College name SNDT Women’s University Law School

Name Namrata Pawan Thakur

Class FY LLB, 2021-22

Roll Number 54

Subject Contract Law

Assignment Topic Remedies In Case Of Breach Of Contract

Professor Ms Deepti Kanoria

Date of Submission 9th April 2022

ACKNOWLEDGEMENT

I would like to thank my mentor , my lawyer, Adv Jignesh Shah (High Court) who has
always been my guide and support for the last 5 years and encouraged me to pursue
studies in Law. I would like to thank Justice P.D Kode for encouraging me to be a lawyer
and work for the Legal Aid; my criminal lawyer, Adv Apoorv Singh (High Court) for
pushing me to work on loop holes and understanding forgery and criminal law.

I would like to thank Adv Komal Sinha, for giving me the opportunity to work on this
assignment.

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All of them were ever ready to clear my doubts and help me with all the necessary
information and books. I would also like to express my gratitude to all those who played a
role directly and indirectly in the completion of this assignment.

INDEX

Sr.No Contents Page Nos

1. Contract & Legal Framework 4

2. What Is Breach Of Contract? 5

3. Types Of Breach Of Contract 6

4. Remedies For Contract Violations – Damages 7

Types Of Damages 8

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 Section 73 Of The Indian Contract Act 1872  10

5. Specific Performance Relief 12

Section 10 Of The Specific Relief Act, 1963 13

Case Law 15

6. Injunction Relief 16

How Injunctive Relief Works 17

Injunctive Relief Clause 18

Section 36 Of Specific Relief Act 1963 19

7. Quantum Meruit Relief 20

Quantum Meruit As Discussed By Indian Courts

8. Curious Case Of Section 74 Of The Indian 22

Contract Act
9. Conclusion 23

10. References 24

Contract & Legal Framework

A contract is an agreement having specific terms between two or more persons or entities
in which there is a promise to do something in return for a valuable benefit known as
consideration. The contract law is at the heart of most commercial or business dealings,
therefore, it is one of the most significant areas of law and can involve significant
variations in circumstances and complexities. The existence of a contract requires finding
the following seven factual elements:

1. an offer;
2. an acceptance of that offer;
3. a promise to perform;
4. a consideration (a payment in some form);

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 5. a time or event when performance must be made (meet commitments);
6. terms and conditions for performance;
7. performance.

To define contract in simple terms– a contract is an agreement between private parties

creating mutual obligations enforceable by law.

Legal framework

The Indian Contract Act, 1872 prescribes the law relating to contracts in India. The Act
was passed by British India and is based on the principles of English Common Law. It is
applicable to all the states of India except the state of Jammu and Kashmir. It determines
the circumstances in which promises made by the parties to a contract shall be legally
binding and the enforcement of these rights and duties. The Act as enacted originally had
266 Sections and had a wide scope.

What is Breach of Contract?

A contract is legally binding as per the Indian Contract Act, 1872, Section 2(h) of
the Indian Contract Act, 1872 simply defines a contract as:
An agreement which is enforceable by law.
It observes that a breach of contract is a violation of the entitled legal duty. In such a
violation, if one of the parties fails to fulfil the obligations of the contract then the other
must terminate it. A breach of contract could be either in its entirety or partly. The party
who breaches the contract must give compensation only for the part they have not
performed.

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Though many a times, the contracting parties work according to the terms and conditions
of the other party, there are instances when one party back steps, thus leading to the loss
to other party.

This is referred as repudiation. According to the section 39 of the Indian contract Act,
“Anyintimation whether by words or by conduct that the party declines to continue with
the contract isrepudiation, if the result is likely to deprive the innocent party of
substantial the benefit of thecontract”

Thus, repudiation can occur when the either party refuses to perform his part, or makes
itimpossible for him to perform or even fails to perform his part of contract in each of the
cases insuch a manner as to show an intention not to fulfill his part of the contract.

A breach of contract occurs when one of the parties of the contract do not abide by the
terms of the contract. The breach in a contract happens even when there is a failure in the
performance of the contract. But such breach of contract comes with some remedies
which provide the aggrieved party for the damages. This assignment deals with the breach
of a contract, its types and the remedies for breach of contract.

