REMEDIES FOR BREACH OF CONTRACT

 INTRODUCTION
A Contract is legally enforceable agreement between two parties. Each party to a contract
makes a promise to either to perform a certain duty or pay a certain amount. If one party fails
to act as promised and other party has fulfills the duties under the contract, the other party is
entitled to legal relief.

 MEANING OF THE TERM BREACH OF CONTRACT

Breach of Contract refers when one party breaks the terms of an agreement between two or
more parties. A breach of contract is a violation of any of the agreed-upon terms and
conditions of a binding contract. The breach could be anything from a late payment to a more
serious violation such as the failure to deliver a promised asset.

 REMEDIES FOR BREACH OF CONTRACT

A legal remedy is a court order that seeks uphold a person’s right or to redress a breach of
law. When one party breaches a contract, the other party may ask a court to provide a remedy
for the breach.
There are several remedies for the breach of contract such as: Damages, Quantum
Meruit, Specific performance and injunction.

1. DAMAGES
The word ‘Damages’ means monetary compensation for the loss suffered. Damage is the
most common remedy available to the injured party. This entitles the injured party to recover
compensation for the loss suffered by him due to the breach of contract. Section 73 to 75 of
the Indian Contract Act, 1872 incorporates the provisions in this regard.

 TYPES OF DAMAGES

1. Compensatory damages: aim to put the non-breaching party in the position that they
would have been in if the breach had not occurred.
 2. Punitive damages: are payments that the breaching party must make, above and
beyond the point that would fully compensate the non-breaching party. Punitive
damages are meant to punish a wrongful party for particularly wrongful acts, and are
rarely awarded in the business contracts setting.
3. Nominal damages: are token damages (small amount of damages) awarded when a
breach occurred, but no actual money loss to the non-breaching party was proven.
4. Liquidated damages: are specific damages that were previously identified by the
parties in the contract itself, in the event that the contract is breached. Liquidated
damages should be a reasonable estimate of actual damages that might result from a
breach.

Section 73 is based on a case law Hadley v. Baxendale i In this case well known rule was
stated by the court as follows:
“Where two parties have made a contract which one of them has broken, the damages which
the other party ought to receive in respect of such breach of contract should be either such as
may reasonably and fairly be considered as arising naturally, i.e. according to usual course
of things, from such breach of contract itself, or such as may reasonably be supposed to have
been in the contemplation of both parties at the time they made the contract as the probable
result of the breach of it.”

2. QUANTUM MERUIT
Quantum meruit literally translates to “as much is earned”. At times when one party of the
contract is prevented from finishing his performance of the contract by the other party, he can
claim quantum meruit. So he must be paid a reasonable remuneration for the part of the contract
he has already performed. This could be the remuneration of the services he has provided or the
value of the work he has already done.
In a claim of quantum meruit, the plaintiff does not seek a precise sum of money, nor a sum
representing the general damages incurred by the plaintiff as a consequence of some unjust
act on the part of the defendant, but a sum which will provide the plaintiff, the value of what
the plaintiff has done for the defendant, usually calculated in terms of the market price or
value of those services.
In William Lacey (Hounslow) Ltd v. Davisii, the plaintiffs rendered services to the defendant
at the latter's request in anticipation of a building contract that failed to materialize. When the
plaintiffs sued for payment for the services, the defendant argued that it was the common
 expectation of the parties that a contract would be entered into between them and that the
plaintiffs' services would be rewarded by the profits of the contract. The defendant denied
that in the circumstances there was any implied promise to pay for the services in issue. The
defendant's argument was that any quantum meruit claim was necessarily contractual, and
any such claim was negated by the fact that the parties had an express contract in mind
thereby making it impossible to imply any other, contradictory contract. This argument was
rejected. Instead the court explained that quantum meruit, though contractual in origin, had
given rise to another form of action founded upon what was known, in 1957 when the case
was being determined, as quasicontract. In such quasi-contractual instances of the application
of quantum meruit the court looked at the facts and ascertained from them whether or not a
promise to pay should be implied, irrespective of the actual views or intentions of the parties
at the time when the work was done and the services rendered.
3. SPECIFIC PERFOMANCE

Specific performance is most common in sales contracts. This remedy is sometimes used
when a sales contract involves something unique, such as a particular tract of land, a rare
heirloom, or a priceless art piece.

Illustration: Specific performance is best understood by considering an example. Let's say

that Arty is an art dealer. He acquires a rare, ancient Egyptian statue that is thought to have
belonged to Cleopatra. Andrea collects Egyptian art and makes a sizable offer to buy the
piece. Arty agrees, and the two make a valid legal contract. Arty then decides that he'd rather
keep the piece for now. He breaches his contract with Andrea. Andrea sues Arty for breach of
contract. The court decides that the piece is truly priceless, and Andrea can't acquire another
comparable piece no matter how much money the court awards her. Instead, the court decides
that Arty should comply with the terms of the contract, and sell the piece to Andrea for the
price she already agreed to pay. This is specific performance.

4. INJUNCTION

Another equitable remedy is injunction, which is a remedy that prohibits a party from a
particular act. Note that specific performance and injunction remedies are similar, but the key
difference is this: specific performance orders a party to do something, and an injunction
orders a party not to do something.
 Injunctions can be issued as a remedy at the conclusion of a lawsuit, such as a breach of
contract claim.

Under Sections 36 & 37 of the Specific Relief Act 1963, there are two types of injunctions –
temporary and perpetual, whereas Section 39 governs mandatory injunctions.

1. Temporary or interim injunctions are governed by Order 39 of Civil Procedure

Code 1908 and are those injunctions that remain in force until a specified period of
time, e.g. 15 days, or till the date of the next hearing. Such injunctions can be granted
at any stage of the suit. 

2. Permanent or perpetual injunctions, as under Sections 38 to 42 of the Specific

Relief Act, 1963 are contained in the decree passed by the Court after fully hearing the
merits of the case. Such an injunction permanently prohibits the defendant from
committing an act which would be contrary to the plaintiff’s rights. 

 CONCLUSION

A contract is an agreement made between the two parties that are enforced by the court. In
case any of the promise is not fulfilled by the party, this results in the breach of contract.
Hence, when breach of contract happens the party look for its remedies and consequences of
breaching. There are several kinds of breach: Suit for damage, Suit upon quantum meruit,
Suit for specific performance of the contract, Suit for an injunction. All these are important in
dealing with the breach of contract. it is also stated that a third party can claim for the
suffered loss and further that interest can be claimed as damage if only it is mentioned under
the terms of contract. Then is difference between Indian law and English law regarding
liquidated damages and penalty and whether actual loss is to be proved or not. Lastly
highlighting the points missing in our contract law as compared to other countries. Overall
The Indian Contract Act is a relevant and comprehensive piece of legislation.
i
(1854) 9 Ex. 351
ii
[1957) I W.L.R. 932.