Bahria University Islamabad

Department of Law
Subject
Law of Contract 1

Assignment On
Consequences of Breach of contract

Submitted By
Muhammad Ibrahim
Enrollment no: 01-177162-021
Submitted to
Mr. Adnan

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 Table of contents

Abstract- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - page 3

Introduction- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - page 4

Types of breach of contract - - - - -- - - - - - - - -- - - - - - - - - - -page 4

Consequences of breach ------------- - - - - - - - - - - - - - - - - - - page 5

Remedies for breach of contact & statutes - - - - - - - - - -- - - - -page 8

Case laws - - - - - - - - - - - - - - - - - - - - -- - - - -- - - -- - - - - - - -page 9

Sumpter V Hedges (1898) UK - - -- - - - - - - - - - - - - - - - - - - page 9

Hochster V De La Tour (1853) UK- - - - - -- - - - - - - - - - - - -page 9

Conclusion- - -- - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - page 10

References - - -- - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - page 12

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Abstract

The provision is dealing with breach of contract and its consequences which are faced by

parties. It is explaining that what breach of contract is and how parties face it. Solutions are also

mentioned in it. An overview of jurisprudential part and statutory part is also discussed so that

we should know the importance of all this. The research is based on different articles, books and

on work of some researchers. Further detail is mentioned below.

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Introduction :

A breach of contract is a failure, without legal excuse, to perform in a manner that meets the

standards of the industry or the requirements of any express warranty or implied warranty of

merchantability. A breach of contract is a broken contract without a justifiable, lawful excuse.

In general there are four types of breach of contract :

Material Breach :

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A breach is material if, as a result of the breaching party’s failure to perform some aspect

of the contract, the other party receives something substantially different from what the

contract specified. Factors that court consider in determining materiality include :

1. The amount of benefit received by the non breaching party;

2. Whether the non breaching party can be adequately compensated for the damages.

3. The extent of performance by the breaching party.

4. Negligent or willful behavior of breaching party.

5. The likelihood that the breaching party will perform the remainder of the contract.

Minor breach :

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A breach is minor if, even though breaching party failed to perform some aspect of the

contract, the other party still receives the item or service specified in the contract.

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1&2 Jec.unm.edu./eduation/online-training/contract-law/breach-of-contract

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 Fundamental Breach :

This kind of violation allows aggrieved individual to stop performance of the contract

and sue for damages.

Anticipatory Breach :

This allows one person to say the contract is broken when it becomes evident other

party will not execute his or her end of the contract within the allotted time.

Consequences of breach of contract :

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Compensation for loss or damage caused by breach of contract :

When a contract has been broken , the party who suffers by such breach is entitled to

receive, for the party who has broken the contract compensation for any loss or damage

caused to him thereby, which naturally arose in the usual course of things from such

breach , or which parties knew when they made the contract to be likely to result from

breach of it.

Such compensation is not given for any remote and indirect loss or damage

sustained by reason of the breach.

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Compensation for failure to discharge obligation resembling those

Created by contract :

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 __________________________________________________________________________

3&4 contract act 1872 pg29-pg30

When an obligation resembling those created by contract has been incurred and has not

been discharged, any person injured by the failure to discharge it is entitled to receive the

same compensation from the party in default, as if such person had contracted to discharge

it and had broken his contract.

Explanation:

In estimating the loss or damage arising from a breach of contract, the means which existed

of remedying the inconvenience caused by the non-performance of the contract must be

taken into account.

Illustrations

a) A contracts to repair B’s house in a certain manner, and receives payment in

advance. A repairs the house, but not according to contract. B is entitled to recover

from A the cost of making the repairs conform to the contract.

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Compensation for breach of contract where penalty stipulated for :

When a contract has been broken, if a sum is named in the contract as the amount to

be paid in case of such breach, or if the contract contains any other stipulations by

way of penalty, the party complaining of the breach is entitled, whether or not

actual damage or loss is proved to have been caused thereby, to receive from the

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 party who has broken the contract reasonable compensation not exceeding

5.contract act 1872 pg31 chapter VI

the amount so named or, as the case may be, the penalty stipulated for.

Explanation :

A stipulation for increased interest from the date of default may be stipulation by

way of penalty.

Exception :

When any person enters into any bail-bond, recognizance or other instrument of the

same nature, or, under the provisions of any law, or under the orders of the Federal

Government, or of any Provincial Government gives any bond for the performance

of any public duty or act in which the public are interested, he shall be liable, upon

breach of the condition of any such instrument, to pay the whole sum mentioned

therein.