A remedy is a legal way of repositioning the aggrieved party into the place they were
before the breach of contract or in a place where they would be after the performance of
the contract.

Types of Breach of Contract

The breach of contract is of two types. The following are its types:

Anticipatory
Anticipation by one of the parties is the anticipatory breach. The breach will occur either
expressly or through conduct. The party will intimate eventually that he or she is going to
commit a breach. The aggrieved party will not have sufficient in the loss if there is
compensation and if he waits for the actual breach.

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Illustration: In the Hochster v. De La Tour, it was decided that if there is a rejection of
the contract before the performance, then claim for the damages can be made. In
accordance with that, De la Tour agrees to employ Hochster as their for 3 months. De La
Tour appoints Hochster in April to start work from June. But De La Tour withdraws the
appointment by May. Hochster sues them. De La Tour argues that Hochster is under the
terms or obligation, stating that he should be ready to perform until the 3 months is due.
But Lord Campbell CJ dismisses the argument and awards Hochster with the damages.

Actual
The refusal to abide by the contract is an actual breach. If one of the party withdraws to
perform before the due date or if he performs incompletely, then he commits a breach.
Illustration: Poussard was to perform opera in the London run for 3 months. The
producers found a substitute when she was ill. The producers refuse to take her back
when she returned. The court was with the producers as it discovered their defence
justifiably. The court did not award her with the damages. The contract claims that she
must perform from the first day. Failure to oblige by the contract made the producers
reject her contract.

Remedies for Contract Violations – Damages

If a promise or Agreement is broken by any parties involved we call it a Breach of

Contract. Therefore if one of the parties does not comply with the terms of the Agreement
or does not fulfil its obligations under the terms of the Contract, that is a Breach of
Contract. There are several Remedies for Contract Breach available from the Victim.
Let's take a look.

Sue for Damages

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Section 73 makes it clear that the Victim as someone who has broken a promise may
claim compensation for loss or damages incurred in the normal course of business.
Such damages will not be paid if the loss is not natural in nature, i.e. not in the normal
course of business. There are two types of damage in terms of the Act,
a) Discontinued Damage: Sometimes Contract parties will agree to the amount
payable in the event of a Breach. These are known as liquidated damages.

b) Unintended Injury: Here the amount payable for Breach of Contract is assessed
by the courts and any other relevant authorities.

Types of Damages

 Normal Damages or General Damages

Damages that arise within the normal course of events from the Breach of Contract are
referred to as normal damages.
General damages cover the loss directly and necessarily incurred by the breach of
contract. General damages are the most common type of damages awarded for breaches
of contract.

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Example: Company A delivered the wrong kind of furniture to Company B. After
discovering the mistake later in the day, Company B insisted that Company A pick up the
wrong furniture and deliver the right furniture. Company A refused to pick up the
furniture and said that it could not supply the right furniture because it was not in stock.
Company B successfully sued for breach of contract. The general damages for this breach
could include:

refund of any amount Company B had prepaid for the furniture; plus 
reimbursement of any expense Company B incurred in sending the furniture back to
Company A; plus payment for any increase in the cost Company B incurred in buying
the right furniture, or its nearest equivalent, from another seller.

 Special Damages
Special damages are those damages that are collectable for the loss arising on account of
some special or uncommon circumstances. That is, they undue the natural and probable
consequences of the Breach of the Contract.
Special damages (also called “consequential damages”) cover any loss incurred by the
breach of contract because of special circumstances or conditions that are not ordinarily
predictable. These are actual losses caused by the breach, but not in a direct and
immediate way. To obtain damages for this type of loss, the nonbreaching party must
prove that the breaching party knew of the special circumstances or requirements at the
time the contract was made.

Example: In the scenario above, if Company A knew that Company B needed the new
furniture on a particular day because its old furniture was going to be carted away the
night before, the damages for breach of contract could include all of the damages awarded
in the scenario above, plus: payment for Company B’s expense in renting furniture until
the right furniture arrived.

