Remedies for the Breach of

Contract
Learning Outcome:
•Explain the meaning of Breach of contract
•Outline and Interpret the remedies for the
Breach of Contract.
News
 Breach of Contract
• It amounts to a broken promise to do or not
to do an act.
• It may be single, occurring at single point of
time or continuing breaches.
• It can be Actual Breach or Anticipatory Breach
– An actual breach occurs when one person refuses to fulfill his or her
side of the bargain on the due date or performs
incompletely. Anticipatory breach occurs when one party announces,
in advance of the due date for performance, that he intends not to
fulfill his side of the bargain.
 Remedies of Breach of Contract
• Rescind/cancel the contract and refuses
further performance of contract.
• Sue/file a case for damages if any
• Sue for specific performance
• Sue for an injunction.
– An INJUNCTION is a judicial process, whereby a person is required to
do or abstain from doing a particular act or wrongful act. The grant
of injunction aims to restore the violated rights of a party . It follows
the principles of natural justice and equity.
• Sue for quantum meruit: Quantum
meruit involves cases where someone gets a
benefit while the other party gets nothing. ...
In other words, it means that the other party
who has received the services is unjustly
benefited and must return it to the party who
provided such benefit.
 Rescind the contract and refuses
further performance of contract
• Under Sec. 65, when a party treats a contract as rescinded, it
makes itself liable to restore any benefits it received under
the contract to the party from whom such benefits were
received.
Ex.
P, a music teacher, contracts with B, a manager of a theatre, to
impart music training to his singers at his theatre for 2 nights
in every week during the next 2 months, and B engages to pay
her Rs. 1000 for each night’s performance. On the 6th night, P
willfully absents herself from the theatre.
Discuss: Can B rescinds the contract?
 Consequences of Recession of the
contract
• In case of voidable contracts—Sec.64
When the person at whose option the contract
is voidable, rescinds the contract, the other
party thereto need not to perform his/her
contractual obligations
The party rescinding the contract have to
restore the benefits, if any.
 2. Sue for Damages (Sec. 73)
• Damage is the monetary compensation allowed by the
court to injured party.
• The party injured by the breach of contract can claim for
damages.
Ex.
X, a buyer, agreed to purchase a house for Rs.5 lakhs, but Y,
the seller, failed to deliver it, normally, the buyer will be
forced to go and buy a house elsewhere in the same
location.
Discuss: If, in the meantime, the price of property has gone up
by Rs.1 lakh. What remedy the X will have against Y?
Ex. Opposite of the case
 Case: Hadley v. Baxendale
Plaintiffs operated a mill, which they were forced to shut down when the crank
shaft of their steam engine broke. They contacted the manufacturer of the
engine, W. Joyce & Co. (Joyce), and Joyce agreed to make a new shaft from
the pattern of the old one. Therefore, a servant of Plaintiffs went to the office
of Defendants, common carriers, to have the crank shaft taken to Joyce.
Plaintiffs’ servant told Defendants’ clerk that the mill was shut down and the
shaft must be sent immediately. The clerk informed Plaintiffs’ servant that if
the shaft were given to them by twelve o’clock any day, it would be delivered
by the next day. Plaintiffs took the shaft to Defendants the next day before
noon. Due to Defendants’ neglect, the delivery to Joyce was delayed, and
Plaintiffs did not receive the new shaft for several days after they should have
received it.
Issue. Are Defendants liable to Plaintiffs for damages suffered by Plaintiffs due
to lost profits?
 Held
Held. No. A non breaching party is entitled damages arising
naturally from the breach itself or those that are in the
reasonable contemplation of the parties at the time of
contracting. Here, while the breach by Defendants was the
actual cause of the lost profits of Plaintiffs, it cannot be said
that under ordinary circumstances such loss arises naturally
from this type of breach. There is a multitude of reasons for a
miller to send a crank shaft to a third party. Defendants had no
way of knowing that their breach would cause a longer
shutdown of the mill, resulting in lost profits. Further,
Plaintiffs never communicated the special circumstances to
Defendants, nor did Defendants know of the special
circumstances.
.
 Type of Damages
A. Unliquidated damages
I. General or ordinary
II. special damages
III. Exemplary, or punitive, nominal
IV. Damages for loss of reputation
V. Damages for inconvenience and discomfort
 General/Ordinary damages
Case
P agreed and in a contract to sell to Q 100
quintals of wheat at Rs.335 per quintal and the
price was to be paid at the time of delivery. The
price of wheat rose to Rs.350 per quintal and P
refused to sell the wheat. Can Q claim any
damages from P?
 Solution
• Decision: Yes, he can claim ordinary damages.
• Explanation (Hint): Q can claim Rs.1500 at the
rate of Rs.15 per quintal
 Special Damages
• Damages occur under some peculiar (different to
what is normal) circumstances.
Ex.
X delivered goods to railway admin. To be carried
to a place where an exhibition was being held
and told the clerk that if the goods did not reach
the destination on the stipulated date he (X)
would suffer a special loss. The goods reached
late. Can X claim any damages from Railways?
 Solution
• Decision: Yes
• Explanation (Hint)-X can claim special
damages
 Exemplary Damage
• The damages are awarded to punish the
defendant
• Eg. wrongful dishonour of cheque by bank
 Nominal damages
• Where there has been an infringement (the action of
breaking the terms of a law) of contractual rights , but no
actual loss has been suffered then nominal damages are
awarded. These damages are very small in amount.
A contracted to purchase a Scooter from B, a dealer.
But he failed to purchase the scooter. However, the
demand for the scooters far exceeded the supply,
and B could sell the scooter agreed to be purchased
without loss of profit. B is entitled only to nominal
damages.
 Damages for loss of Reputation
• These damages are not recoverable
• An exception is Banker which wrongfully
dishonour the customer’s cheque.
• In this case, the smaller the amount of cheque
is dishonoured, the larger the amount of
damages are awarded.-----Big Business man
• Nominal damages----Ordinary Man
 Damages of Inconvenience and
Discomfort
Example
P, a surveyor told Q, a client that the house which Q is buying is
in good condition but in fact substantial works need to be carried
on it. This put considerable strain on Q’s marriage as he has too
live under those appalling conditions with her wife. Q sued P. It
was held that Q was entitled to recover an award for his physical
discomfort.
b. Liquidated Damages and Penalty
• P gave Q a bond for the repayment of Rs.1000
with interest at 12%, at end of 6 months, with
a stipulation that in case of default, the
interest will be payable at 75%, from the date
of default. Is such rate of interest Valid?
 Solution
• Decision: No
• Explanation (Hint) This is a stipulation by way
of penalty and Q is entitled to cover only such
compensation which court will decide as
reasonable
 3. Sue for Specific Performance
Specific performance is an equitable remedy in the law of contract, whereby a
court issues an order requiring a party to perform a specific act, such as to
complete performance of the contract.

