17

BREACH OF CONTRACT (Ss. 73-75)

CONSE QUENC ES OF BREAC H OF ~ONTR A~T.- The law

. t a contract to perform their respective obligation
expects parties o . T
upon a breach by either party. herefore as s,
and naturaIIy f ro Wns ' 800
as either party commits a breach of the co~tract, the law gives to then
other, three remedies. He may see~ _to obtain (1) damages for _t~e loss
sustained, or (2) a decree for specific performcance, or (3) an m1uction.
The law as to damages is regulated by_t~e ~ntr~ct Act, whereas the
law as to specific performance and _m1unct1on 1s regula~~d by the
Specific Relief Act, and is, therefore, discuss ed below only in brief.

What is breach of Specific performance can be granted only when ~he damages are
contract? (2 marks) an inadequate remedy, or when the Court can supervi se the execution
M.U. May 2017 of the contract, or when the contrac t is certain, fair and just. Specific
performance cannot be enforced of contrac ts of personal service.
Injunction is used as a means of enforcin g a contract or a
promise to forbear, or it may be the only means of enforcing the
What is specific per·
specific performance of a contrac t where damage s are an inadequate
formance of contract?
M.U. Apr. 2016 remedy. Thus, A agrees to buy and B agrees to sell a picture by a
May 2017 dead painter and two rare China vases; A may compel B specifically
to perform the contract - for there is no standard for ascertaining
the actual damage which would be caused by its non-performance.
So also, A, a singer, contracts with B the manager of a theatre, to
sing at his theatre for one year, and to abstain from singing at other
theatres during the period. She absents herself. B cannot compel A to
sing at his theatre (as it is a personal contract), but he may sue her for
an injunction restraining her from singing at other theatres . Thus,
personal contracts, (that is, contracts which have to be performed by
the person himself or herself and by no one else), cannot be specifically
enforced. However, an injunction can be issued in such a case.
Injuncti ons are of two types : temporary and permanent. A
What is Tempora ry per_ manent injunction (which is governed by the Specific Relief Act) can
injunction? (2 marks) be_ issued when the
final order or decree is passed, i.e. at the end of the
M.U. Apr. 2016
suit. On the other hand, a tempora ry injunction (which is governe~ by
the Code of Civil Procedure) can be issued at any stage of the suit.
(For the law relating to specific perform ance and permanent
injuncti on, kindly refer to the Specific Relief Act.]
188
 --
BREACH OF CONTRA
CT
189
AND EXE MPLARY DAM
., ,AtN.A L AGES.- Where no loss arises
,,0 breach at contract, the party claiming co
11\8 rnina I A . m pensation is
l damages on y. special loss wh ich do
'~1ed ioa;: obviously flow es not
fro_m the breach cann
f 1u13\\Y ss ot be recovered
r, expre ly stipulated for m the contract. It mus
~01ess at damages are gi.ve b f t be borne in
n y way o compensation,
~,od \h nis hrn ent. So,
th and not by
I pu e party wronged can
,at ~ pecuniary loss sus ta,.ne d b h' reco ver only the
,1u a xernplary damages Y .,m (com pens ato ry damages),
001 . Formerly, exemplary
i0d -~ cases of brea da mages were
ch of promise of m
arriage where the
1

~anied f the person injure

iee\\ogs0 d were taken into cons
ide;ation
\aw relating to damag •
Theed under the followi
es for breach of contr
ng four heads : ac t can be
~cuss
Rules gove rn ing the m
~- easure of damages (S
. 73)
compensation tor breach
of contract where pena
&.
101 (Differen ce between penalty
lty is stipulated
and liquidated damages
C. Rights ot party rightfu
) (S. 74)
lly rescinding a contrac
t (S . 75)
o. Quantum Meruit.

t RULES GOVERNING TH
E MEASURE OF DAM
AGES (S. 73)
s. 73 lays down four importa
nt rules governing the
oamages. It contains eighte measure of What is breach of
en illustrations, which wi
appropriate and necessary ll be discussed with contract? What are
comm ents, along with the de the principles on
cided cases.
first rule tS. 73(1 )l which damages are
assessed for breach
The first rule governing of contract?
the measure of damag
S. 73, thu s : es is laid down in B.U . Apr. 2011
Apr. 2013
When a contract has May 2017
been broken , the party
such breach is entitled who suffers by
to receive, from the pa
broken the contract , co rty who has When can special
mpensation tor any los
caused to him thereby,- s or damage da mages be granted?
(i) which naturally aros (2 marks) ·
e in the usual course f th . t B.U. Nov. 20 15
such breach, or o mgs rom
(ii) which the parties
knew, when they made
to be \ikely to result the contract,
from the breach of the
liusrrations contract.
(a) .A contracts to se
ll
a\ a certain price to be paidandondeliver 50 maunds of_saltpe~re to ~·
delivery. A breaks
his prom1s~. B is
en1i11ec1 to receive from
A by way of compens
~ 'flhich the contract pri~e falls ation, the ~um i it ~nh,t
short of the price tor wh
ich B m,g
 BREACH O
F CONTRA
NAL A CT
NOMI breachN D E X E M P L A R Y DAMAG 189
trorn the no
of c o n tr a c t, ES
minal d a m a g th e P a rt c ·- :- ~ h
eollt. 1ed toand o . e s o n ly A
J P \~immg
e re n o lo s s
arises
bviously . co
naturallYxpress f\ow fr o m th
\y s ti p u la te e bre ec,a/ lo s s mpensation is
5 0
~n1es t dam d fo r in the w h1c ' h d
oes n
ages a re g iv c o :c h c a n n
"'.'"d tna u n is e n b y way o t b e recov o t
hme S ofn ract. \t m ered
'llaY ~1:ecunia nt. o, th e p a rt y w c o mpens f
ust b e b o rn
e in ·
ry ro
actua ot exe m p la lo s s s u s ta in e d b y h ir :: g a ion, an d
n o t by
and nd in c a s e ry d a m a g e s . Former/Y, td can recover only th e
s o f b re a c h compensato
gra~tegs of the o f prom;~ e ry damages
1eehn p e rs o n in iu xe mp lary ),
re d w e re ta _d amages w e
ke e .o f m a rn re
The \aw re la a g e, where
discussed und ti n g to d ~ m a g e s fo n into consideration th e
er th e fo \l o r breach of
w m g fo u r h ·
A Rules
eads :
governing th contract can
I'•
e m e a s u re be
co m of damag""
8 pe nsation fo r b (S
-.s . 7 3 )
. tor (Differen re a c h o f co
ce b e tw e e n n tr a c tw
p e n a lt y and here
c. Rights of p a rt . \iquidat pdenda . .
lty is
y ri g h tf u ll y
rescinding a e amagesstipulated
o. Quantum M e ru contract (S . ) (S. 7 4 )
it . 75)
A. RULES GOV
ERNING TH
E MEAS U R E O F DA
S. 73 lays d MAGES (S.
o w n fo u r im 73)
1arnages. It c o n p o rt a n t rule
s governing
ta in s e ig h te the measure
3Ppropriate an e n illustratio
d n e c e s s a ry ns, which wi\\ of
c o m m e n ts , b e discussed W h a t is b
along with th with c o n tr a c t?
re a c h o f
:1rst rule (S. e d e cide d W h a t a re
7 3 (1 )l cases. th e p ri n c
ip le s o n
The first ru le w h ic h d a m
ag
g o v e rn in g th a s s e s s e d fo e s a re
>. 73 , thus : e measure r
o f c o n tr a c t? b re a c h
of damages
is \aid down
When a c o n in B .U . A p r. 2
011
tr a c t h a s b
such b re a c e e n broken, A p r. 2 0 1 3
h is e n ti tl e the party wh
broken th e d to receive o suffers by May 2017
c o n tr a c t, c , from the p
o m p e n s a ti o arty who has
caused to h n for any lo When can
im th e re b y ss or damag s p e c ia l
(i) w h ic h n a ,- e damages b
e g ra n te d ?
tu ra ll y a ro s (2 marks)
e in th e usu t .
s u c h b re a c al course of
h, or things rom B .U . N o v . 2
(.,.,) w . 015
hich th e p a • k w wh
to b e li k e ly rt ie s ne • en they ma d the contract
to re s u lt fr o th e
ustrations m e breac h of the contract. '
, la).A c o n tr a c ts
.~ certain p ri c to s e ll a n d de . O maunds o
e to hver 5 f saltpetre to
~\\ b e p a id o n
d e li v e ry. A b k s h is promise. B~·
, 'fle~ to re
c e iv e fr o m reat_ the s ,s
A , by w O c f m p e n sa n, um , if any,
hich th e c o n tr ~ f the p ri c,o
a c t p ri c e fall a y e for 8
which m,g . ht
s s h o rt