 Exemplary or Vindictive Damages

These damages are awarded against the party who has committed a Breach of the
Contract with the thing of gruelling the fallible as a defaulting party and to compensate
the aggrieved party. Generally, these damages are awarded just in case of action on loss

 Nominal Damages
These damages are in little quantity. They’re awarded merely to acknowledge the
correctness of the party to say damages for the Breach of the Contract. Sometimes, the

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damages aren't associated with an adequate remedy for Breach of the Contract. In such
cases, the Court could, at the suit of the party not in Breach, direct the party in Breach to
hold out his promise as per the terms of the Contract. This can be referred to as the
precise performance of the Contract.
 Example: A united to sell associate previous stamp of the pre-independence amount to 8
for Rs.500. However, afterwards refused to sell it. During this case, B may file a suit
against A for the precise performance of the Contract and therefore the Court could order
A to sell the stamp to B as united.

Section 73  of the  Indian Contract Act 1872 

Section 73 of the Indian Contract Act 1872 lays down four important rules
governing the measure of damages.

 First Rule: Section 73(1)

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When a contract has been broken, the party who suffers by such breach is entitled to
receive from the party who has broken the contract, compensation for any loss or damage
caused to him:
Which naturally arose in the usual course of things from such breach, or
Which the parties knew, when they made the contract, to be likely to result from the
breach of the contract.

 An uncommonly known fact is that Section 73 is based on a case law, i.e. Hadley

v. Baxendale (1854) 9 Ex. 354

The well-known rule in this case was stated by the Court as follows:
“Where two parties have made a contract which one of them has broken, the damages
which the other party ought to receive in respect of such breach of contract should be
either such as may reasonably and fairly be considered as arising naturally, i.e. according
to usual course of things, from such breach of contract itself, or such as may reasonably
be supposed to have been in the contemplation of both parties at the time they made the
contract as the probable result of the breach of it.”

 Second Rule: Section 73(3)

The second rule of measuring damages deals with remoteness of damage. It states,
“Such compensation is not to be given for any remote and indirect loss or damage
sustained by the reason of the breach.”
Damages are measured by the loss actually suffered by the party. The loss must naturally
arise in the usual course of things from the breach; or it must be such as the parties knew,
when they made the contract, to be likely to result from the breach of it. Therefore, it
follows that a party is not liable for a loss too remote, i.e. which is not the natural or
probable consequence of the breach of the contract.
In Madras Railway Company v. Govinda (1898) 21 Mad. 172, the Plaintiff, who was a
tailor, delivered a sewing machine and some clothes to the defendant railway company, to
be sent to a place where he expected to carry on his business in an upcoming festival. Due
to mistakes made by the company’s employees, the goods were delayed and were not
delivered until some days after the festival was over. The plaintiff had not given any
notice to the railway company that the goods were required to be delivered within a fixed
time for any special purpose. On a suit by the plaintiff to recover a sum of his estimated
profits, the Court held that the damages claimed were too remote.

 Third rule: Explanation to Section 73

The third rule is to be found in the Explanation to Section 73, which provides as follows:

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“In estimating the loss or damage arising from a breach or contract, the means which
existed of remedying the inconvenience caused by the non-performance of the contract
must be taken into account.”
Therefore, if a railway company, having contracted with a passenger to take him to a
particular station fails to do so, the passenger is entitled to damages for the inconvenience
of having to walk and any reasonable expense which he incurs, like staying at a motel,
and he may get some other conveyance, and charge the railways with that expense if it is
a reasonable thing to do so in that particular circumstance. What is not reasonable is for
him to charter a special train to save himself for waiting and charge the railway company
with the expenses.

 Fourth Rule: Section 73

It is to be noted finally, that damages payable for the breach of a quasi-contract are
exactly the same as those payable for any other contract. To rephrase, all the above rules
apply to quasi-contracts in the same manner.
It should be noted that when no loss arises from the breach of contract, only nominal
damages are awarded. Damages are given by way of restitution and compensation only,
and not by way of punishment. The aggrieved party can therefore recover the actual loss
caused to him as compensation.

Specific Performance Relief

Specific performance is a remedy developed by principle of equity. A party to a contract

who is damaged because the contract is breached by another party has the option to file a
suit for specific performance compelling to perform his part of contract.

