Breach of Contract

A Contract may be terminated or broken when one of the parties fails or refuses to fulfil his or her
obligations, or his or her promise under the Contract. Therefore, it can be said that when a binding
Agreement is not honoured by one or more parties for not fulfilling his promise, the Agreement may be
terminated.
Introduction
The parties to the Contract are Legally required to perform their duties respectively, so naturally, the law
does not deal with violations of any party.
Remedies for Breach of Contract/ Contract Violations
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.
1. Contract Reduction: If one of the parties in Contract does not fulfil his or her obligations, then the
other party may withdraw the Contract and deny the performance of his or her obligations. In terms of
section 65 of the Indian Contract Act, a company that rescinds a Contract must repay any benefits
received under the specified Agreement. And section 75 states that the entity withdrawing a Contract is
entitled to claim damages and/or compensation for such Recession.
2. Sue for Damages: 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,
(i)Discontinued Damage: Sometimes Contract parties will agree to the amount payable in the event of a
Breach. These are known as liquidated damages.
(ii)Unintended Injury: Here the amount payable for Breach of Contract is assessed by the courts and any
other relevant authorities.
3. Sue for Specific Performance: This means that the offending party will have to do its job
contractually. In some cases, the courts may insist that the party enter into an Agreement
4. Injunction: An order is basically the same as the law of a particular operation but of the opposite
Contract. An order is a court order that prohibits a person from committing an act. So the court may issue
an injunction suspending the Contractor from doing something he has promised not to do. In a restraining
order, the court suspends the action and by order, will suspend the continuation of the illegal act.
5. Quantum Meruit: 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.
Contingent Contracts
Contracts are of different types. Since people can get into various kinds of agreement for performance or
non-performance of certain acts. One way of understanding contracts is by dividing them into two types:
Absolute and Contingent. Let us take a detailed look at contingent contracts.
Contingent Contracts
An absolute contract is one where the promisor performs the contract without any condition. Contingent
contracts, on the other hand, are the ones where the promisor performs his obligation only when certain
conditions are met.
If you look at the contracts of insurance, indemnity or guarantee, they have one thing in common – they
create an obligation on the promisor if an event which is collateral to the contract does or does not
happen.
For example, in a life insurance contract, the insurer pays a certain amount if the insured dies under
certain conditions. The insurer is not called into action until the event of the death of the insured happens.
This is a contingent contract.
Under Section 31 of the Indian Contract Act, 1872, contingent contracts are defined as follows: “If two or
more parties enter into a contract to do or not do something, if an event which is collateral to the contract
does or does not happen, then it is a contingent contract.”
Example: Peter is a private insurer and enters into a contract with John for fire insurance of John’s house.
According to the terms, Peter agrees to pay John an amount of Rs 5 lakh if his house is burnt against an
annual premium of Rs 5,000. This is a contingent contract.
Here, the burning of the house is neither a performance promised as a part of the contract nor a
consideration. Peter’s liability arises only when the collateral event occurs.

Essentials of Contingent Contracts

1] Depends on happening or non-happening of a certain event
The contract is contingent on the happening or the non-happening of a certain event. These said events
can be precedent or subsequent, this will not matter. Say for example Peter promises to pay John Rs.
5,000 if the Rajdhani Express reaches Delhi on time. This is a contingent event.
2] The event is collateral to the contract
It is important that the event is not a part of the contract. It cannot be the performance promised or
a consideration for a promise.
Peter enters into a contract with John and promises to deliver 5 television sets to him. John promises to
pay him Rs 75,000 upon delivery. This is NOT a contingent contract since John’s obligation depends on
the event which is a part of the contract (delivery of TV sets) and not a collateral event.
Peter enters into a contract with John and promises to deliver 5 television sets to him if Brazil wins the
FIFA World Cup provided John pays him Rs 25,000 before the World Cup kicks-off. This is a contingent
contract since Peter’s obligation arises only when Brazil wins the Cup which is a collateral event.
3] The event should not be a mere will of the promisor
The event cannot be a wish of the promisor. Say for example Peter promises to pay John Rs 5,000 if
Argentina wins the FIFA World Cup provided he wants to. This is NOT a contingent contract. Actually,
this is not a contract at all.
Peter promises to pay John Rs 50,000 if he leaves Mumbai for Dubai on August 30, 2018. This is a
contingent contract. Going to Dubai can be within John’s will but is not merely his will.
4] The event should be uncertain
If the event is sure to happen, then the contract is due to be performed. This is not a contingent contract.
The event should be uncertain.
Peter promises to pay John Rs 500 if it rains in Mumbai in the month of July 2018. This is not a
contingent contract because in July rains are almost a certainty in Mumbai.