X, a party to a contract, paid for a delivery of

some musical instruments, but Y, the other
party, did not ship them properly and this cause
a bad impact on the performance. A specific
performance might require the goods to be
properly delivered.
Cases where specific performance
is granted:
• Where actual damage cannot be determined
• If monetary compensation will not be
adequate
• Where the act to be done is in the
performance of trust
• Where, in general, it would be just and
equitable to do
Cases where specific performance
is not granted:
• Where monetary compensation is an
adequate relief
• Where the court cannot supervise the
execution of the contract
• Where a contract is for personal service
• Where one party is minor
 4. Injunction
• An injunction is a legal remedy imposed by a court.
In simple terms, an injunction means that one of the
parties to a certain action must either do something
or refrain from doing something.
• The power to grant injunction is discretionary.
• It may be granted temporarily or for an indefinite
period.
• It may be prohibitory or mandatory
 Cont..
Example
A landlord might bring an action against a tenant for
mismanagement of domestic waste and garbage , in
which the right to protect the landlord’s interest in the
ownership of the premises is at issue. The landlord
might apply to court for an injunction against the
tenant’s continuing harmful use of property.
 5. Sue on Quantum Meruit
• It means “as much as earned or deserved” or
“as much as is merited”.
Eg.
A contractor was contracted to work on a school. The
contractor did some work but messes up part of the work
(breach of contract). The school suspended the construction
work because of the problem. The contractor was entitled to
be paid for the services he had already done for the school on
the basis of quantum meruit.
 MCQs
1. Anticipatory breach of contract arises when
the promisor refuses to perform his promise:
a) At the due date of performance
b) Before the time of performance arrives
c) After the due date of performance
d) Both a and c
2. Actual breach of contract arises when the
promisor refuses to perform his promise:
a)At the due date of performance
b)Before the time of performance arrives
c)After the due date of performance
d)Both a and c
3. Which of the following is not a kind of
damages that is generally awarded:
a)Special
b)Vindictive
c)Nominal
d)Personal
4. Exemplary damage cannot be awarded:
a)For breach of promise to marry
b)For breach of promise to divorce
c)Wrongful dishonour of cheque
d)Both a and c
5. In case of breach of contract, if the promisee
did not suffer any real damage, he can claim:
a)No damages
b)Exemplary
c)General
d)Nominal
 Some Weblinks to prepare the
topic
• https://www.toppr.com/guides/business-laws-cs/indian-
contract-act-1872/remedies-for-breach-of-contract/
• https://accountlearning.com/types-of-damages-for-breach-
of-contract-with-examples/#:~:text=Damages%20that
%20arise%20in%20the,contract%20are%20called%20ordinary
%20damages.&text=General%20damages%20are%20such
%20damages,intentions%20was%20not%20to%20punish.