Explanation :

A person who enters into a contract with Government does not necessarily thereby

undertake any public duty, or promise to do an act in which the public are

interested.

Illustrations

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 a) A contracts with B to pay B Rupees 1,000, if he fails to pay B Rupees 500 on a

given day. A fails pays B Rupees 500 on that day. B is entitled to recover from A

such compensation, not exceeding Rupees 1,000, as the Court considers reasonable.

Remedies for breach of contact & statutes :

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The principal remedies for breach of contract are:

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(a)damages; (b) specific performance of the contract; and

(c)injunction.

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

caused to him thereby, being loss or damages which naturally arose in the usual course of

things from such breach or which the parties knew, 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 of damage sustained by reason of the breach. The same principle applies

for determining damages for breach of an obligation arising from quasi-contract. In

estimating the loss or damage arising from a breach of contract, the means which existed of

remedying the inconvenience caused by the non-performance of the contract must be taken

into account. This is referred to, as the duty to mitigate. Illustration A stipulation for

increased interest from the date of default may be regarded as a stipulation by "way of

penalty", if the amount is excessive. The court is empowered to reduce it to an amount

reasonable in the circumstances. In certain special cases dealt with in the Specific Relief

Act, 1877, the court may direct against the party in default "specific performance" of the

contract, that is to say, the party may be directed to perform the very obligation which he

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 has undertaken, by the contract. This relief is awarded only in exceptional cases. That Act

also deals with permanent injunctions. Temporary injunctions are governed by the

provisions of order of the Code of Civil Procedure, 1908.

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6 zklawassociates.com/the-law-of-contract-in-pakistan

Case law

Sumpter V Hedges (1898) UK

 7The claimant agreed to build two houses and stables for the defendant. It was agreed that

£565 would be payable on completion. The claimant commenced performance and then ran

out of money and was unable to complete. He had performed just over half of the contract.

The defendant completed the work himself. The claimant sought to recover £333

representing the value of the work he had completed. He argued that in completing the work

himself, the defendant had thereby accepted partial performance and prevented the claimant

from completing the contract.

Held:

The claimant's action failed. The court held that the defendant had no choice but to accept

partial performance as he was left with a half completed house on his land.

Hochster V De La Tour (1853) UK

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Applicants for three months from first June 1852 agreed that the defendants Messenger. 11

May in the work on the defendant did not want that rejected his services and wrote the

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7&8https://www.lawteacher.net/free-law-essays/contract-law/case-study-of-breach-of-

contract-contract-law-essay.php

manuscript for compensation. Scored another service contract by the complainant, but not

until 4 July start. The plaintiff sued for breach of contract on 22 May Employees of the

contract due by 1 Begin in June, when the card is not a breach of contract claims to 22 days.

Held:

Before the injury occurred in the application until the parties of its intention not to perform

the contract if the innocent party would you mind passing. They shall immediately or can

choose their continued violation of this Agreement to wait.

Among them immediately or to seek their own contracts before they are waiting for a

breach of the law continue to enter into the innocent party to make a choice to make. This

can be beneficial or harmful.

Conclusion

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 A contract creates certain obligations that are to be fulfilled by the parties who entered into

the agreement. Legally, one party's failure to fulfill any of its contractual obligations is

known as a breach of the contract. Depending on the specifics, a breach can occur when a

party fails to perform on time, does not perform in accordance with the terms of the

agreement, or does not perform at all. Accordingly, a breach of contract will usually be

categorized as either "material" or "immaterial" for purposes of determining the appropriate

legal solution or "remedy" for the breach. When a breach of contract occurs or is alleged,

one or both of the parties may wish to have the contract enforced on its terms, or may try to

recover for any financial harm caused by the alleged breach.If a dispute over a contract

arises and informal attempts at resolution fail, the most common next step is law suit.

Courts and formal lawsuits are not the only option for people and businesses involved in

contract disputes. The parties can agree to have a mediator review a contract dispute, or

may agree to binding arbitration of a contract dispute. These out of court options are two

methods of "alternative dispute resolution."

In Pakistani law it is dealt under contract Act of 1872.

When an individual or business breaches a contract, the other party to the agreement is

entitled to relief or a remedy under the law. The main remedies for a breach of contract are:

1. Damages,

2. Specific Performance, or

3. Cancellation and Restitution

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 References

 www.zklawassociates.com

 Jec.unm.edu

 www.rocketlawyer.com

BOOKS

 Contract Act 1872 .

 The law of contract in Pakistan.

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