•
l
 THE LAW OF CONTRAC TS
190
have obtained 50 maunds of saltpetre of . like quality at the l'
when the saltpetre ought to have been delivered. irne
Illus. (a) establishes the principle that under a contract fa
the sale of goods, tho measure of .damages upon a breach is th~
difference between the contract price and the mar~et price at the
date of the breach. It is, however, not neces~ary in such a case
that the buyer should have actually b?ught 1.1ke goods frorn the
market. This is made clear in the above 1llustrat1on by the use of th
8
words, "might have bought".
(b) A hires B's ship to go to .somb?Y, and th_ere take on board, on
the first of January, a cargo .which A 1s to pro~1de, ~nd to bring it tc
Calcutta, the freight to be paid when earned. 8 s ship does not go t
Bombay, but A has opportunities of procuring suitable conveyance fa~
the cargo upon terms as advantageous as those on which he had
chartered the ship. A avails himself of those opportunities, but is put
to trouble and expenses in doing so. A is entitled to receive
compensation from 8 in respect of such trouble and expense.
Featherson v. Wilkinson, (1873) L.R. Ex. 122.- A contracts with 8
to provide a ship on a certain day to receive a cargo of coal to be
carried to Havra. A fails to provide the ship in time, and B has to
charter vessels at an advanced freight and also buy coal at a higher
price. What is B's remedy?- 8 can recover from A the increase of
price as well as the increase of freight, unless A can show that, by
reason of a corresponding increase in the market price at the port of
delivery or otherwise, the loss is compensated, wholly or in part.
(c) A contracts to buy of 8, at a stated price, 50 maunds of
rice, no time being fixed for delivery. A afterwards informs B that he
will not accept the rice if tendered to him, 8 is entitled to receive
from A, by way of compensation, the amount, if any, by which the
contract price exceeds that which 8 can obtain for the rice at the
time when A informs 8 that he will not accept it.
[Note : This is an example of an anticipato ry breach of contract,
discussed earlier.]
(d) A contracts to buy B's ship for 60,000 rupees, but breaks
his promise. A must pay to 8, by way of compensation, the excess,
if any, of the contract price over the prico which 8 can obtain for
the ship at the time of the breach of promise.
(e) A, the owner of a boat, contracts with 8 to take a cargo 01·
jute to Mirzap~r, for sale at that place, starting on a specified dt:
The boat, owmg to some avoidable cause, does not start at ·s
time appointed, whe_reby the arrival of the ca_rgo ~t Mirzap~~~d
delayed beyond the time when it would have arrived If the boa
190

d
 BREACH OF CONTRACT 191

ordlng to the c ontract. f Afte r that date a n d b e fore the

ace th j ,
0 e pr Ice o ute falls. The mea sure of the
inllD I of th o carg o,
betw een the rice
srr1vllensa tion paya ble to B by A Is the diffe renc e
apur at the ~lme
cotfl~ B could have obta.i ned !or the carg o at Mlrz
'/Ihle would have arriv ed 1f forw arde d in due cour se, and Its
en 11 h .
'IIh t price at the t Ime w en 1t actu ally arriv
ed
rnsrke ·
mea sure of
[Note - Illus. (e) Is an Illus tratio n of a case of
.,es in ca se of dela y.]
darTI8::,
in man ner and
(f) A contract~ to repa ir B's hous e in a certa
ceives payment in adva nce. A repa irs the hous e, but not acco rding
B . .I d ing
re
to the contract. 1~ ent1t e to reco ver from A, the cost of mak
thBrepairs conf ormi ng to the cont ract.
tho first January,
(g) A contracts to let his ship to 8 for a year, from
January, the hire
lor a certain price . Freig hts rise, and on the first
price. A breaks his
obtainable for the ship is high er than the contract
a sum equa l to
promise. He mus t pay to B, by the way of compensation,
fvr which 8
the difference betw een the cont ract price and the price
of January.
could hire a simi lar ship for a year on and from the first
of iron at a fixed
(h) A contracts to supp ly 8 with a certain quantity
could procure and
price, being a high er price than that for which A
8 must pay to
deliver the iron. 8 wron gfull y refus es to receive the iron.
contract price of
A, by way of com pens ation th'3 difference ·between the
and deliverod it.
!he iron and the sum for whic h A coul d have obtained
be conveyed,
(I) A delivers to B, a com mon carrier, a machine, to
is stopped for ~ant
without delay, to A's mill, infor ming B that his mill
of th e machine,
of the machine B unre ason ably dela ys the delivery
and A in cons e~ue nce lose s a profi table contract with
Ais entitled to rece iv~ from B, by way of compensa th
tion, t~~ av:;~~=
the Government.

e b:~~~~~he loss
a~ount of profi t whic h wou ld have be~n made by
delay ed,
rn,u during the time that the deliv ery of it was
act.
sustained throu gh the loss of the Gove rnme nt contr
54) 9 Ex 354 .- The
1 in i11us. (i) to S.
RULE IN HAD LEY v. BAX END ~L~, ( B hose
~acts ot Had ley v. Baxe ndal e we~e s1m 1la~ : :n
that famous En_glish
machinery
3, except that the defe ndan ts did not kn f . ( ant of the
tor loss of
case) that the plain tiffs' mill was stop ped h o:dwnot liable
Which they were to supp ly. They were e r ble
had they known
Profit. But they wou ld have been held so ,a
about the stop page of the mill. Baxendale and the
Hadl ey v.
is ~ase d on
O b S. 73, in fact,
servations mad e there in .
1 92 T HE LAW Of CO NTRACTS

The v.e1.-....no1. n r>J e ... · -us :..ase ~as s..· a•ec e:, ·-e ':,:,.~•· -3 • ~
• wh , ,~c r,a•·
, ,ere .. .., -PS .. a .,_... .._.,.
'--- ., , - . ,, i\ c - or. 4 - 1 ~
...... a ..- v-r••a ll
l: .. T,\a n,
bro k en tr e da.,,a;=?s Ar::"' , ~e ...,•- ar oa.r,y c~ J--· ~~ '~:s:vlP ;'l _ . " 11
such breacn c( co ... Ha::· s,..o... c oe e :..,,::11 s-cin as ..... a, ~a ft-~ a- :;
be c ors c ered as a' s rg na~ ... "a, e a~coro n ~ ·o •1--c -sua .... On.au,..,
·1::~c.~ ..t

