SUBJECT-LAW OF CONTRACT-I

MODULE-8: BREACH OF CONTRACT & REMEDIES FOR BREACH

THIS STUDY MATERIAL IS PREPARED

[for the use of students] BY:

Dr. PRADIP KUMAR DAS

Associate Professor
DEPARTMENT OF LAW AND GOVERNANCE,
SCHOOL OF LAW AND GOVERNANCE
CENTRAL UNIVERSITY OF SOUTH BIHAR
GAYA,
BIHAR 1
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MODULE-8: BREACH OF CONTRACT & REMEDIES FOR BREACH
REMEDIES FOR BREACH OF CONTRACT:
(i). Rescission of contract
The aggrieved party is freed from all his obligations under the contract
(ii).Suit for Damages
The aggrieved party is entitled to receive compensation for any loss or damage
caused to him by the breach of contract and can file a suit for getting a decree for
damages.
(iii).Suit upon Quantum Meruit
When a contract has been partly performed the aggrieved party can, under certain
circumstances, file a suit for the price of the services performed before breach of
contract.
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(iv).Specific Performance of Contract
In certain special cases, the court can direct a party to perform the contract
according to the agreed terms.
(v).Injunction-
Under certain circumstances the court can issue an order upon a party whereby he is
prohibited from doing something which amounts to a breach of contract.

NATURE OF DAMAGES & MEASURE OF DAMAGES-

When a contract is broken, the injured party can claim damages from the other
party. However, following are different types of damages:
(i).Compensatory Damages-
Compensatory damages are damages calculated in such a way as to compensate or
make up the loss suffered by a party. They can also be called as Ordinary Damages.
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(ii).Special Damages-
The court may allow remote damages, i.e., damages not arising naturally from the
breach, if such damages may reasonably be supposed to have been in the
contemplation of both the parties at the time they made the contract.

(iii). Nominal Damages

Where the court finds that the party has not actually suffered much damage or when
the court is of opinion that the breach complained of was too insignificant or petty,
the court allows a nominal sum for damages to the plaintiff. These are called
nominal damages or contemptuous damages.

(iv).Exemplary, Punitive or Vindictive Damages-

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-The court may allow damages exceeding the actual loss suffered by way of
punishment. These are called exemplary, punitive or vindictive damages. Such
damages are unusual. In English courts exemplary damages are usually given in
cases of breach of contract of marriage and against bankers refusing to pay traders
cheques where there are sufficient funds of the trader in the bank.

QUANTUM MERUIT:
The phrase “Quantum Meruit” means “ as much is merited”. A person can, under
certain circumstances, claim payment for work done or goods supplied without any
contract and in cases where the original contract has terminated by breach of
contract by one party or has become void for some reason. This is known as the
doctrine of quantum meruit.
Rules regarding doctrine of quantum meruit-
(i).Where there is a breach of contract, the injured party is entitled to claim
reasonable compensation for what he has done under the contract; 5
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(ii).When a contract is discovered to be unenforceable for some technical reason,
any person who has done something under the contract, is entitled to reasonable
compensation.
(iii).In certain cases the law presumes an implied agreement to pay for services
rendered, for example, when work is done or goods are supplied by a person
without any intention to do so gratuitously and the benefit of the same enjoyed by
the other party. This case is provided for by Section 70 of the Contract Act.
(iv).Where a contract is not divisible into parts and a lump sum of money is
promised to be paid for the entire work, part performance does not entitle a party to
claim payment quantum meruit.
(v). Nothing can be recovered for quantum meruit when there is no evidence of an
excess or implied promise to pay for work already done.
(vi). A person guilty of breach of contract cannot claim payment on quantum meruit.
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SPECIFIC PERFORMANCE OF CONTRACT & DECREES:
Under certain circumstances, a person aggrieved by breach of contract can file a suit
for specific performance i.e. for an order by the court upon the party guilty of
breach of contract directing him to perform what he promised to do. It is a
discretionary remedy which is allowed only in a limited number of cases. Rules
regarding the granting of this relief are contained in Specific Relief Act, 1963.
Generally speaking, specific performance is directed only in cases where monetary
compensation is not an adequate remedy. Again, it is not allowed where monetary
compensation is an adequate relief.
PREVENTIVE RELIEF:
When the court prevents a party from doing that which he is under an obligation not
to do it is called preventive relief. Such relief is usually granted to prevent breach of
contract or the violation of right arising otherwise than by contract.
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Remoteness of damages-
The term remoteness refers to the legal test of causation which is used when
determining the types of loss caused by a breach of contract or duty which may be
compensated by a damages award. Damage which is too remote is not recoverable
even if there is a factual link between the breach of contract or duty and the loss.
In contract, the traditional test of remoteness is set out in Hadley vs Baxendale case.
The test is in essence a test of foreseeability. That is, the loss will only be
recoverable if it was in the contemplation of the parties. The loss must be
foreseeable not merely as being possible, but as being not unlikely.
Mitigation of Damage-
It is the plaintiff’s duty to mitigate loss. The plaintiff must take all reasonable steps
to mitigate the loss which he has sustained consequent upon the defendant’s wrong,
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and, if he fails to do that, he cannot claim damages for any such loss which he ought
reasonably to have avoided.