Detailed outline on Breach of contract and its remedies

1. M.P.Prince Allwyn Jebaraj
Assistant Professor
Dept of Management Studies
SVGI, Coimbatore

2. All parties to a contract are expected to
perform their promises. When one party refuses
to perform his promise, then the breach of
contract takes place. The other party or parties
are called aggrieved or injured party or parties.
There are various types of remedies for the
injured parties. Such as –
i) Rescission of the contract.
ii) Claim for specific performance.
iii) Claim for injunction.
iv) Claim for quantum merit and
v) Claim for damages.

3.  If there is breach of contract by one party,
then the other parties may rescind the
contract and thereby he is absolved from his
all obligations under the contract.
Example: - M promises N to supply him a
motor car on 1st January 2007, and N
promises to pay for the motor car on 1st
January 2007. N is absolved from paying its
price.

4.  In some specific cases if the damages are not adequate
remedy, then the court can direct the party in breach for
the specific performance of the contract. In such case, the
promise is carried out as per terms and conditions of the
contract.
Generally in the following cases, the court grants specific
performance:
i) When the act agreed to be done is such that
compensation in money for its non-performance of the act
agreed to be done.
ii) When it is probable that compensation in money cannot
be get for the non- performance of the act agreed to be
done.
iii) When there is not any standard for ascertaining the
actual damage caused by the non-performance of the act
agreed to be done.

5.  i) Damages are an adequate remedy.
ii) The contract is not certain.
iii) The contract is inequitable to either party.
iv) The contract is of revocable nature.
v) The contract is made by the trustee in breach
of trust.
vi) The contract is of personal nature i.e. contract
to marry.
vii) The contract made by a company ultra-vires
of its memorandum of association.
viii) The court cannot supervise its carrying out.

6.  Injunction is an order passed by a competent
court restraining a person from doing some
act. Injunction can be defined as a mode of
securing the specific performance of the
negative terms of a contract. Negative terms
of contract imply doing something, which a
party has promised not to do. Injunction is an
order which is granted by the court
restraining the person to do what he had
promised not to do.

7. i) if the contract is voidable.
ii) if the contract becomes void or
iii) on discovering the contract as void.

8.  The claim for quantum merit may be arise if a contract
performed by one party has become discharged by breach
of the other party. The meaning of the phrase quantum
merit is ‘as much as earned’. The claim is not for the
original contract that has been discharged or void, but on
an implied promise by the other party to pay for what he
has done.
Quantum merits are arised in the following circumstances.
a) If a contract is found to be void.
b) If something is done without any intention to do so
gratuitously.
c) If one party abandons or refuses to perform the
contract.
d) If a contract is divisible.
e) If a contract is performed badly.

9.  Damages are a monetary compensation
awarded by the court to the injured party for
the loss or injury suffered by him. As per
contract, one party can claim damages if
other party breach the contract. The main
purpose of awarding the damages is to make
good the loss suffered by him. It is known as
doctrine of restitution. The Section 73 of the
Indian Contract Act, 1872 deals with the
compensation for loss or damages caused by
a party for breach of contract.

10.  There are mainly four types of damages, such
as-
i) Ordinary damages
ii) Special damages
iii) Vindictive or exemplary damages
iv) Nominal damages.
v) Damages for loss of reputation
vi) Damages for inconvenience

11.  When a contract has been broken the injured
party can recover from the other party such
damages as naturally and directly arose in the
usual course of things from the breach.
Ex:
A contracts to sell and deliver 50 quintals of
Wheat to B at Rs.775 per quintal and the price
to be paid at the time of delivery. The price of
wheat rises to Rs. 800 per quintal and A
refuses to sell the wheat. Now B can claim
damages at the rate of Rs.25 per quintal.

12.  Special Damages can be claimed only if special
circumstances which would result in a special
loss in case of breach of contract are brought to
the notice of the party. These damages arise on
account of the special or unnatural circumstances
affecting the plaintiff.
 The special circumstances which are mentioned
above are the circumstances at the time when the
contract is entered into. Subsequent knowledge
of special circumstances will not create any
special liability.
Read more:

13. These damages are awarded with a view to punish the
guilty party for the breach. The exemplary damages have
no place in the law of contract since the object of the
damages are to compensate the loss suffered by the
injured party in case of a breach. However, Exemplary or
vindictive damages are awarded to the following
exemptions.
 Breach of a contract to marry
 Dishonour of a cheque by a banker when there are
sufficient funds to the credit of the customer.

14. These damages are awarded when there are no
significant loss suffered by the plaintiff. It is awarded
for namesake to establish the right of the injured
party.
a) A contracted to purchase ‘LML Scooter’ from B, a
dealer, for Rs. 25, 000. But A failed to purchase the
Scooter. However, the demand for the Scooter far
exceeded the supply and B could sell the Scooter to Z
for Rs. 25, 000, i.e., without any loss of profit. Here if
B makes a claim upon A for breach of contract, he will
be entitled to nominal damages only.

15.  Generally not recoverable
 Exception – Banker who wrongly refuses to
honour a customer's cheque, if the customer
happens to be a tradesman, he can recover
damages in respect of any loss to his trade
reputation by the breach.
 If the customer is not a trademan he can only
claim a nominal damages.

16.  Damages can be recovered for physical
inconvenience and discomfort.
 The measure of damages is not affected by
the motive or manner of the breach.
 If the inconvenience caused by a breach is
substantial, the damages can be recovered on
the ground of fairness.