Q) remedies available for BOC

When a promise or agreement is broken by any of the parties, we call it a breach of contract. So
when either of the parties does not keep their end of the agreement or does not fulfill their
obligation as per the terms of the contract, it is a breach of contract. A breach of contract can be
Anticipatory or Present. Breach of Contract leads to the infringement of the rights of the non-
breaching party and the breaching party suffers a loss. Hence, his rights need to be restored and he
must be reimbursed. For this various remedies are available to the aggrieved party. Remedies for
breach of contract are based on the Latin maxim ‘Ubi jus, ibi remedium’ denotes ‘where there is a
right, there is a remedy

The party refusing to perform the duty is the defaulting party and the other party is an aggrieved
party

The aggrieved party has more than one remedy against the guilty party
a) suit for rescission

b) suit for damages

c) suit for specific performance

d) suit for injunction

e) suit for quantum merit

Meaning of “Breach of Contract”

Breach of contract is failing to perform any term of a contract, written or oral, without a legal
excuse. According to the Black Law Dictionary: - “Breach of contract means failure to live up to the
terms of a contract.” Therefore, breach of contract is a legal term that denotes a violation of a
contract or agreement in which one party fails to fulfill its promises.

a) suit for rescission:

when one party commits a breach of contract, the aggrieved party can assume the contract to
terminate, rescind the contract and is exempted from further performance

as per section 65 on ICA 1872, the party that has enjoyed the benefits of the contract which is said to
be void is bound to restore the benefits or compensate the person from whom he has received it.
Section 75 of ICA 1872, that the party that rescinds the contract is entitled to receive damages
and/or compensation for non-fulfilment of a contract

s. 73 of ICA, provides compensation for damages caused by breach of contract to the aggrieved party

Basic reasons for rescission:

fraudulent representation

mutual mistake

lack of capacity to contract

undue influence

duress

impossibility to perform a contract not contemplated by the parties

A party can rescind a contract because of a breach by another party, but the breach must be so
substantial that it defeats the purpose of the contract. One can also rescind a contract by
agreement. If all parties to a contract agree to cancel it, they can do so

b) suit for damages:

Damages may be defined as the disadvantage which is suffered by a person as a result of the act for
default of another. “Injuria” is damage that gives rise to a legal right to recompense; if the law gives
no remedy, there is absque injuria, or damage, without the right to recompense. Therefore, the
meaning of “damage” in a statute is a matter of great concern. Remedy by way of damages is the
most common remedy available to the injured party. This entitles the injured party to recover
compensation for the loss suffered by him due to the breach of the contract, from the party who
caused the breach. The magnitude of loss caused by the breach determines the quantum of
damages.

Fixation of damages or assessment of loss

The quantum of damages is fixed by the court on the basis of the proximate loss, not the loss which
is too remote.

In Hadley v Baxendale (q- rule of Hadley v. Baxendale)

In the case of Hadley v. Baxendale, Hadley's mill's crankshaft broke, and he needed a new one
urgently.

He hired a carrier, Baxendale, to transport the broken crankshaft to the manufacturer for reference
in making the replacement. The defendant was not told that the mill was closed for want of a
crankshaft. Owning to the negligence of the defendant’s servant the plaintiff could not get the
crankshaft quickly.

However, the shipment was delayed because it was rerouted through London, causing Hadley's mill
to remain shut, resulting in significant losses. Hadley sued Baxendale for damages, claiming
compensation for his losses and potential damage to his mill's reputation and customers.

The House of Lords held that the plaintiff did not inform the defendant that the mill was closed
because of the crankshaft. If the plaintiff had been informed, he would have made alternate
arrangements for quicker transportation, and the defendant was not held liable for the losses.

The rue of Hadley v. Baxendale was laid down. – the damages which the aggrieved party out to
receive must fairly and reasonably be considered with respect to the BOC

The rule further divided into general damages- according to the usual course of things – damages are
natural and direct

Special damages - those damages which may be recovered as the

probable result of the breach of contract. These are agreed in advance. They can be claimed only if
we have told the other party about the special circumstances.

