IN CLASS EXERCISE

LINKS BETWEEN TERMINATION, DAMAGES, RESTITUTION

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A. The plaintiff carries on business from Calcutta as a distributor of cinema films.

The defendants are a limited company who import such films into India. The
contract between the parties was expressed in a letter dated May 8, 1936, sent by
the defendants to the plaintiff, under which the plaintiff was to maintain at his own
cost the defendants' office in Calcutta and handle their films in Bengal, Bihar,
Orissa, Assam and Burma in conjunction with the defendants' head office at
Cawnpore. The main stipulation was in the following terms:

That we shall deliver you a brand new positive print of each picture
approximately at the average of one picture a month and we shall pay for
all the royalties to the producers for the exploitation of the pictures and in
consideration of this, you will pay us a sum of Rs. 1,750 towards the cost of
each print supplied to you. Such payments to be made to us on demands
and the prints to be delivered to you within four to five weeks from the date
of the payment. The exact price of the print to be adjusted on the delivery
of the print and to be reckoned by adding the actual duty as would be
payable on the footage together with the costs of the positive print and
other incidental charges (shippers, freights, etc.).

B. This was followed by a provision whereby the plaintiff was to retain twenty-five
per cent of the revenue received on the exhibition of the film until he had
recovered half of his "investment on the prints" or "print cost," the balance being
divided between the parties equally : thereafter the whole revenue was to be
divided equally. The prints were to be returned to the defendants after the "
exploitation " was over.

C. The correspondence between the parties which followed upon the contract and
continued until January, 1937, need not here be described in detail, but it shows
 that two films only-Shipmates o' Mine and Annie Laurie-were offered to and
accepted by the plaintiff. On July 2, 1936, the plaintiff paid the defendants Rs.
2,000 on account of the sum due or to become due under the contract. From a bill
dated September 30, 1936, it appears that the full sum due for Shipmates o’ Mine
the first picture, delivered was Rs. 2,043; which included the cost of making the
positive print, customs duty, shipping charges, clearing charges, censor's fee, etc.
The film was delivered by the defendants to the plaintiff on October 5 ; but it
would seem that the plaintiff had difficulty in getting it booked by cinema
exhibitors, and on or about December 4, 1936, at the defendants' suggestion, he
returned it to the defendants for a time so that the defendants might try to get it
exhibited.

D. Meanwhile on November 7, 1936, the plaintiff had likewise paid Rs. 2,000 on
account of the sum due or to become due for Annie Laurie under the contract; but
this film had not been delivered by the defendants when on December 1, 1936, the
plaintiff wrote to the defendants making various complaints of delay and breach of
contract; and saying that in the circumstances which have happened we find you
have no bona fide intention of carrying out the contract and we decline to have any
business dealings with you. 

E. This letter intimated a claim by the plaintiff for refund of the sum of Rs. 4,000
already paid, for Rs. 908 expenses incurred, and for Rs. 5,000 damages. The
defendants by letter of December 3 denied that they had committed any breach.
The plaintiff on December 12 by letter and telegram, adhered to his letter of
December 1 and refused to act as defendants' agent any further. The defendants,
on December 14 denied the plaintiff's allegations of breach of contract and refused
his claims for refund and damages and also said that the advance of Rs. 4,000 was
spent on the purposes of the contract itself (the positive print, shipping charges and
other items mentioned); finally, by letter of January 21, 1937, they accepted the
plaintiff's repudiation of the contract and said that they were taking the
organisation of the contract territories under their own control and would claim
against the plaintiff for all losses.
 F. A suit was brought in the High Court at Calcutta on January 25, 1937. The plaint
alleged that the defendants had failed and neglected to perform their part of the
contract and to make over positive prints of a number of films therein specified by
name. On this basis it claimed (a) Rs. 3,000 as general damages for loss of profit,
(b) refund of the Rs. 4,000 paid on account, and (c) Rs. 913 expenses incurred.
The defendants by their written statement of April 22, 1937, denied that they had
committed any breach of contract, and averred that they had all along been ready
and willing to perform their part. They alleged that the plaintiff had broken the
contract and that they had suffered damages for which they were advised to bring
a separate suit.

Exercise – part I: Assuming that the defendants had indeed breached the contract,
would it be open (in principle) for the plaintiff to claim damages on the three heads
above?\

Rs. 4000- finally, by letter of January 21, 1937, they accepted the plaintiff's repudiation
of the contract. Sec 39 ---- When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the
promisee may put an end to the contract,

In a way, Section 39 makes the contract voidable at the option of promissee. Here, the defendant did rescind it. Therefore section 64 will gt triggered and D will be liable
to restore any benefits received. So should refund rs 4000 as the movies were never exhibited and P did not get anything out of it.

G. At the trial before Panckridge J. in January, 1939, it was found by the learned
Judge – a and rightly found, as the plaintiff by his learned Counsel now admits –
that the plaintiff failed to prove any breaches by the defendants entitling him to
repudiate the contract as he had done by his letter of December 1, 1936. But
learned Counsel for the plaintiff, contended that even if the plaintiff had broken
the contract and the defendants were justified in rescinding it, the plaintiff had,
under section 64 of the Indian Contract Act, 1872, a good claim for refund of the
sum of Rs. 4,000 paid on account… On the other hand, it was argued by the
 Defendants that section 64 of the Act did not apply to a case of termination under
section 39 (and further, that the amount of Rs. 4,000 was already spent for the
purposes of the contract).

H. The only matter raised now is the plaintiff’s right to recover the sum of Rs. 4,000
paid on account under the contract.

Exercise – part II: Please read the provisions of sections 39, 64, 65and 75 (including the
illustrations) of the Indian Contract Act. Sections 19, 53, 55 and 73 may also be relevant
depending on the line of argument chosen. Please summarise the detailed contentions
which can be advanced by the Plaintiff (to claim the Rs. 4000 even assuming that the
Plaintiff had breached the contract) and by the Defendants (to resist the claim). How
would you ultimately decide the matter?