REMEDIES FOR BREACH OF CONTRACT

INTRODUCTION
When ever there is breach of contract, the injured party becomes entitled to any one or more of the following remedies against the guilty party:
† 1.

Rescission of contract † 2. Suit of damages † 3. Suit upon quantum meriut † 4. Suit for specific performance of the contract † 5. Suit for injunction

1. Rescission of contract:
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When there is breach of contract by one party, the other party may rescind the contract and need not perform his part of obligations under the contract and may sit quietly if he does not want to take any legal action against the guilty party. But in case the aggrieved party intends to sue guilty party for damages for breach of contract, he has to file a suit for µRescission of Contract¶. When the court grants rescission , the aggrieved party is freed from all his obligations under the contract, and becomes entitled to compensation for damages which he has sustained through the nonfulfilment of contract. ----

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2. Suit of damages: 

Damages are monetary compensation allowed to the injured part for the loss or injury suffered by him as a result of breach of contract. The fundamental principal underlying damages is not punishment but compensation. By awarding damages the court aims to put the injured party into the position he would have been, had there been performance and not breach, and not to punish the defaulter party.  

Types of damages:
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A. Ordinary Damages: 

or

General

or

Compensatory

When a contract has been broken, the injured party can, as a rule, always recover from the guilty party ordinary or general damages. These are such damages as may fairly and reasonably be considered as arising naturally and directly in the usual course of things from the breach of contract itself. Generally in the use of a contract for µsale and purchase¶ the general rule as regards measure of damages is that the damages would be assessed on the basis of difference between the contract price and the market price at the date of breach. ----  

Ordinary

damages can not be claimed for any remote or indirect loss or damage by breach of contract and the damages will be paid only for those loss which arises naturally in the usual course of things. 

E.g. A railway passenger¶s wife caught cold and fell ill due to his being asked to get down at a place other than the railway station. In a suit by the plaintiff against the railway company held damages for personal inconvenience of plaintiff alone can be granted, but not for sickness of plaintiff¶s wife, because it was very remote consequence.
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B. Special Damages: (Remote Damages) 

These damages are claimed in the case of loss of profit etc. When there are certain special or extraordinary circumstances present and there existence is communicated to the promisor, the non performance of promise entitles the promisor to not only the ordinary damages but also damages that may result there from. The communication of special circumstances in a prerequisite to the claim for special damages. ---- 

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C. Exemplary or Vindictive Damages: 

There are such damages which are awarded with a view to punish the guilty party for the breach and not by way of compensation for loss suffered by the aggrieved party. This mode is adopted only in following two situations

Breach of contract to marry : in this case the amount of damages will depend upon the extent of injury to the party¶s feelings. One may be ruined, other may not mind so much Dishonor of a cheque by a banker when there are sufficient funds to the credit of customers: In this case the rule of ascertaining damages is ³the smaller the cheque, the greater, the damage´. Of course, the actual amount of damages, will differ according to the status of party. 

† D.

Nominal Damages: 

Nominal

damages are those which are awarded only for the name sake. These are neither awarded by way of compensation to the aggrieved party nor by way of punishment to the guilty party. are awarded to establish the right to decree for breach of contract when the injured party has not actually suffered any real damage and consist of a very small sum of money, say a rupee or two.  

These

E.g. Where in a contract of sale of goods, if the contract price and the market price is almost the same at the date of breach of contract, then the aggrieved party is entitled only to Nominal Damages.

Liquidated Damages & Penalty
Sometimes parties themselves at the time of entering into a contract agree that a particular sum will be payable by a party in case of breach of contract by him. Such a sum may either be by way of µliquidated damages¶ or it may be by way of µpenalty¶. The essence of liquidated damages is a genuine covenanted perestimate of damages. Thus, the stipulated sum payable in case of breach is to be regarded as liquidated damages if it be found that parties to the contract conscientiously tried to make a pre-estimate of loss which might happen to them in case the contract was broken by any of them. On the other hand, the essence of penalty is a payment of money stipulated as ³in terrorem´ of the offending party. Thus if it is found that the parties made not attempt to estimate the loss that might happen to them on breach of contract but still stipulated a sum to be paid in case of breach of contract, with the object of coercing the offending party to perform the contract, it is the case of penalty.

Cost of Suit:
† The

aggrieved party is entitled, in addition to the damages, to get the costs of getting the decree for damages from the defaulter party. The cost of suit for damages is in the discretion of the court.

3. Suit upon Quantum Merit The third remedy for a breach of contract available to an injured party against the guilty party is to file a suit upon µquantum merit¶. The phrase µ quantum merit¶ literally means ³as much as is earned´ or ³in proportion to the work done. A right to use upon µquantum merit¶ usually arises where after part performance of the contract by one party, there is 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 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 claim on Quantum Merit arises in following cases† Where

work has been done in pursuance to the contract, which has been discharged by the default, no matter whether the contract is divisible or indivisible. ---that in both the above cases the contract was wrongfully terminated by the defendant, and both damages as well as quantum merit have been allowed.

† Note

Where work has been done in pursuance of a contract which is discovered µvoid¶ or becomes µvoid¶ provided the contract is divisible. ---When the person enjoys benefit of non ± gratuitous act although there exist no express agreement between the two parties.
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One of such cases is provided in Section 70 which lays down that when services are rendered or goods are supplied by person (i) without any intention of doing so gratuitously, and (ii) the benefit of the same are enjoyed by other party, the latter must compensate the former or restore the thing so delivered. ----

When an indivisible contract is completely but badly performed.
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When an indivisible contract for a lump-sum is completely performed, but badly, the person who have performed can claim the lump-sum less deduction for bad work. 

E.g. µA¶ agreed to decorate µBs¶ flat for a lump-sum of Rs. 750. µA¶ did the work but µB¶ complained for faulty workmanship. It Cost µB¶ Rs. 204 to remedy the defect. Held, A could recover from B Rs. 750 less Rs. 204.

4. Suit for Specific Performance There are other remedies in a contract suit besides damages. The main one is Specific Performance. Specific performance means the actual carrying out of the contract as agreed. Under certain circumstances an aggrieved party may file a suit for specific performance, i.e. for a decree by the court directing the defendant to actually perform the promise that he has made. Where damages are not an adequate remedy, the court may direct the party in breach to carryout his promise according to the term of the contract.

Some of the instances where court may direct specific performance are† † †

A contract for the sale of a specific house A contract for the sale of a specific rare (antique) article. Any other article for which monetary compensation is not enough because the injured party will not be able to get an exact substitute in the market.

However, specific performance may not be granted in case† †

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where monetary compensation is an adequate relief. the contract is of personal nature e.g. a contract to paint a picture.(in such case injection is granted in place of specific performance) where the court cannot supervise the actual execution of contract e.g. a building construction contract.

5. Suit for an Injuction :
† Injuction

is an order of a court restraining a person from doing a particular act where a party is in breach of a negative term of contract i.e. where he does something which he promised not to do. The court may by issuing an order, prohibit him from doing so. ----

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