Kinds of Damages:

1) General damages: ordinary/ substantial damages. Damages are awarded to the plaintiff for
the loss actually sustained as a BOC
 2) Special damages: those damages which may be recovered as the probable result of the
breach of contract. These are agreed in advance. They can be claimed only if we have told
the other party about the special circumstances
3) Nominal damages (q write a short note on Nominal damages): Nominal damages are
awarded where the plaintiff has proved that there has been a breach of contract but he has
not in fact suffered any real damage. It is awarded just to establish the right to decree for
the breach of contract. The amount may be a rupee or even less.

In the following circumstances, nominal damages are awarded to the plaintiff:

 The defendant committed a technical breach and the plaintiff himself did not intend to
execute the contract;
 The complainant fails to prove the loss he may have suffered as a result of the contract
breach;
 He has suffered actual damage, not because of the defendant’s wrongful act, but
because of the complainants’ own conduct or from an outside event;
 When someone wants to prove that their legal rights were violated but can't show the
exact amount of loss, they can seek nominal damages, which means a small amount of
money. Nominal damages are a symbolic sum, not a specific quantity of money.

Where the loss is small and quantifiable, the damages awarded, although small, are not nominal
damages. If the market rate on the date of the breach is not proven, the plaintiff shall be entitled to
nominal damages. However, the fact that the buyer does not sustain any actual loss as a result of the
seller’s failure to deliver the goods is no reason to award the buyer nominal damage.

4) Exemplary damages: Also known as vindictive or punitive or compensatory or retributive

damages. At times breach of contract by one party not only results in monetary loss to the
injured party but also subjects him to disappointment and mental agony. In such cases
monetary compensation alone cannot provide an appropriate remedy to the sufferings of
the injured party. Thus, there is a need for vindictive damages. These may be taken as an
exception to the general principle that damages are awarded only for the financial loss
caused by the breach of contract.
These are not allowed in India except in two cases: (i) Breach of promise to marry. (ii)
Dishonour of a cheque by a bank even after having money in an account.
5) Liquidated damages: amount payable in case of a breach of contract

c) suit for specific performance:

specific performance means actual carrying out of the promise. In cases where damage is not an
adequate remedy, the aggrieved party can claim specific performance of the contract by, filing a suit

In the case of Nutbrown v. Thornton, the claimant had a contract to buy machinery from the
defendant. However, the defendant broke the contract by refusing to deliver the machines, and they
were the only manufacturers of this specific machinery. The claimant sued for specific performance
of the contract, which means they asked the court to force the defendant to fulfill the contract. The
court granted this request because awarding damages wouldn't be enough compensation since the
claimant couldn't purchase the machines elsewhere.

When deciding whether to grant specific performance, the court considers several factors:

1. Timing of the request.

2. Whether the party asking for performance is ready to fulfill their part of the contract.

3. The balance between the benefit to one party and the cost to the other.

4. The potential hardship the party being forced to perform might face.

5. Any impact on third-party rights.

6. Whether the contract has sufficient consideration (specific performance won't be ordered for
contracts with nominal consideration, even if they are under seal).

d) suit for injunction:

An injunction is an order of a court restraining a person from doing a particular act. It is a mode of
securing the specific performance of the negative terms of the contract. To put it differently, where
a party is in breach of negative terms of the contract i.e. where he is doing something which he
promised not to do, the court may, by issuing an injunction, restrain him from doing, what he
promised not to do. Thus, an injunction is a preventive relief

In the case of Lumley v. Wagner, an opera singer named Johanna Wagner had a contract to perform
exclusively in the claimant's theater for three months, meaning she couldn't sing for anyone else
during that time. However, she was offered more money to perform at Covent Garden Theatre by
another manager. The claimant sought an injunction to stop her from singing at Covent Garden
Theatre. The defendant argued that granting the injunction would be like forcing her to perform for
the claimant, which wouldn't usually be allowed. However, the court decided to grant the injunction,
effectively requiring the defendant to sing for the claimant, as it was necessary to enforce the terms
of the contract.

e)suit for quantum merit:

Remedy for a breach of contract available to an injured party against the guilty party is to file a suit
upon quantum meruit. The phrase quantum meruit literally means “as much as is earned” or “in
proportion to the work done.” A right to use upon quantum meruit usually arises where after part
performance of the contract by one party, there is a breach of contract, or the contract is discovered
void or becomes void. This remedy may be availed of either without claiming damages (i. e., claiming
reasonable compensation only for the work done) or in addition to claiming damages for breach (i.e.,
claiming reasonable compensation for part performance and damages for the remaining
unperformed part)

The aggrieved party may file a suit upon quantum meruit and may claim payment in proportion to
work done or goods supplied in the following cases:

a. Where work has been done in pursuance of a contract, which has been discharged
by the default of the defendant.
b. Where work has been done in pursuance of a contract which is discovered void’ or
‘becomes void,’ provided the contract is divisible
c. When something is done without any intention to do so gratuitously although there
exists no express agreement between the parties
d. A party who is guilty of breach of contract may also sue on a quantum meruit
provided both the following conditions are fulfilled: The contract must be divisible,
and the other party must have enjoyed the benefit of the part which has been
performed, although he had an option of declining it
Illustration
 A plowed the field of B with a tractor to the satisfaction of B in B’s presence, it was held that
A was entitled to payment as the work was not intended to be gratuitous and the other
party has enjoyed the benefit of the same.

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Q) Explain general damages and special damages with the help of decided cases./ Explain ordinary
damages and special damages with the help of decided cases.

Damages are compensation given for damage ie loss incurred . the aggrieved party can claim
damages for the loss incurred in his side during a breach of contract. There are different kinds of
damages awarded to the injured party and they are

i) General damages
ii) Special damages
iii) Nominal damages
iv) Exemplary damages and
v) Liquidated damages

General damages: also known as ordinary damages or substantial damages. Damages are awarded
to the plaintiff for loss actually sustained as a breach of contract

General damages depend on which party are presumed to posses. 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 cause to him thereby, which naturally arose in
the usual course of things from such breach, or which the parties know, when they made the
contract, to be likely to result from the breach of it. Such compensation is not to be given for any
remote and indirect loss or damage sustained by reasons of the breach.

Hadley v. Baxendale

In this case, the Claimant hired the Defendant to transport a broken crankshaft for repair and return
it. The Defendant was negligent and returned it seven days late, causing the Claimant to lose profit
because their mill couldn't operate during the delay. The Defendant argued they didn't know about
the profit loss. The court ruled that the Claimant was only entitled to regular damages because they
didn't inform the Defendant about the potential profit loss due to the delay, so it was considered too
remote to be the Defendant's responsibility.

(Give illustration to fill pages)

Special Damages:

Special damages are awarded to the plaintiff in special circumstances for sustained loss as a breach
of the contract

Special damages would be the compensation for the special losses caused to the aggrieved party by
the special circumstances attached to the contract. At the time of making the contract, a part may
place before the other party some information about the special circumstances affecting him and tell
him that if the contract is not performed properly, he would suffer some particular types of losses
because of those special circumstances. If the other party still proceeds to make the contract, it
would imply that he has agreed to be responsible for the special losses that may be caused by an
improper performance of his obligation. Compensation for such special losses is called special
damages.

In Govind Rao v. Madras Railway Company, Govind Rao was a tailor and consigned through rail some
sewing machines to a place in Tamil Nadu. He planned to take part in a village fair, where he hoped
to stitch garments and make profits. However, the train reached the town, after the fair concluded.
Hence, Govind Rao could not participate in the fair. He sued the railway company for the loss of
profits. It was held that he could not recover, as the special circumstances were not brought to the
notice of the Railway company in the beginning itself

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Q) write a short note on liquidated damages and penalty

Liquidated damages are a kind of actual damages. It is found in contract. In commercial agreements,
liquidated damages are a useful contracting tool. It is an actual “pre-estimate of damages” likely to
flow from the breach. "Liquidated damages" refers to a specific amount of money that the parties
agree upon in a contract to be paid in case of a breach, regardless of the actual damage incurred.
Essentially, it's a pre-determined sum that one party agrees to pay the other if they break the
contract, and it's agreed upon when the contract is formed. This helps provide clarity and
predictability in case of a breach. If the compensation to be paid for the breach of contract is the
genuine pre-estimate of the prospective damages, it is known as liquidated damages. Liquidated
damages should be a reasonable estimate of actual damages that might result from a breach.