things f rof"' s u;::h orea::., :J 1 co ,..•,a=· :se · Df suu-- :is -- ....~ , •F,;.2"": - ....___ ... ---:1; :-
,...a.:,.
s uppose d :o r, a .. e bee., r .~e co.-·e,....,,c a · ::>,,,..., ol oo· -. pa•~ ~5 a· ... .,. .' ~
they rrade 1r,e cori1rac1 as •ne orobao e ·esuli o f tr-e o,eac 1-- 0 • • - ~
Now. f t~e spec a crc.1..,,.s •arces ..,."'tde· • "' C "' ',e ::or••a 1
actually made v-ere comrp.. r ca·ec o, trc o a n:_ ··s •c ·~ ~•:a~"''Zll
and thus know n to bo:r part es me da"'age::> res~-,...-J ...,__ .... •• 'i1e
~
breach of such a cor,1rac· ~ r ch ~ , .-.ould ·cas...1"aof , co-•~ ~
c; • • .•-,...,.,,,a1a
w ould b e ttie amo_..,, o n1ur ; ,•. r r w ou.d o•c "'a· t-.• ''): "'"
1 ~.&., •• o;:-; - a
breach of cont rt31,I urdc• the .. c ..o~ l.Jj C rc..,.ms' a.,_~~s SC " " C-. ~ a--o
co m mun ca 1 ed Bui 0'1 ·he ot"'•"'H .., a1 ~ ' • ..,_ ~~ spec 3 c rcu--~•a~
we re wr o'I/ unkr-o .•.. r •o l hc pa,:; 0 t ca ~ ng ' f'C co.,•rac1 ,-~ 21 ·:ie
most. could be st.ppc::1-:-d ·o h-a . c .. -20 "' ;,, s co""•e.....,ota acr. ·:-e
a mount ol n t: •/ ,,; ,., c h h Ould a• S"' 9=,ierafl T a~ r ·"'e ;·e~:
multrru de o' cases no.- a'·ec·~~ &1 ... '"'I socc a l c ·c... ..,,s·ance"S ' !"0r:'I
such a b react, 01 con•rac: F-:. • "\ad ' !-e ..oec a • : •c ... ~:=1 ar:n Dei!-:'l
known . tre pa• · \;s IT'~,-.• na . ,e S{)t.~ a , o· o . cec ·.:,r •tie tvea~r. .t
contract b f spec.a ·cr'""'s as ' u •nc oa......,a~es n •t,a· c.asI:? a'"'O :• 'l"i:3
advantage : w !:: .... c be ~ ,..,JS' •o Ot..O' • e ·rer
FACTS O F THE CASE - Tre 1ac•5 o ' Hao e . . Sa, ena.a e ~ !
as follows A r-- I be or-;~ 1 0 LJ had a o ro- ..2r ,; ,,.a,.. · s..,..J"' ~~ ...
de l i vered t h e s 1a 't to 8 a c.ornnion car · e • ·o · a -- e · 1 : a
m anu1actu re r ar Greer "' c., 10 coo, ard rra · £? a ... ~,_ : --P. e
negltgently dela1ed &Jet ~er I o ' t:ie sha·t be, o..,1 a reasorac ~ · rr~ ai.s
a result of w h ich tre m .1 w as die :01 a lar ger per oc 1-Je o.c xi
make known to 8 m at d ela; ~ ov•d rcsu 1 n k>ss o · p ro' ·s n a ~: c-,
H against B cla ,m,ng to reco . c r bit wa y o f dam ages me loss e-' pro•J
caused by the de lay. 1t was h e ld Iha : ' "le (e w c•e on' 1 r.-.o ~•oc~
upon w hich H could sustam his et a ,,,, F rsl tha: n tne uS.J:l .:~'"Sot
of things , the profit ol the m ,11 w oulo cease ar:ogc~net 'o• ~-an' c• ,...,
shatt. But this would not be the norm al occu rre nce H rr "9"'' . .. '°'.
have had a spare shaft in reserve Second ,y. 1na1 tro soec.~
circumstances w ere so furty discJosed i h at th e ,rie-. 1ab.'e loss
01
~
~ r. e:·,e c,re
was made apparent to 8 This howc,. e r was r:; ! :,.. 0 c :it
B was not liable for loss of prohl dur rg the per od o t c; _ ,:i,
P no Je•Jteil
In one E nglish case O a g reed to sell a b01lor 10 w O ~s 1
the deliver y for tw enty w eeks beyono rre svncduled CJt ,. .. -
g ous .. -
dyer. and O knew 1hat the bo1lor vi,as rc.-Oulfed for n s d,e r ,r ,,.,
n •ra r t ~ w
In tact, P required the bo ,ler for cena ,n lucr.:i~1v e Co r -
1
 OR E ACt-1 OF CO NT RA CT
19 3
1 t,u 1 b ,1:-, <,d '11 ~ cla1 ,n
,I ,,,,irrl ,ri•1rt , ,, , t1 1ri :J f'/ d J(Hflg C() kJt d amag es me rel y on the lo ss o1
fI I I II I rllr :ir:t s Th P. Court ot
1 ,,h1'l , . e;r1 11t1 r; r:l 1, 1 ~u cc <--:1.;< Appe al he ld
(, fl //,J ' 1 ( Vic tor ia La un dr y v.
,, ;ii / /ti (: c
( 1 .j /4 ~ )
, r .
"J V 1J ,: ' l 8 Ne wm an
/(/IJ 'J ' . O.c. )
1n1Ju 0
A, 1,, ,v/r ,g r;,rm lra cl od w I
th ~ 10 su pp ly B wit h
O_I ,,i<i ,ur,r;c; :: ~ tr,n , lo b e de llve 1,0 00 ton s of
,,,ri ;;~ frJf 1h<.: r,ur r;h a ~c of 1 ,UO r<!d a t a sta ted tim e . co ntr ac ts
11 111 O ton s o1 iro n at 80 rup
✓ r, , r1:, 1 h 1; '1<"JG ', :-,o for ee s a ton ,
thEl nuq1ose o1 per1orming
,,, e (.,
,J/lfl f/ .,