QUASI CONTRACT
Can there be a contract without offer, acceptance, consideration, etc? Well, yes there can be such a
contract based on social responsibility. We call such contracts quasi contract.
Quasi Contract
The word ‘Quasi’ means pseudo. Hence, a Quasi contract is a pseudo-contract. When we talk about a
valid contact we expect it to have certain elements like offer and acceptance, consideration, the capacity
to contract, and free will. But there are other types of contracts as well.
There are cases where the law implies a promise and imposes obligations on one party while conferring
rights to the other even when the basic elements of a contract are not present. These promises are not
legal contracts, but the Court recognizes them as relations resembling a contract and enforces them like a
contract.
These promises/ relations are Quasi contracts. These obligations can also arise due to different social
relationships which we will look at in this article.
The core principles behind a Quasi Contract are justice, equity and good conscience. It is based on the
maxim: “No man must grow rich out of another persons’ loss.”
Let’s look at an example of a Quasi contract: Peter and Oliver enter a contract under which Peter agrees
to deliver a basket of fruits at Oliver’s residence and Oliver promises to pay Rs 1,500 after consuming all
the fruits. However, Peter erroneously delivers a basket of fruits at John’s residence instead of Oliver’s.
When John gets home he assumes that the fruit basket is a birthday gift and consumes them.
Although there is no contract between Peter and John, the Court treats this as a Quasi-contract and orders
John to either return the basket of fruits or pay Peter.
Features of a Quasi Contract
1. It is usually a right to money and is generally (not always) to a liquated sum of money
2. The right is not an outcome of an agreement but is imposed by law.
 3. The right is not available against everyone in the world but only against a specific person(s).
Hence it resembles a contractual right.
According to the Indian Contract Act, 1872 there are five circumstances under which a Quasi contract
comes to exist. Remember, there is no real contract between the parties and the law imposes the
contractual liability due to the peculiar circumstances.
1. Section 68 – Necessaries Supplied to Persons Incapable of Contracting
Imagine a person incapable of entering into a contract like a lunatic or a minor. If a person supplies
necessaries suited to the condition in life of such a person, then he can get reimbursement from the
property of the incapable person.
John is a lunatic. Peter supplies John with certain necessaries suited to his condition in life. However,
John does not have the money or sanity and fails to pay Peter. This is termed as a Quasi contract and
Peter is entitled to reimbursement from John’s property.
However, to establish his claim, Peter needs to prove two things:
John is a lunatic
The goods supplied were necessary for John at the time they were sold/ delivered.
2. Section 69 – Payment by an Interested Person
If a person pays the money on someone else’s behalf which the other person is bound by law to pay, then
he is entitled to reimbursement by the other person.
Peter is a zamindar. He has leased his land to John, a farmer. However, Peter fails to pay the revenue due
to the government. After sending notices and not receiving the payment, the government releases an
advertisement for sale of the land (which is leased to John). According to the Revenue law, once the land
is sold, John’s lease agreement is annulled.
John does not want to let go of the land since he has worked hard on the land and it has started yielding
good produce. In order to prevent the sale, John pays the government the amount due from Peter. In this
scenario, Peter is obligated to repay the said amount to John.
3. Section 70 – Obligation of Person enjoying the benefits of a Non-Gratuitous Act
Imagine a person lawfully doing something or delivering something to someone without the intention of
doing so gratuitously and the other person enjoying the benefits of the act done or goods delivered. In
such a case, the other person is liable to pay compensation to the former for the act, or goods received.
This compensation can be in money or the other person can, if possible, restore the thing done or
delivered.
However, the plaintiff must prove that:
The act that is done or thing delivered was lawful
He did not do so gratuitously
The other person enjoyed the benefits
4. Section 71 – Responsibility of Finder of Goods
If a person finds goods that belong to someone else and takes them into his custody, then he has to adhere
to the following responsibilities:
Take care of the goods as a person of regular prudence
No right to appropriate the goods
Restore the goods to the owner (if found)
Peter owns a flower shop. Olivia visits him to buy a bouquet but forgets her purse in the shop.
Unfortunately, there are no documents in the purse to help ascertain her identity. Peter leaves the purse on
the checkout counter assuming that she would return to take it.
John, an assistant at Peter’s shop finds the purse lying on the counter and puts it in a drawer without
informing Peter. He finished his shift and goes home. When Olivia returns looking for her purse, Peter
can’t find it. He is liable for compensation since he did not take care of the purse which any prudent man
would have done.
5. Section 72 – Money paid by Mistake or Under Coercion
If a person receives money or goods by mistake or under coercion, then he is liable to repay or return it.
Let us see an example. Peter misunderstands the terms of the lease and pays municipal tax erroneously.
After he realizes his mistake, he approached the municipal authorities for reimbursement. He is entitled to
be reimbursed since he had paid the money by mistake.
Similarly, money paid by coercion which includes oppression, extortion or any such means, is
recoverable.