In Common Law, a liquidated damages clause will not be enforced if its purpose is to punish the
wrong-doer or the party in the breach rather than to compensate the injured party.

In commercial agreements, liquidated damages are a useful contracting tool, but there is a problem,
if they are not considered properly or drafted correctly, they may be construed as a “penalty clause”
and therefore become unenforceable.

A penalty is said to be a sum so stipulated in fear (with the object of threatening the party to
perform the contract), and thus an amount can be said to be a penalty if the sum named is excessive
and unconscionable

Indian Law: The Indian law makes no distinction between liquidated damages and penalties. The
compensation awarded cannot exceed the amount mentioned in the contract. According to Section
74 of the Indian Contract Act, 1872, if the parties fix the damages, the Court will not allow more.
However, it may award a lesser amount, depending on the case. Hence, the suffering party gets
reasonable compensation but no penalty.

Difference between liquidated damages and penalty:

When the amount of damages is fixed by the parties on the basis of a reasonable estimate of the
probable actual loss which a party will suffer in case of breach is called liquidated damages. On the
other hand, if the amount of damages is not based upon a reasonable calculation of actual loss but is
fixed by way of punishment and as threat is called penalty.

liquidated damages the court allows only the amount stipulated, never more or less even though the
actual loss is different from the amount mentioned. In case of penalty the court allows only
reasonable compensation by way of damages but not exceeding the amount mentioned.
In case of penalty, the court has a discretionary power to grant or not to grant the amount
mentioned in the contract. But in case of liquidated damage the court has no such option and the
court is bound to grant the entire amount to the plaintiff.

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Q) quasi-contract- types and quasi contractual liabilities

The Indian Contract Act, 1872 does not define a quasi-contract, it calls them relation resembling
those of contracts. However, a quasi-contract may be defined as, “a transaction in which there is no
contract between the parties; the law creates certain rights and obligation between them which are
similar to those created by a contract.

The term quasi is a Latin word which means similarly. The term quasi contract is derived from Roman
Law. Quasi contract is not a real contract entered into by parties intentionally. In layman’s language,
this type of contract aims to prevent one party from benefiting financially in a situation while
financially draining the other party. Such agreements may be enforced by the approval of the party
which is responsible for providing the goods or services but it is not necessary to keep this factor in
mind before enforcing a quasi-contract.

In layman’s language, this type of contract aims to prevent one party from benefiting financially in a
situation while financially draining the other party. Such agreements may be enforced by the
approval of the party which is responsible for providing the goods or services but it is not necessary
to keep this factor in mind before enforcing a quasi-contract.

Illn:

A leaves his bag at B house mistakenly after a party. B has quasi contractual obligation to return it to
A.

In this illn, an obligation is not created in a quasi contract by entering into an agreement. The law
creates such obligation on the grounds of natural justice. obligations are created on the parties
without any agreement.

ESSENTIALS:

The defendant has gained the benefit

Benefit has come at the expense of plaintiff

Considered unfair or unjust for the defendant to keep his benefit

Types of quasi contract :

Section 68 to 72 of ICA 1872, deals with 5 types of quasi contract. And they are

a)Supply of necessities to a person not competent to contract

b)Payment by an interested person

c)Non gratuitous act

d)Responsibility of finder of lost goods

e)Payment by mistake or coercion

a)Supply of necessities to a person not competent to contract: section 68 of ICA

If someone provides necessary goods to a person incapable of entering into a contract or to

someone, they are legally obligated to support, the person who supplied the goods can seek
reimbursement from the property of the incapable person.

For example, if A provides necessary items to B, who is a lunatic, A can get reimbursed from B's
property.

However, it's important to note that contracts with minors or legally incompetent individuals are
void from the beginning, so no legal action can be taken against the incompetent person. Instead,
reimbursement can only be sought from their property.