1H -'
f:,tl ·. 1r; pc~r1orrn h1.,.) co
ntr act with A , wl lo ca nn
hi s co ntr ac ts
, •r, f, ( rcir , ~ri d b , 1n ur n sc.:
u · ot pro cu re
I • qu en ce , res cin ds the co
\ · ?O /JCJCJ ru V,J '35 \ <"> A , ntr ac t. C mu st
be ing the pr o11ts wh ich A
wo
,. 1no r1,.rf
i, ,/ u ld ha ve ma de
1 , c>rt ni1 n u , of h1:-,- co ntr ac t wit h B
,, (k) A r.,.r1r1tr-1 c.t~; wit h 8 to
mru<.e and deliver to B, by
,, ·.ri1;r,t111;d p ri c e: , a ma a fi xe d da y, for
ch ine ry. A do es no t de
., wu rir; r / ::i t lt'1<; \1mr3 live r the pie ce of
sp cc1 f1c d , an d in con se qu
,,r;tgc;(j 1rJ (1r <1r, 1J rc an oth er en ce of thi s , B is
at a hig he r pn ce than tha t
"i r:, 11; r1;;;1d 10 A wh ich he wa s
an d is pre ve nte d fro m pe
r1orm ing a co ntr ac t wh ich
8 r~,J m:; dr, with a 1'h1 rd pe rso n at the tim e
,tr 1)1 h<ld no t hc <:n the n of his co ntr ac t with A (bu t
co mm un ica ted to A) , an
,,-,.,11: r,mnpr; n-: atr on d 1s co mp ell ed to
for b rea ch of tha t co ntrac
11::.1 r1I ,nmpc;;nsatt on the
t . A mu st pa y to 8 , by
dif feren ce be tw ee n the co
t,':' h of mac.h 1ne ry an r.trac t pri ce o1 the
d the su m pa id by B for
u ri paJd b/ B to thi rd pe rso an oth er, bu t no t the
n by wa y of co mp en sa tio
n.
(I) A, d bu ild er, co ntr ac
ts to ere ct an d fin ish a ho us
1
' ·J G f ,Janu ary, in o rde r tha e , by the
t 8 ma y give po ss es sio
' 'nt: to C, to wh om B n of it at the
has co ntr ac ted to let it.
·1.rrtr:,r,1 br.:tween B an A is inf orm ed of the
d C. A bu ild s the ho us e
'' ': lir:..t 01 Ja nu ar y, 1t fal l s so ba dly tha t, be for e
do wn an d ha s to be reb
·i,r ·~c:quenc.,<; , lo &e s the re nt uil t by 8, wh o in
wh ich he was to ha ve receiv
~·1 1·~ obl1g9 d to ma ke co mp ed fro m C,
en sa tio n to C for the bre
1
'M 1J'3c't A rnu at ma ke ac h of his
co mp en sa tio n to 8 for the
'' ': hr,iJ:c:: , for th,e re nt los co st of re- bu ild ing
t , an d for the co mp en sa
tio n ma de to C.
Im) A E:r::lls ce rta in me rch
an dis e to B, warranting it
'.f.:n '-'Jlar quali ty an d B in to be of a
,M-r1 reliance up on this warranty
t
• :; '_.. tmilar wa rra nty I . sells it to C
. Th e go od s prove to be
~-:1r;,m 1. 3 nd 8 be co me s not accordi• ng to th e
~~re, :n•,;, lia ble to pay C a su m of mo
t,o n. B ia en titl ed to be rei ney by wa y 01
mbursed thi s ·
sum b A
y .
1, } " 1 A 1-vn t rac t 1 to pa
,•,,.. y a su m of money to B on a sp ecifie d da y.
·· . · · n () t pa ; mo ne · on se qu en ce of not
• -': 1,,r y on tha t day. 8 in c
·,. ''J th ,.:: rn0 np 1 on tha . .
· ,. , .,
. I ' 'J1r1,:rJ A i ·~ no t !table
t da y 1s unab le to pay h.15 debts an d 1s
to ma\.te good to 8 any1hin · pt the
g exce
19 4 TH E LA W OF CO NT
RA CT S
pr in cip al Su m he co nt ra cte d to pa y, to ge th er
w ith ·
da y of pa ym en t . int er es t
IN TE RE ST AS DA M AG up lo lne
ES .-_ Th e ab ov e Illu str
. t f op ini on am on g at ion (n)
co n fl 1c o th e Hi gh Co ur ts on
. t es t ca n be all ow th e qu
tn er ed as da m ag es. Th e es tio n lea 10 it
Pr ivy Co un cil dec1s1. on . N RI C co nf lic t wa s Wheih
tn B. . R . settled
in wh ich it lai d do wn ~- o. v. utt~nJI, 40 Bo er
th at , su b1ec t to ce rta rn . l by lhe
ca nn ot be re co ve re d in ex ce pti on s -R. 7
as da m ag es for wr on 461
In te re st ca n be re co gf ul de te nt, o · tnfe res
{i) wh en th er e is an
ve re d no w on Iy in . th
e fol low ing
n of Fll r
.
ex pr es s or im p11e . d , Oney
{ii) wh er e a cu sto m ag re em en t to P ou r c::i'Qe ..
'l .
or tra de us ag e all ow
/nt er es t Ac t: an d (iv ) s int er es t : (ii,~y tr)te res
un de r S . 61 of th e Sa -
le of Go od s Ac t~n° er the
(o ) A co nt ra cts to de
liv er 50 m au nd s of
fir st of Ja nu ar y. at a sa ltp et re to
ce r t ain pr ice . B aH er 8
Ja nu ar y, co nt ra c ts to wa rd s, be for e th on the
se ll th e sa ltp et re to
th e ma rk et pr ice of C at a p ric e higeh l1rs1 01
th e fir st of Ja nu ar y.
es tim at ing th e co m pe . A br ea ks his pro er tt'- ar
ns at io n pa ya b 1e by
of th e ftr st of Ja nu a ry A an d 8 , th e markm1se 1•
, an d no t th e pr of it. wh .
8 fro m th e sa le to C ich wo uld have are1 P<<.e
, i s to be ta ke n in to 1ser ··
ac co un t
c..
(p ) A co nt ra cts to se ll
an d de liv er 50 0 ba le s
da y. A kn ow s no th ing of co tto n to a on a ri
his pr om ise . an d 8 , ha
re sp on sible to 8 to r th
of 8 ·s mo de of co nd uc
vin g no co tto n , i s ob lig
tin g his bu siness. A
ed to clo se his mill. A ,s
txe:
/llJ'
e lo ss ca us ed to B by
th e clo sin g ot the mil
(q ) A co nt rac t s to se ll
an d de liv er to 8 . on
ce rta in clo th , w hich 8 th e firs t ol Jar-..iar
int en ds to m an uf ac tu 1
kin d , for wh i ch th er e re int o ca ps of a partJOA
1s no de m an d ex ce pt
is no t de liv er ed till af at th at se as on . The do:."
te r th e ap po in te d tim
th at ye ar in m akin g e, an d to o lat e to be usa
ca ps . 8 is en tit le d to :
co mp en sa tio n, th e d iff re ce ive fro m A, by wa1
er en ce be tw ee n th e ~
an d its m ar ke t pr ice co nt ra ct pr ice of lhe ck>
at th e tim e of de liv er ;-
he ex pe cte d to ob ta y, bu t no t the protrts wt
in by m akin g ca ps , r
ha s be en pu t to in m no r th e e xp en ses whtct\ ne
ak in g pr ep a ra tio n to
r th e ma nu fac tur e
(r) A, a sh ip- ow ne r,
co nt ra cts wi th 8, to co
to Sy dn ey in A 's sh ip nv ey him from Ca~
sa ilin g on th e fir st Ja
by wa y of de po sit on nu ar y, an d 8 pays 1~ '
e- ha lf of hi s pa ss ag
no t ~a il o_n th e fir st of Ja e mo ne y._ Th e ship 8f\Cf
nu ar y, an d 8 , af te r be
de ta ine d m Ca lcu tta ing in cons:Upensi·
fo r so m e tim e an d th
pr oc ee ds to Sy dn ey , er eb y pu t to some rri\lln.J
in an ot he r ve ss el . an
·
to o at e m Sy dn ey , lo d in
se s a su m of m on ey A · r ble to rep
co ns eq ue nce, :Y10 f
' po sit
hi s de wi th int er es t, an d th . 1s ,a . ul bY 111~
de te nt ion in Ca lcu tta e ex pe ns e to wh ich he 15
. an d th e ex ce ss . if p mo/1~
an y of the passag 0
 BREACH OF CONTRACT 195