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This means the party in breach will actually have to carry out his duties according to the
contract. In certain cases, the courts may insist that the party carry out the agreement.
So if any of the parties fails to perform the contract, the court may order them to do so.
This is a decree of specific performance and is granted instead of damages.
Specific Performance is mostly sought in case of a breach of contract resulting
in damages or losses for one of the parties to the contract. Instead of compensation in lieu
of the losses accrued, the aggrieved party may approach the Court in order to enforce a
specific part of the contract.

Illustration

A is owner of land. He executed an unregistered agreement of sale in favour of B and

received Rs. 50,000/- as an advance out of sale price of Rs.1,00,000/-. A has to execute a
Regd. Sale deed within three months from date of execution of agreement of sale. But, A
refused to execute Regd. Sale deed and sold the said property to C for higher price. B can
sue against A for specific performance.

From the above illustration, no doubt, B can file a suit for specific performance. This case
involve several aspects such as, whether plaintiff is ready and willing to perform his part
of contract or not; when would time is essence of contract?; Can C be impleaded in the
suit as party? Is escalation of price is a ground in such a suit? Question of Lis Pendens;
whether B is entitled for damages and compensation or not; whether an unregistered
agreement of sale is admissible or not etc. All these aspects are dealt in the following
paragraphs with relevant illustrations.

Section 10 of the Specific Relief Act, 1963

 A decree for Specific Performance 

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According to Section 10 of the Specific Relief Act, 1963, there are seven cases when
specific performance of a contract may be allowed by the Court. They are: 
When there is no standard for ascertaining actual damage
When it is impossible to quantify the actual damage caused by the non-performance of
the act agreed to be done, the Court may, in its discretion, grant a decree of Specific
Performance of that act.

 Duke of Somerset v. Cookson, 1935, 3 P Wins. 390

Art, paintings, old furniture, antiques, etc. have a special value to the contracting
party, although such articles may not have much monetary value. For example, an
idol which has been passed down from generation to generation of a family has
immense value to that family, even if it means nothing to someone else. No
amount of damages can compensate for the loss to the members of the family,
even if the Court makes an attempt to assess the damages payable instead of the
idol. Therefore, an order will be passed for specific delivery of that idol, not for
damages.

 In Vijaya Minerals v. Bikash AIR 1996 Cal. 67, the Hon’ble Calcutta High Court
has observed that since manganese and iron ore are not ordinary items of
commerce, if a contract for sale of iron and manganese ore from a mine has been
made, specific performance of such an act would be allowed.

 When monetary compensation would not afford adequate relief:

When the act agreed to be done is such that compensation offered in money for its non-
performance would not afford adequate relief. However, until the contrary is proved, it is
to be presumed that:
 The breach of a contract to transfer immovable property cannot be adequately
compensated by payment of money.
 The breach of a contract to transfer movable property can be so compensated,
except in the following cases:
 Where the property is not an ordinary article of commerce or is of special
value or interest to the plaintiff, or consists of goods which are not easily
obtainable in the market;
 Where the property is held by the defendant as the agent or trustee of the plaintiff.
Usually, the Courts are entitled to presume that in case of breach of contract to transfer
of immovable property, mere compensation is not adequate relief, whereas specific
performance is adequate relief, whereas in the case of movable property, compensation is
the ordinary relief and specific performance is exceptional. However, it must be noted
that these presumptions are rebuttable.

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  In Bank of India v. Chinoy, AIR 1949 PC 90, it was held that if shares are freely
available in the market, then specific performance would not be granted. If shares
of a particular company, for instance a private company are not readily available
in the market, specific performance would be granted.

 Suits for enforcement of a contract to execute a mortgage

In a suit for the enforcement of a contract to execute a mortgage or furnish any other
security for the repayment of any loan which the borrower is not willing to pay at once,
specific performance may be allowed. However, where only part of the loan has been
advanced by the lender, he must be willing to advance the full amount of the loan.
 Contracts for the purchase of any debentures of a company.
 Suits for the execution of a formal deed of partnership.
 Suits for the purchase of partner’s share.
 Suits for the enforcement of a building construction contract or any other work on
land, provided the following 3 conditions are fulfilled:
 The building or other work has been described in the contract in a reasonably
precise manner, so as to enable to Court to decide the exact nature of building or
work;
 The plaintiff has substantial interest in the performance of the contract, and the
interest is such that financial compensation for non-performance of the contract
would not be adequate relief; and
 After the contract, the defendant has obtained possession of the whole or any part
of the land in question.
It is important to remember that specific performance is an equitable remedy and is
therefore left to the discretion of the Court, rather than to the right of a person by law.