Minor’s obligation to pay for necessities is a quasi-contractual obligation

In the case of Kedharnath v. Ajundhia , in this case money given for marriage expense of a minor is
recoverable

b) Reimbursement of person paying money due by another, in payment of which he is interested

(Section 69):

section 69 deals with the reimbursement of the person paying money due by another, in payment in
which he is interested.

Illn

Illustration B holds land in Bengal, on a lease granted by A, the zamindar. The revenue is payable by
A to the Government being in arrear, his land is advertised for sale by the Government. Under the
revenue law, the consequence of such a sale will be the annulment of B’s lease. B, to prevent the
sale and the consequent annulment of his own lease, pays to the Government the sum due from A.
A is bound to make good to B.

The essential requirements of section 69 are as follows:

1. The payment made should be bonafide for the protection of one’s interest.

2. The payment should be a voluntary one

3. The payment must be such as the other party was bound by law to pay.

c) obligation of person enjoying benefit of non-gratuitous act (section 70):

If someone does something for another person or gives them something without it being a free gift,
the person who receives the benefit is obligated to compensate the giver or return what was given.
However, this action must be done legally, and the person receiving the benefit should actually
benefit from it.

For example, if A mistakenly leaves goods at B's house, and B keeps and uses them, B is obligated to
pay A for those goods.

The following conditions must be satisfied for the recovery of the compensation for non-gratuitous
acts:

1. The person must lawfully do something for another person or deliver something to him.

2. The person doing some act or delivering something must not intend to act gratuitously.
3. The other person must voluntarily accept the acts or goods and he must have enjoyed the
benefits.

d)Responsibility of finder of lost goods (section 71):

As per Section 71 of the Indian Contract Act, 1872, if a person finds an item that belongs to someone
else and decides to take it into their custody, the former person has to adhere to the responsibilities
that include taking good care of the goods, not appropriating the goods and returning it back to the
owner in the same condition they found it in.

A person who finds the goods belonging to another, and takes them into his custody, is subject to
the same responsibility as a bailee. The duties of the bailee as provided

a)Duty to take reasonable care of goods - According to Section 151, when someone finds goods, they
must take care of them as responsibly as an ordinary person would with their own belongings. If
they fail to do so and claim they treated the goods similarly to their own, it won't excuse them if
both their own goods and the found goods were lost or damaged. In essence, the primary duty of a
bailee is to treat the goods they've found or been entrusted with as carefully as they would their
own possessions.

b)Duty to return goods - According to Section 160, the person who finds goods must return them to
the true owner as per the owner's instructions before the specified time period expires.

Section 161 states that if the finder of goods doesn't return or deliver the goods as required, they
become responsible for any loss or damage to the goods from that point forward due to their
default.

c)To make proper use of the goods bailed - If someone finds goods and uses them in a way that goes
against the conditions set by the owner of the goods, they are responsible for compensating the
owner for any damage that occurs to the goods as a result of that unauthorized use. This rule
defines the liability of a bailee who doesn't follow the agreed-upon terms when using someone
else's goods.

d)Duty not to mix his own goods with the goods of the bailor - According to Section 155, if the finder
of goods mixes them with the owner's consent, both the owner and the finder have a share in the
mixture, proportionate to their contributions.

Section 156 states that when mixed goods can be separated, both the finder and owner retain their
shares, but the finder must cover the cost of separation and any resulting damage.

Section 157 explains that if the goods can't be separated, it's considered a loss, and the owner can't
claim compensation from the finder. Importantly, a bailee should avoid mixing the owner's goods
with their own.

e)Duty not to question the title of the bailor- It is the duty of the bailee that he should not set up an
adverse title to the goods when demanded by the bailor. Finder of goods is not responsible on re-
delivery to owner without title.

f)Duty of bailee to pay increase or profit from goods bailed - Section 163 of the Act states that unless
there's a different agreement in place, a bailee must give any increase or profit that comes from the
goods they were entrusted with back to the bailor. In other words, any additions or gains related to
the bailed goods belong to the bailor and must be returned when the goods are given back. For
example, if A leaves a cow with B, and the cow has a calf while in B's care, B must return both the
cow and the calf to A.

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