and ship over th nt. agreod upon for tho first , but not
1110 soc b I .
-atd tor y whl ct1 B lost y arr ving In Sydnoy too lato
r·- of 1110 11 0 .
If!' suff1
rule [S. 73 (3 )]
.aeon d
~--...., cond rule as to measure of damages Is to bo found in
8 se
'" con d clause ol , S. 73. It deuls with what Is known as
9
1111 s of damage . 1t runs thu s:
moteness
,,. ompensation is not to be given for any remote and
sue~
/fld1rect o
;sor damage sustained by reason of the breach .
EMOTENESS OF DAMAGES.- Damages are measured by
R actually suffered by the party. The loss must naturally arise
8
1t1 toSSsual course of things from the breach; or It must be such as
·n
1 the u
rties knew, when they made the contract, to be likely to result
1h8
P~he breach of it. It follows, therefore, that a party is not liable
:m/oss which is too remote, i.o., which Is not the natural or
probable consequence of the breach of the contract.
In other words, the measure of damages is the estimated loss
rM,ectly and naturally arising in the ordinary course of events from the
t,reach of contract. Compensation is not to be given for any remote
and indirect loss or damage sustained by reason of the breach.
In Madras Rly. Co. v. Govinda, (1898) 21 Mad. 172, the plaintiff,
who was a tailor, delivered a sewing machine and some clothes to
Ille defendant railway company, to be sent to a place where he
arpected to carry on his business with special profits by reason of a
IDrthcoming festival. Through the fault of the company's servants, the
goods were delayed in transmission, and were not delivered until
aome days after the conclusion of the festival. 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
lYt the plaintiff to recover a sum on account of his estimated profits,
tt was held that the damages claimed were too remote.
PROBLEM.- The plaintiff entrusted the defendant with a
telegraphic message in cipher (i.e., a coded message) for
::mission to America. The message, not being intelligible to the
~dant, h~ ~mitted to send the message, in consequence of
~ ~he plaintiff lost a large sum of money which he would have
~8~ th e message had been delivered. The defendant had no
'9 C-0 ge of the contract or purpose of the telegram, and hence
"'1i :Id not have contemplated any damages as likely to result
Naintiff,s not sending it. In the circumstances, it was held that th e
Was t·
en 1tled only to nominal damages.
196 THE LAW OF C
ONTRACTS
In Mowbray v. M
erryweather: (189
d ·th 8 a shipow 5 1.0.B. 640) , A
ner, to discharge
ag~!!d ~~ su,ppl the cargo of h· a
S\ev
y all necessary
ag . ) reasonab and prope r chai
geanng ly fit for that pu ns ~s Ship,~t·:
rpose . A chain
detective and brok d Z a workma supp ra°'ong ~-\
A was compelled etoin use , an , n
f 180 by
o A Was th 8; ot,·
pay Z a reason ,
held that B was lia ab le compensation _ereby
ble to make good ht: \
had paid to Z as to A t_ he compensatioihe
damages natura C0i_, I
lly re ~u lllng from B's bren 'flhit
warranty. A was entitled, as betwee h~
warranty though . n himself and a
such reliance was t aC h 01 ,
, no excuse for A , o rely 1i 1

as a . on 8:
Third rule (Expln Qa1ns1 2,
7
. to S. 3)
The third rule as
to the measure ·
Explanation to S. of damages is to
73, which provid b
es as follows: 10
In estimating the e u~.
loss or damage
contract, the m . h arising from a b
eans wh 1c . t d
inconvenience ca ex 1s e of remedyin reach
used by the non- ~
must be taken in performance of the 9
to account : Exp lni
lanation to s. .
Thus, if a railway 73 con~itl
company having
to take him to a contracted with a
particular station pass
entitled to damag . fa ils to do so, the pass
es for the inconv . engeng~
reasonable expens enience of havin .
e he has been pu g to wa lk ander 11
he may g~t so t to , as by staying at
me other . c?nvey an inn,:
company with the an~e, and char
expense 1f m the ge the railwai
thing to do so; bu cIrcumstanc0 it is
t he is not ordina a reason~
train to save him rily entitled to ch
self from the te arter a speci~
railway company dium of waiting,
with the expenses an d charge ~e
.
Fourth rule (S.
73)
Lastly, it is to be
noted that damag
a quasi-contract es payable for the
are exactly the sa breach ~
ordinary contract m e as those for the br
. In other words, each of an
quasi-contracts. all the above rule
s also apply 10
SUMMARY OF R
ULES GOVERNIN
G THE MEASURE
1. When a party OF DAMAGES
contract, he is sustai ns a loss by reason ·
entitled, (so far of a bre~ch ol.
concerned) to be as monetary co
put in the same mpensation ;
as ,t• the contract situation with rega
rd to dama
ha
th a t' loss or dam s been performed, sub1.ect to th ualificaQu·oo
age is such (a) e q . 1tte
usual course of as has arisen na
things, or (b) as turally '\e1
made the contra th e pa rties kn
ct to be likely to ew w~~~I. aod
(c) as is not rem result from the br
ote an d indirect. each
 11ttl At~tl l)t CONlllACf
107
rl ,,11 I\ IAllll :-i ,'lJlcJ, 'l.11 d t~lll
t:1Ur1t1
1
w11i:t 11 1 \Whlol
i II'" 11.1111 11,u l11 cHWil\. l1f1 IIHl tl l p11)Vc>, II I wnuh.l 110 /
1111~"" ,') II/ 1/,1 /1, 1/1 • 1( /h '"' tll rJ }l::11 (lf):J 1\I II I HII ~111· 11 ILl:iS Wrltl
(41 ,.,,, ' I I 11:1 I 11111 LIi II
a ~1/1 ' • II ',, •11 /I ((J, t, ,, Ill ih)IIII E\i il
! ,, \)\/TNI • r
f ' t/l 111 r'/.•1 ,,,rillll\J 111r1 h 11i~1 ,11 d rllllc\UtJ ' th t 1 IIIH,1/1~ whlal
11
: tllrJ 11 11 ·111\\lcltlldill' cl l ' i lll:'hHI hv Ill l l . I OXISle ll 01
,. ,.,.,fl ,,,;J ' )1utwh 11111Kt bo lfll,A11
11' • ,,,, II 1111
ti' ,,,
~ ~ .,, vv ' r1,, 11., /, 1:1:i 1111:i,1:1 1in111 tho hr t>nr.h
'
01 1
m 111r 1101 unly
1 ,, (II l1ti tJIVtl ll ' 110111/118/
~,i:1~,~ ~ r
11
, ,, ·•1 ,11:111 h 1 ti,) 1111h, d 111111 dn11 11,uos n , ll O1von by f
•1 II 1 , nt ri 1111rr111~:1f/illl
only, und lltJf by w f wny o
111 11
,.,1111 i~11,,v~il p«t IV ,:1111, 111010101o, rocovor tho ;;:, oI f"nls/1111onr.
n1dl~p (nllllP'lll:\l lhll y Olll11H\Jt1S), nm1 not 8X0111pfllr I/ltd DSS Cf\USOd
IO 11111 • Y 1inlllgos.
. lfHl "uovu ",1t1s , olntlno to <1omng 09 npply 10 qrms.,·contracts
fi.

.1~0PttEASURE
. OF DAMAGES IN CASE OF BREACH OF
CONTRACT FOR SALE OF LAND - Tho rulo In Hndl
,,ndnlo does 1101 npply /11 E11gl/sh law to contracts for tho•:.~
~13 rnovonblo proporty. Tllo loadl11g cnse on thi s point is the
1111
dOclsloii of tllO Hou so of Lords In Bain v. Fothergill, (187 4 L.R. 7
H.L, 158), whoro It wos /l old thnt tho Intending purchaser al land
o,nnot recovor ony damages for the loss of his bargain; but he
c,n recover doposlt and the expenses Incurred by him.
The Bombay High Court hod, at one time (In Pitsmber v.
Qnssibal, 1886 11 Born. 272), held that the rule In Bain v. Fothergill
was also tho law In India. However, It will be seen that Section 73 Is
wry general In Its terms, and does not exclude cases of Immoveable
,operty. As observed in a later case decided by the said High
Court, "The loglslature has not prescribed a different measure of
damages In the case of contracts dealing with land from that laid
~own In the case of contracts relating to commodities".
In later cases, the Bombay High Court has reversed its decision in
Pltsmber v. Cassibal, (above) and has held that Section 73 would
tovern cases of sale of land also. Thus, where an intending purchaser
~ 18nd claims damages for the loss of his bargain, he would
0rd
th
inarily
be entitled to damage caused to him which ··naturally arose in e usual
course of things from such breach". The High Courts of Calcutta,
lehore and Madras have also taken a similar view.
MEASURE OF DAMAGES IN AN ANTICIPATORY BREACH OF
tONTRACT - In the event of an anticipatory
. b h the innocent
reac ·
 ~98 THE LAW OF CONTRACTS

party may either--

(i) accept the repudiation, treating the contract as at an
8
enforce the appropriate remedy at once, (in which case : ,
measure of damages will_be the difference between the co~tra:t
price and the market price on the date of the repudiation) ; or
(ii) ignore the repudiation, and wait until the time for performance
arrives (in which case, the measure of damages will be the
difference between the contract price and the market price 00
the date of performance).