Case Law

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 In Case of Ram Karan v. Govind Lal , an agreement for sale of agricultural land
was made & buyer had paid full sale consideration to the seller, but the seller
refuses to execute sale deed as per the agreement. The buyer brought an action for
the specific performance of contract and it was held by the court that the
compensation of money would not afford adequate relief and seller was directed
to execute sale deed in favour of buyer.

 Similarly, it was held by the court where the part payment was paid by plaintiff
and defendant admitted that he had handed over all documents of title of property
to the plaintiff. Sale price in an agreement is not low and defendant had failed to
establish that said document was only a loan transaction then the agreement is
valid and defendant is liable to perform his part (M. Ramalingam v. V.
Subramanyam).

Injunction Relief

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Injunctive relief, also known as an injunction, is a remedy which restrains a party from
doing certain acts or requires a party to act in a certain way. It is generally only available
when there is no other remedy at law and irreparable harm will result if the relief is not
granted.
The purpose of this form of relief is to prevent future wrong. Such orders, when issued
before a judgement, are known as preliminary injunctions that can be punished as
contempt if not obeyed.
Injunctive relief is only granted in extreme circumstances. The party seeking a
preliminary injunctive relief must demonstrate:

 Irreparable injury in the absence of such an order;

 That the threatened injury to the moving party outweighs the harm to the opposing
party resulting from the order;
 That the injunction is not adverse to the public interest; and
 That the moving party has a substantial likelihood of success on the merits

Injunctive relief is a court order delivered in a civil trial or suit. This court order stops the
defendant from pursuing a certain activity. This can include constructing a new building,
pursuing a business venture, or making transactions that are harmful to the plaintiff. A
person who fails to comply with an injunction may find themselves in contempt of court,
which can lead to fines or even jail time in the worst case.

How Injunctive Relief Works

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Injunctive relief usually takes one of three forms:

 Temporary Restraining Order (TRO),

 Preliminary Injunction, and
 Permanent Injunction

Each form of injunctive relief has a different level of the time commitment involved.
Preventive injunctions work to address an ongoing legal wrong or prevent injury toward
the plaintiff. Such injunctions can include one against a factory for polluting drinking
water for locals.

A TRO is often the first line of defense used by a party seeking injunctive relief because
it can be granted and implemented quickly. They are used to either preserve a status quo.

The preliminary injunction comes after the dust of the TRO has settled and the parties
have a chance to hash out before the court the circumstances that lead them to this
particular point. A permanent injunction is as it sounds – permanent.

Injunctive Relief Clause

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An injunctive relief clause is a component of a contract that specifically orders one party
or both parties of the contract to refrain from doing an act that would cause harm to the
other party. It is used in cases where there is no remedy for having caused the stated harm
by exchanging money or other property of value, and the only way to prevent damage is
to stop the stated action.

In today’s legal system injunctive relief is a third type of reparation. It does not involve
the exchange of money or other reparations, but just orders that person to stop whatever
they are doing.

If you are involved in a civil lawsuit and either you or the other party is seeking
injunctive relief, you should contact litigation lawyers to assist you with the matter. Keep
in mind that injunctive relief is not always granted by a court. A judge must decide if the
action that is subject to injunction truly warrants an injunction.

Section 36 of Specific Relief Act 1963

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Under Section 36 of Specific Relief Act 1963, an injunction is defined as an order of a
competent court, which: 
i. Forbids the commission of a threatened wrong,
ii. Forbids the continuation of a wrong already begun, or
iii. Commands the restoration of status quo (the former course of things).
Clauses i and ii deal with preventive relief, whereas clause iii deals with an injunction
called mandatory injunction, which aims at rectifying, rather than preventing the
defendant’s misconduct.

