded when the aggrieved party does not suffer monetary loss. They are small in amount They are awarded te ‘recognize the rights of the aggrieved party. The court has discretion in this case. The court may refuse to award damages.a 2 Breach of Contract EXAMPLES ‘ a. A promises to sell cement to B for Rs. 500 per bag. A does not supply, At the time of breach, market rate of cement is the same. 8 is entitled to nominal damages. 5. S contracted to buy a Hillman car from C, a car dealer, but refused to buy C Sold the same car to another customer and suffered no loss, C sued for loss of profit. Held, he could recover nominal damages. (Charter vs. Suiivan) 3., Suit upon Quantum Meruit The term quantum meruit means payment in proportion to the work done, When a person has done some work under 2 contract and the other party cancels the contract or an event happens which makes the performance of contract impossible, such party can claim remuneration for the work already done. The aggrieved party may sue for quantum meruit in the following cases: a. When some work has been done and accepted, the contract becomes void before completion. b. When a person does some act without an agreement about remuneration, and the party enjoys the benefit. ©. When a person does some act with the intention of receiving payment and other party enjoys the benefit 4. When the contract is divisible and the party has enjoyed the benefit of partial Performance. . When one party prevents the other from completion of the contract. {__When an indivisible work is performed badly. | EXAMPLES i a. B contracts to build a three storey nouse for A. When one storey is complete, A stops B from work. B can get compensation for work done. ». Cwas employed as managing director in a company. After 3 months, it was found that the directors were not authorized to appoint C. C sued for remuneration. Held, © could recover for the work done. (Craven Ellis vs. Canon Ltd.) * 4. Suit for Specific Performance Specific performance means performing the contract according to the terms of the contract. The court may order the guilty party to complete his obligation according to the terms of the contract. It is a discretionary remedy. It is granted when the aggrieved party satisfies the court that the remedy of damages is inadequate. The aggrieved party can sue for specific performance in the following cases: ‘a. When monetary compensation is not an adequate remedy.‘Breach of Contract 85 ©.” When it's difficult to calculate the actual damages &__When compensation in money cannot be obtained EXAMPLES 3. 8 agrees to Sell his plot to C, who wants to erect a factory. B commits breach. C sues. The court directs 8 to partorm the contract. i: ©. A aorees to sell B his painting but commits breach. A can be ordered for Specific performance to B. 5. Sult for Injunction Mis the order of court by which a party is prevented from doing 2 particular act which he has promised not to do. Generally, the court issues such crder where compensation in terms of money is not an adequate relet EXAMPLES: = W agreed to sing at Lu’s theatre and for no one else Afterwards, W contacted 2 fo sing at another theatre and refused to sing for La Held, W could be restrained by injunction from singing for 2. (Lumly vs. Wagner) b. G agreed to take the supply of electricity only from M Co, G was, festrained by an injunction from buying electricity from any other company. (Metropolitan Electric Supply Co. vs. Ginder) QUESTIONS +, What remedies are avaiable to an aggrieved party upon the breach of contract? Explain the different kinds of damages. Explain quantum meruit 4. Explain specific performance and injunction. en