B. COMPENSATION FOR BREACH OF

CONTRACT WHERE PENALTY IS STIPULATED FOR
(DIFFERENCE BETWEEN PENALTY AND
LIQUIDATED DAMAGES) (S. 74)
Write a note on : MEANING OF 'PENALTY' AND 'LIQUIDATED DAMAGES.- As
Liquidated damages
and penalty.
a general rule, compensation must be commensurate with the loss
B.U. Nov. 2012 or damage sustained. Acting upon this principle, when the injury
consists of a breach of a contract, the Court would assess damages
with a view to restore to the injured party, such advantages as he
might reasonably be expected to have derived from the contract,
had the breach not occurred. But, at times, the parties themselve s,
at the time of entering into a contract, agree that a particular sum
will become payable by a party in case of breach of the contract.
Thus, for instance, X may agree to sell his house to Yon 1st
April, for Rs. 20 lakhs, and one of the clauses of the agreement
may provide that if either party commits a default, he would pay Rs.
50,000 to the other.
S~ch a sum is .sor:11etimes agreed upon by the parties by way 01
what 1s known as hqwdated damages, that is, it is a sum payable bY
a party as damages, the amount of which, instead of being left to th8
determination of the ?ourt, is previously determined by the parties
themselves. At other .times,.-such. a sum is named as a penalty, that
is, it is an amount stipulated as m terrorem of the offending party.
In English law, a distinction is made between liquidated damages
and penalty. Whereas liquidated damages are allowed to be recovered,
. ses of penalty, the courts In England can grant relief against th8
in ca . . · .,. t· . s
Th·s distinction is not s1gm,1can m India, as Indian law doe
penalty. :ze
the same. The rule under S. 74 of the Act is that in thS
not recogn t which has been broken, if a sum is named in 111s
case of a contrac
 BREACH OF CONTRACT H~9

5 th e amou nt to be paid
. I in . case of such breach , or if the
act a ·ns any other st1pu at1011 by way of penalty the party
0tr contai . t· I d ( ,
tract . f th e breach 1s en 1t e whether or not actual damage
r ·r,1119 o b d
..,p1
I"
a1 is pro
ved to have een cause thereby) to receive from the
t
1oss hO has broken the con ract, reasonable compensation not the
1rtY~ 50 named or, as th e case may be, the penalty stipulated for.
noun. ulations of t h.is nat ure are usuaII y to be found in cases of
51y,p1ending. A gives B a bond for the repayment of Rs. 10,000
oneinterest at 12 per cent at the . end of six months , with a
ilh . n that in case of default, interest shall be payable at the
· uiauo
11P 75 per cent rom
f th d f
e ate O _default. This is a stipulation by
0
ite \ penalty, and B is only entitled to recover from A such
O
iaY sation as the Court considers reasonable.
ornpen
It is further clarified by S. 7 4 tha~ a sti~ulation for increased interest
rorn the date of default may be a st1pulat1on by way of penalty.
Illustrations.-(a) A contracts with B to pay Rs. 1,000, if he fails
0
pay B Rs. s_oo on a given day. A fails to pay B Rs. soo on that
□ay. a is entitled to recover from A, such compensation, not
exceeding Rs.1,000, as the Court considers reasonable.
(b) A contracts with B that if A practises as a surgeon within
Calcutta, he will pay B, Rs. 5 ,000. A practises as a surgeon in
Calcutta. B is entitled to such compensation, not exceeding Rs.
5,000, as the Court considers reasonable.
(c) A gives B a bond for the repayment of Rs.1,000, with
inlerest at 12 per cent at the end of six months, with a stipulation
that, in case of default, interest shall be payable at the rate of
75 per cent from the date of default. This is a stipulation by way
01 penalty, and B is only entitled to recover from A, such
compensation as the Court considers reasonable .
(d) A, who owes money to B, a money-lender, undertakes ~o
repay him by delivering to him 1 O maunds of grains on a certain
d~te, and stipulates that in the event ·of his not delivering th e
~~i'ulated amount by th~ stipulated date, he shall be liable ~o
onter ~O maunds. This is a stipulation by way of penalty, and B is
Y entitled to reasonable compensation in case of breach.

rii (e) A Undertakes to repay B a loan of Rs. 1,000 by five equal

th1
01°~ Y instalments, with a stipulation that, in default ~f pa~me~t
not ~Y instalment the whole shall become due. This stipulation_15
rd
\o it Y way of pe~alty and the contract may be enforced acco '" 9
s terrns.
~Gu THE LAW O f C
ONTRACTS
ll) A borrows Rs. 100 trom 8 , and gives h
ble b live yearly instal im a bond for n
ments of Rs . 4 . .
~aya Y f aym ent ot 0, with a stipul ns. 2o
m default o P any in stalment, ation 0,
. . st·
,pu the whole shal
due . Thi s ,s a lation by way o f l b \ha1,
pena Ity. eco"'
'PENALTY' DEFIN ,,,e
ED.- A penalty is a
agreement ..n ,·,th a view to secu sum mentioned
re perform in
according to the . ance , the sum
true intention of
be·an
.
damages . The es _the parties, on
sence of pe~alty ly a maximuntg
·n terrorem of th
, ,s a p~y~ent of
as e otfendmg part money stipu\at~I
other hand , are y. L,qu,dated da
a genu ine covena d . mages d
nte pre-estim ate of dam,agonesth
In other words if e
it is found that th
estimate the loss • . e parties made
no atte
that might occur
to them on brea
but still s f pulate
d a sum to be •d • ch of the cornpt to
obiect of ensurin pa , m f . 1ract
g that both the
pa
• case o its breach w,n ·th '
would be treated rt ies would per1orm '
as a penalty. In ot the contra tlhe.
contract as co_m?e her words, a sum
~sation tor breach mentioned icthi\
as a penalty ,t ,t of the co~tract w
1s extravagant an ould be tr~a\e~
with the greatest d unconscionab
loss that could le in comparis
possibly flow fro
m the breach . on
Highe r rate ot interes
t, when a pena
lty
The following rule
s regarding a high
er rate of interest
l1) A stipulation tor pa may be no\ed:
date of the bond ym ent of interest at a high
, on default on er rate from the
amount on the th e part of the debt
due date alway or to repay the
cases, the provis s amounts to
ions of S. 74 ap a penalty. In such
debtor, and awar ply, and the Cou
d only such co rt may relieve the
considers reason mpensation to
able . the creditor as it
(2) It, however,
the stipulation is
higher rate from 1or the payment
the date of defaul of interest at a
regarded as a pe t, such a provisio
nalty. However, n is not general~y
cases, be regard such a stipulatio
ed as penal, an n could, in certain
on the facts and d whether it is pe
circumstances of nal or not depeo ds
the case.
(3) A. stipulation
for payment of .
default, at the sa
me rate at which
compound in terest, ·n 1 cases of
bl0 is
not a penalty with simple interest w
in the meaning as paya '
of S. 74.
(4) However, a
default, at a high stipulation to pay compoun d in . t rest in case o1
er rate than tha e ' Id arnounl
to a penalty, an t of simple intere
d relief would be Sl wou
granted under S. 74
(5) It a bond pr . · ii the
ovides tor in ec ified rate
Id tall under s.
money is not re te rest at a sp
paid on the due
74, and the appr date , the cas~ ~~
opriate relief wou ~ecessarY-
ld be grante '
r
BRE ACH OF CON TRA CT
201
. • _1 t,('., d pro\ ldes for pay men t of int8 1ost nt
n lowo , 11\lo . If
: _. , 0.31d r~u tart~ o n the due data s. such
a duu su Is nor 111 tho
·; "~· _,- 3 oen att) · Thu s. it a bon d prov ides to,
pav111t111t ur lntoro~t at
-~ ~-~ ,~-tti a st1pul 3 tion that if t~,e deb tor po.y
s Inte r ost µ unotuul ly
: •·e era .:>I B\ er y yea ,· th e cred itor woulci acce
pt Inter ost ot 1~%
io (.f a clau se ,vou ld not amo unt
,
I, _,
~ to a pen alh1.