Under Sections 36 & 37 of the Specific Relief Act 1963, there are two types of
injunctions – temporary and perpetual, whereas Section 39 governs mandatory
injunctions.
 Temporary or interim injunctions are governed by Order 39 of Civil Procedure
Code 1908 and are those injunctions that remain in force until a specified period
of time, e.g. 15 days, or till the date of the next hearing. Such injunctions can be
granted at any stage of the suit.
 
 Permanent or perpetual injunctions, as under Sections 38 to 42 of the Specific
Relief Act, 1963 are contained in the decree passed by the Court after fully
hearing the merits of the case. Such an injunction permanently prohibits the
defendant from committing an act which would be contrary to the plaintiff’s
rights. 

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Quantum Meruit Relief

Quantum meruit means "earned money". Sometimes when one part of a Contract is
prevented from completing its Contract performance by another, it may require quantum
suitability.
So he should be paid a fair wage for part of the Contract he has made. This could be the
reward for the work he did or the amount of work he did.
Parties to a Contract area are unit duty-bounded to perform their guarantees. However,
things arise wherever one among the parties to a Contract could break the Contract by
refusing to perform his promise. This can be what's referred to as the Breach of Contract.
Once one party commits a Breach of Contract, presently the opposite party is entitled to
the subsequent Remedies.

When one among the party commits a Breach of the Contract, the opposite party becomes
entitled to any of the subsequent reliefs:

a) Rescission of the Contract

When one among the parties commits a Breach of Contract, another party shall
additionally treat the Contract as void or cancel. Once the Contract is cancelled, the
affected party is mechanically discharged from all the commitments beneath the Contract.
Section 64 of the Act provides that the party cancel the Contract if he has received any
profit under it from the opposite party; restore such profit to the person from whom it had
been received. Further, the one that truly cancels the Contract is entitled to compensation
for any loss that he faced from the non-fulfilment of the Contract.

b) Damages for the Loss Suffered 

The term “Damages” means that financial compensation collectable by the defaulting
party to the affected party for the loss suffered by him once the Contract was broken.
Therefore, the aggrieved party could bring associate action for damages against the party
who are guilty of the Breach of Contract. The party is guilty of the Breach and is
vulnerable to pay damages to the aggrieved party.  

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QUANTUM MERUIT AS DISCUSSED BY INDIAN COURTS

The action of Quantum Meruit is allowed in Indian Courts under Section 70 of the Indian
Contract Act 1872, which states:
"Obligation of person enjoying benefit of nongratuitous act—where a person lawfully
does anything for another person, or delivers anything to him, not intending to do so
gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make
compensation to the former in respect of, or to restore, the thing so done or delivered."

 Recently, the Supreme Court of India in the case of Mahanagar Telephone

Nigam Limited v. Tata Communications11differentiated between the claims in
quantum meruit and the damages in breach of contract. The question before the
Hon'ble Court was whether, when parties are governed by contract, a claim in
quantum meruit under Section 70 of the Indian Contract Act, 1872, would be
permissible. While deciding the aforesaid question, the Hon'ble Court referred to a
number of judgments:

First, it referred to the split verdict of two judges in the case of Moselle Solomon v.
Martin & Co.12where Lord William. J held that the remedy provided by Section 70 is not
dependent upon the law relating to the liabilities of principal and agent. It is an
independent remedy, which is based upon a different cause of action, namely, upon
whether a person has lawfully done anything for another or has delivered anything to him
not intending to do so gratuitously, and such other person has enjoyed the benefit thereof.
If so, he must either make compensation in respect of, or restore the thing so done or
delivered.13On the contrary Jack. J held that where there is an express contract, Section
70 has no application, as shown by the heading of Chapter V of the Act, in which the
section finds a place.

 In the case of Alopi Parshad and Sons Ltd. v. Union of India15, Hon'ble
Supreme Court dealt with an arbitration award which awarded certain amount
on the basis of quantum meruit. However, the same was set aside and it was held
that,

"Compensation under quantum meruit is awarded for work done or services rendered,
when the price thereof is not fixed by a contract. For work done or services rendered
pursuant to the terms of a contract, compensation quantum meruit cannot be awarded
where the contract provides for the consideration payable in that behalf. Quantum meruit
is but reasonable compensation awarded on implication of a contract to remunerate, and

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an express stipulation governing the relations between the parties under a contract, cannot
be displaced by assuming that the stipulation is not reasonable."