~ rence bet wee n par t-pa ym ent and ear

nes t mo ney
fa-rest mon ey is a sum of mon ey dep
osited as secu rity tor
"i!":,rr ance of a con trac t. Suc h sum may be
torfelted It thor e Is
~ e to perrorm the contrac t Suc h 1orteiture .
it has bee n held In
~ cases. will not amo unt to a pen alty. On
:-ent is part of the pric e paid othe rwi se
~-e nt can be reco vere d eve n thou gh the cont
the othe r han d. part -
than a dep osit. Suc h part -
ract is not perf orm od,
s»;~ - of cou rse, to the clai m for dam age s of the
other part y.
FORFEIT URE OF EAR NES T MO NEY.- It
mus t be note d that
~ re of earn est mon ey of a defa ultin g purc
hase r Is not a pen alty;
~ a term that a lum p sum sha ll be
paid in addi tion is pena l, and
,t, actual dam age s can be reco vere d. Thus, A cont
racts with B to
:i-~ ase a hou se for RS- 2 ,00 ,000 and pays
Rs. 20,000 as earn est
:«ef . The con trac t prov ided that sho uld A
refuse to buy. the deposit
nid be forfe ited ; and that sho uld B refu se
to sell, he will refund the
rate ,' dep osite d and pay Rs. 20,0 00 as
dam age s. On breach by A.
a may torteit the dep osit. This is not a penalty. Earnest money Is
lUlte d towa rds disc harg e of part of the pric
e it the transaction goe s
Dough, but is forfe ited if it fails due to purc
hase r's default. But, If
earnest mon ey form s a maj or port ion of
the price, or is totally
lisproportionate to the bala nce left (as for insta
nce, If It Is Rs. 80,000,
CU of a total pric e of Rs. 90,0 00), it can not
be forfeited; forfeiture In
SUdl a case is rega rded as pen al, and is not
enforced . The vendee
~ in such case s, enti tled to trea t it as a part
-pay men t towards price
2llCI can have it refu nde d, afte r ded uctin g reas
ona ble compensation
Da'table to the ven dor : Rag hbir Das v. Sun dar
Lal, 11 Lah. 699.
'LIQUIDATED DAM AGE S' DEF INE D.- The
stipu late d sum Is to
be regarded as liqu idat ed dam age s, if it be foun d
that part ies to the
COntract con scie ntio usly tried to mak e a gen
uine pre- estim ate of the
bss Whic h mig ht be occ asio ned to them in
case the co..ntra ct was
br~n by any of them . Hen ce, liqu idat ed dam
age s are a genuine
Co11enanted pre- esti mat e of dam age s"'. Liqu
;a.,~ idat ed damages . are an
~es sme nt of the amo unt whic h, rn . f the part ies will
• ·
the opin ion
COrnPensa te the wro nge d part y for the brea
° '
ch.
 - --
20 2 T H L L Aw O f C O N \ rt AC TS

Th us. , I i' 0 1'1I th ,, 1 Cl m tn ln t1 0 11\y n ul no

w h111t1 lo .•:rip,, 11111
th o b l Or\Gh u t hi I ,1, •'
, l' lll t)LI !1 u111 In lo
. W :,,µ ll \)t lC l) ll) h 1>11y n1J1 1111 , llt1
if\tn d dn rn n , - If t/l t l l fl ,~ n o (l(ln qu
l)' ) ~ 11
A $U m ,~ lt\1u 1l . ) · cl n ,1ns
• m o 11~ . llUCl)
:1s ct1r f.1 ,n ,n 9 f/l t1 r1 1•1 ·,~• 1 ' 11 11
·
w/1/ ch 11111y 111 ti1111 t,•O fl n~
1
· 0 1'.\ nc h or
Q
br aa ch . c} . _ • W h 0 1l1 11 l , tl H un dt >r l f\ kU R \() o, n ,~
l:O lll pl oto 'II)
by R sp ec ,•tIt,"'d 00 dR t o n1"r1 ,,1 11, cl ot nu l\ ol. su t:h cornplot1
011 p
I\ W
to pay R s. 1.0 to ev er y dRy du , rorn 1or~
1 rin g w hl cl , \l~o
in co m pl et e ni ter • • w or k r sos
th e sc11d cta to . orna\na
OI FF E R E N CE BET W EE N ·P E N A LT Y '
AND ·u ou 1 0
DAMAG ES '._ Th e tallo w in g ar e th e po /
·Penalty' and 'L iq ,. nts of dlstlncllon ATEo
ui date d D am ag os . bet
Ween
1. The essenc e
ot penalty is a pa
. terrorem of the at ym en t of m on ey
,n tending party ; th stlpulatact
is a genu ine cove e es se nc e of llquidated da as
nant ed pre-estim . f
ate o da m ag es . rnag8
2. If th e cl au se is co ns s
. tr ue d as a pena
re co ve re d , not ex
ceeding the su m . lty, an y amount c
th e w ho le : w he re m en tio ne d, bu t not nece an be
as ,t· ,t
· ·
1s co ns tru e d as 1· 'd s .
whole sum is re co 1qu, ated damag san/y
es the
ve ra bl e, even th
tro m th e bre~ch ough th e lo ss ac
may_tu r~ o_ut t? be tu al ly a;\s\n
by th e pa rt ie s. _greater ?r lesser
(T hi s d1stmct1on than an ticipate~
law, as st at ed ab 1s ve ry im po rt an
ov e.) t under English
In co ns id er in g w
he th er a na m ed
damages, th e C ou su m is a penalty
rt do es no t go by or liquidated
have called it bu th e name by which
t lo ok s to th e ac the parties
sum fixed is extra tual na tu re of the
vagant, exhorbita thing, e.g., if the
w ill re ga rd it as nt or unconscionab
a penalty, even if le, the Court
in th e co nt ra ct . it is te rm ed as liq
Th e C ou rt is no ui da ted damages
pa rt ie s, i.e., th e t bo un d by th e
ac tu al te ch ni ca l term in ology of the
ci rc um st an ce s, te rm s us ed , bu t
e.g., even th ou gh will inquire into the
of br ea ch , a pa rti a co nt ra ct mentio
cu la r su m sh al l be ns that in case
th e C ou rt w ill pa ya bl e as "liquid
no t be bo un d by ated damages",
da m ag es ", bu t th e us e of th e
w ill in qu ire in to term "liquidated
de ci de fo r its el f th e ci rc um st an ce
w he th er th e cl au s of the case and
se is pe na l or no
3. W he n th e te rm s t.
of co nt ra ct sp ec
no n- pe rf or m an ce ify a su m payabl
of a co nt ra ct , a e for the
un de r English law qu es tio n of construction
as to w he th er th arise s
a pe na lty or liq e su m sh ou ld be
uidated damages regarded , ~s
th is se ns e th at . Th e qu es tio n is
it th e C ou rt co i_mporta~\~:
' m es to th e conc
su m pr ov id ed in th e co nt lu sion th3
di sc re tio n to gran ra ct is a penalty, th 8 Court haS
t, or no t to gr an the
t, th e en tir e am 1
ca se of liq ui da
ted damages, ho ount. in ;on
th e m at te r. It is
bo un d to gr an t
w ev er , th e C ou rt
th e en tir e am ou
ha s
nt to t 0
0
ni
~laintitl.
 BREACH OF CONTRACT 203
be noted that the abov~ distinction Is peculiar to English
8
11 rT1 Y h distinction Is recognised In India. In India the Court
9~ '
~o Into the question whether the sum named is a penalty
/IO go h
no1d111e d darnages, but as to award reasonable compensation
,
1•uceedfng the amount so named, or, as the case may be, the
fX I ulated for In the contract. The only exception made Is In
IIY sl p
I f any bail-bond, recognizance, or other Instrument of the
oase o h .
nature given under t e provisions of any law or order of
rnrnent for the performance of any pub/le duty; upon breach of
·~ dillon of any such Instrument, the whole sum mentioned
0
~~ to be paid by the person liable. (See below,)
18