Curious Case Of Section 74 Of The Indian Contract Act

 10 June 2020 , by Karun Mehta and Shreyas Edupuganti , Khaitan & Co
-
One of the earliest enunciations on Section 74 is found in the decision of the Supreme
Court in Fateh Chand v. Balkishan Dass3 (Fateh Chand). In this case, the plaintiff made
a claim to forfeit a sum of Rs. 25,000 which consisted of Rs. 1,000 paid as earnest money
and an advance amount of Rs. 24,000 which the defendant paid against delivery of
possession of property. The plaintiff's above claim was based solely on his contractual
entitlement. No evidence was led by plaintiff to prove that any actual loss was caused to
him due to the breach committed by defendant.
Speaking for the Constitutional Bench, Justice JC Shah held that, "[Section 74] does not
justify the award of compensation when in consequence of the breach no legal injury at
all has resulted ...
"…Accordingly, the plaintiff's claim for forfeiture of advance amount was rejected due to
lack of proof that plaintiff suffered any loss or legal injury. Further, in the case of Fateh
Chand,  the Supreme Court considered the forfeiture clause to be in the nature of penalty.
In this regard, the Supreme Court clarified that, "In all cases, therefore, where there is a
stipulation in the nature of penalty for forfeiture of an amount deposited ... the court has
jurisdiction to award such sum only as it considers reasonable, but not exceeding the
amount specified in the contract as liable to forfeiture."   
Interestingly, a few years later, the decision in Fateh Chand came up for consideration
before Justice JC Shah himself and two other judges of the Supreme Court in the case
of Maula Bux v. Union of India4 (Maula Bux). In this case, the Supreme Court referred to
its earlier decision in Fateh Chand and held as follows:  
"...the expression "whether or not actual damage or loss is proved to have been caused
thereby" is intended to cover different classes of contracts which come before the
Courts. In case of breach of some contracts it may be impossible for the Court to asses
compensation arising from breach, while in other cases compensation can be calculated
in accordance with established rules. Where the Court is unable to assess the
compensation, the sum named by the parties if it be regarded as a genuine pre-estimate
may be taken into consideration as the measure of reasonable compensation, but not if
the sum named is in the nature of penalty. Where loss in terms of money can be
determined, the party claiming compensation must prove the loss suffered by him."
The above interpretation of Section 74 does not dilute the law in Fateh Chand, but further
clarifies that there may exist different classes of contracts to which the rule in Fateh
Chand may not necessarily apply. Such different classes of contract are the ones where it
may be impossible for the Court to assess compensation arising from breach and in such
situations the sum named by parties if it be regarded as a genuine pre-estimate may be
taken into consideration as the measure of reasonable compensation. However, where a

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party suffering breach was in a position to prove its loss, the situation would be different
and the law laid down in Fateh Chand would apply.

CONCLUSION

To conclude, it is thus evident that there are several remedies available in case of breach
of a contract, none of which are very simple. One would have to overcome an abundance
of challenges and rebuttals to prove a case of breach of contract.

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 REFERENCES

Webliography

1. http://jec.unm.edu/education/online-training/contract-law-tutorial/remedies-for-
breach-of-contract
2. https://www.vedantu.com/commerce/remedies-for-breach-of-contract
3. https://millerlawpc.com/6-remedies-breach-of-contract/
#Types_of_Remedies_for_Breach_of_Contract
4. https://www.jandkicai.org/pdf/16820Remedies.pdf
5. https://blog.ipleaders.in/list-20-notable-cases-contract-law/
6. https://www.mondaq.com/india/contracts-and-commercial-law/950450/curious-
case-of-section-74-of-the-indian-contract-act
7. http://www.uop.edu.pk/ocontents/contract%20act%20BS%204th%20semester.pdf
8. https://www.contractscounsel.com/b/injunctive-relief

Bibliography

 Avtar Singh’s Contract & Specific Relief Act, 10th Edition, Eastern Book
Company Luckhnow

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