SPECIAL PROVISIONS FOR BAIL-BONDS, ETC.-S. 74 provides

when any person enters Into any ball-bond, recognizance or
Instrument of the same naturo, or, under the provisions of any
r under the orders of the Central Government or of any State
rnment, gives any bond for the performance of any public duty
ltl In which the public are interested, he becomes liable, upon
h of the condition of any such instrument, to pay the whole
mentioned therein.
hus, A gives a recognizance binding him In a penalty of Rs.
to appear in Court on a certain day. He forfeits his recognizance.
liable to pay the whole penalty. (Illustration to S. 74)
all-bonds, recognizances, or other bonds for the performance
public duty or acts In which the public are Interested form an
tlon to the general rule enunciated In this section, that a party
lalnlng of a breach can only recover reasonable compensation,
not any sum that is named In the contract as the amount to be
In case of such breach. Persons who have executed such
8
are liable to pay the whole sum mentioned therein upon
h of the condition of any such instrument.
~• exception does not, however, apply to ordinary contracts
8
Government. A contract, therefore, by a builder or cattle·
to do work for or to supply cattle to the Government, In
he binds himself to pay a fixed sum in case of breach, will ,be
IO precisely the same rule of construction as thaf which
Cites of this description between private individuals.
 THE LAW OF
204 CONTRACiS

c R\GHT S OF PARTY R\GH"TFULLY

. RES
A CONTRAC"T C\~t,
(S. 75)
d w \~Cl
n that a perso
S. 75 lays o n
ensation for an who rightfully res .
is entitled to co y damage Whi
ch ht1nus ac
through the non~l~llilment ot the contract.
. e h¾ ~~ 1~
A a singer , co 11
II/us .- h.· thea ntracts with 8 \a\
tre , the manage
to sing a\ is tor two nights in every .
d 8 eng a ge s to pay her 1 wee1<. ; ~I a \h
\ w0 months an
' On the sixth 00 rupees • \.Iring
P er fo rm ance . 'ff
night, A wr ul/y \h :~ \
in ab se nts h
1
or e" ~~
theatre an d 8 co nsequence, resc · d th <lC
m s e contra erse11 h n·ij1n1•r
clai.m comp ensation tor the dam ct
8 is e1r~·tri
. 1
the non-tu\H\men ages wh1c ' hh
e · ~,
\ of the contra t ha s sust . nt,u~ :
c. a1ne01h ·.-.
IQ~
0 . QUANTUM M
ERU\T
Writ e a short no "Quantum meru
te on : it" means ~as ~ u c h as
Quantum Mer
uit. O
ne person has exp he has earneo•
P.U. Apr. 20 '1 him ressly or rmplredly reque
a se
rvice without sted another · ~~I:
circumstances spec!·tyr·ng a n ',
of the request y_ remun~ration, 1Or~
for there is im imply that the but ,:.
' plied a promis service is to b • i
much as the p e to pay quan
arty doing the . tum meruit th•ie·fllJ.
servic e deserves. I ~
Thus, the claim '·
" ~

of quantum me
to be im p li e d ruit can on\y ar
- ise uponapr~
(1) from a re
quest by the
pertorm servic defendant to th
es tor him, or e plainllil ~
(2) from the a
cceptance of su
rendered, so ch services as the
as to imply a plait
same : Liladha promise to Pa't I01
r v. Mathurdas, t,
Further, if a pe 39, Born. L.R.m
rson by the te
piece of work fo rm of a contra
r a lump sum, ct is to do a~
something diffe a nd he does on\y a
rent, he canno part ot the w:it:
be ab\e to c\aim t c\aim under
on quantum m th e contract, bu\ 1-t ~
been prevented eruit, as tor ex
by the act of th am p\e, ii compleli00 10
e other party
S~/NG ON QU to the contract.
the suit for the AN TU M MERU/T.- Su
value of so m ing on Q~~ntum ::
sue for quantu uch as is don ~
m m e ru it .- Th e. ,h e in1ured pea~
of what he w us, it the iniure
as bound to d parW na; d: ~
operates as d .
ischarge, and
do under the
contract, 1 1 ,.ftQ ~
-
be estimated
in a money va
it what the iniu
red par wn~ ~-.
damages for th \ue, the iniure 08 ~ .
e breach of th d party ca~u~ e' •,~
tor the value e contract or 111
of so much a tor quan
1005 ) : -
an order with
8 for supp\y
s he has a\re
ot 1
a
oo
d y d
chairs to
O
"\e
de\1'181

j
 ,~
BREACH OF CONTRACT 205
, B dehvers 20 chairs when . A informs nim th ut he will .
--e s h A,
more In t 1s case, s rcpud1at1on disc.harges 8 from th e
·e 'IO h
~ '/ to supply t e remaining chairs. He can sue /\ for the
t:,, ol contract, or for the value of 20 chairs already supplied .
~ observed r!f Best, C.J. in Mavor v. Pyne, "If a man agrees to
10 me one hundred quarters of corn, and after I have recerv d
Hi 1· t k' e
. Qllarters, I dee ine a ing any more, he is at all events entltled to
_,,.,ie1 against me the value of the ten that I have received ".

1, order to avail of this remedy, two important conditions must

1 i~lhlled.
r,,stly, the nght to claim quantum meruit is available only if the
,iginal contract has been discharged. The contract must have been
~~en by the defendant in such a way that the plaintiff should be able
• regard himself as discharged without any further performance, and
~must elect to do so. Hence, if the contract is still ·open·, he cannot
msell of this remedy, and would have to sue for damages.
11'811 h1

Socondly, such a claim can be enforced only by the party who

nol rn default. The party who breaks the contract is not entitled to
Siie quantum meruit for the work which he has done, although he
,ay have performed some part of his obligation.
CASES.- Planche v. Colburn. (1 831) 8 Bing. 14.- In this case,
ttie defendants had commenced a periodical publicatio n called "The
-.l\"8nile Library", and had engaged Mr. X to
1 write a volume on
l!lt1ent armour for the periodical, for which he was to receive £ 100
~ complet1on of the work. When Mr. X had completed a part, but not
t,e whole. of the volume, the defendants abandoned the publication.
The Court held that Mr. x was entitled to recover quantum meruit,
!'ld award him £ 50, which the jury found to be payable to him.
De Bernardy v. Harding, l1853) s Ex. 822.- The ~efendant
awointed the Plaintiff as his agent to advertise and sell t1cke_ ts .for
>eats to view the funeral of the Duke of Wellingt~n, on com~1ss 10,n
:iasis. After the Plaintiff had already incurred certain ~x~e~ses '" t~is
:Onnection the Defendant wrongfully revoked the Plaintiff s au.thonty.
· '
lo the circumst h C t he'd 1• that
was entitled to
the Plaintiff h.
ances, t e our
recover quantum meruit for the expenses incurred by im.
A agrees to execute a
E 23 7.- he finds that it
. ~lay v. Ya tes, t1865) 25 L. J. x. th
Pfint,ng job for 8 After doing a part of e work, .
c • · · rr d in refusing to complete
-Onta1ns defamat ory material. He Is 1us I re meruit for the work
1h8 Work, and is entitled to payment quantum
already done.