ICA,

REMEDIES FOR
1872:R

AREACH OF CONTRACT
10
wwww.wwwwa w.wwo*

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10.1INTRODUCTION

means to break obligation imposed by the contract or

reach of
contract

terms and the contract. It occurs when

conditions of
act upon agreed
without a legitimate legal excuse refuses perform
t to to
the c o n t r a c t
a party
to defendant may be
obligation. It may be noted that the
his contractual which
case of "Force majeure"
commit breach of contract in
alowed to riot or natural
of extreme event, such as, war,
means on the happening
of contract).
disaster (supervening impossibility

CONTRACT
10.2 TYPES OF BREACH OF

Breach of Contract may be:

Actual breach of contract, or
of contract.
Anticipatory or constructive breach
1.ACTUAL BREACH OF CONTRACT
fails or
ctual breach of contract may take place
when one of the parties
when pertormance
this obligation either (a) at the time
hA PCrlorm the contract. It may
occur

2res ue, or (b)

during performance of
Mpressly or impliedly.

175
 UNIT I
Para 10.2
176
EXAMPLES
Bon I" July. He does not
deliver 500 cell phones to
agrees to
1. A phoes
cell leliver the
on that day. This is a breach of coniract by A on the. due date

2. A agreed to supplv
to B 500 laptops at a certatn price. The laptor were
ps
be deliered in five instalbnents of 100
each. After 3 300laptops had been
supplied B asked A o deliver no more laptops. This is the
he actual
actual h
contract during performace here A is entitled to bring an bring
an a breach
action ag of
B for breach of
contract. nst

breach of contract due to non ner

It be noted that the actual
may
ony take place provided
the time for performance has arrived mance
can
breach of contract entitles the aggrieved party to treat the cont
terminated and sue the breaching party for damages.
Actual
contract as
2. ANTICIPATORY BREACH

When a party to a contract rescinds or renounces his obligatioOn L.c

date of actual performance, breach by him is termed as anticina
before th
Section 39 days down
tory.
When a party to a contract has refused to perform, or
himself from performing, his promise in its entirety, the pron disabled
the promise
mav put an end to the contract, unless he has signified, by word
conduct, his acquiescence in its continuance." ds or

When a promisor fails to pertorm his obligation and the promisee

condone
dones
his breach or contract or waives his right, the contract
continues. Insich
case innocent party is entitled to claim compensation from the party in
detault.

Anticipatory breach may take place in the following two ways:

() By Express renunciation, and
(i) By Implied renunciation
(i) By express renunciation means when the
isee expressly before the due promisor informs the prom
date of performance, that he
perform his obligation. will n

EXAMPLE
Principal employs A as his rom Ist of March. On2
Feb. he agent with effect from Ist
informs him that his services
will
of Mar i
patory breach of contract
by
not be required. 1 his
D
express renunciation.
 ICA, 1872: REMEDIES FOR BREACH
OF
177
CH. 10- CONTRACT Para 10.2
i p l i e d renunciation. In this case the promisor by his ow
enders the pertormance impossible. Here the party does some-
h i c h indicates his intention not to perform the contract.

EXAMPLE

Aagrees to marry B on AkShay lriutya, Before this date, A murries C. Here

duct has mmade the performace impossible. This is anticipe
inplied remunciation.
breach of contract by
Breach
of Anticipatory
Consequences
can exercise the followin options in case of anticipa-
party
The aggrieved
torn breach:

the contract a s terminated and to sue the party in

T o treat and
He may put an end to the contract
sue

default for damages. due date of performance.

in default without waiting till the
the party his obligation under
he e x c u s e from pertorming
In such a case, gets
the c o n t r a c t .

EXAMPLE
theatre, to sing
of a
enters into a contract with B, the manager
A, a singer, nert two months,
andB
in week during the
at his theatre
two nighis every
On the sicth
1O0 for each night performance.
her rupees
engages to pay
an
theatre. B is at liberty to put
absents herself from the
night A wilfully
c a n s u e A for damages.
end to the contract. He

CASE LAW: Frost vs. Knight (1872)

when his father
to marry Bupon
his father's death; but
Facts: A promised A at
a n action against
B brought
alive, he repudiated the
contract.
was
contract (death of
fa-
once without waiting till the
date of performance
for damages.
ther). Held, B was entitled to sue A

alive and wait till

the date of perfor
D To treat the contract a s
contract as alive and
if he does so
mance. He may elect to treat the
this case the contract
In
has to wait till the date of performance.
NC benefits of both. The promisor may
in
S
kept alive for the mutual
case reconsider and perform
the contract. If he pertorms
Ca
t h e other party too has to discharge his obligation.
the
alive and in the intervening period,
t h e contract is kept due to supervening impossl
o r ails to perform the contract
 CONTRACT ACT, 1872
INDIAN
UNIT I-
Para 10.3
loses his right to ssu
ht to ue fordam
e foredamanages
aggrieved
party advantage of
take advantage
them
of them and and the
bility, the entitled to
becomes
promisor
Assessment of Damages
Price prevailing onL

=
Contracted price
-

e date oi
Amount of damages
pertomance of contract

EXAMPLE

on 10th
wheat to B of July at a certain ne
A agrees tosupply 100 bags of deliver the same to him
B that he will not on
On 5th July he informs
the contract alive till 70th of July and wait
due date. Here B can keep for
the performance. lf A makes up his mina to deliver 100 bags of wheatom
on
10th July then B will pay the price to him But if he still fails to Dertorm
then B is entitled to exercise legal remedies against him.

Suppose B has kept the contract alive till 10th of July and on 8th July
Government imposes ban on the sale of wheat in the market then A would
be entitled to take advantage of these circumstances and Bwill not have the
right to claim damages from A.

CASE LAW: *Hochester vs. De La Tour (1853)

Facts: Hwas engaged as courier by D and he was to accompany D on a
trip which was to commence from 1
June. Twenty days before this date D
Wrote to H that his
services would no longer be
against D for the required. H filed a sut
anticipatory
breath of contract although
the time for 1s
pertormance had not yet arrived.
Held, the court
effective and enforceable from observed that co
tract becomes the
and not from the the date when it is maue
time its
awarded to H. performance is due. Hence damages ere

CASE LAW *R.B. Shah

vs. N.
Facts: A
agreed to
Gopal (1906)
tracts to be purchase from B 200
first contract.delívered on different dates. A
tonnes ofof wheat
wheat under two con
B failed
iled to
una o the
f
tory breach of terminated both the take
to take delivery
deliveipd
contract. Held, contracts on the nticipa-
as A did
not refuse
to
Bwas not entitled grouhe
to terminate the contrac
entitled to
perform both the contracts. termna
10.3
REMEDIES FOR
A valid BREACH OF
enforcedcontract gives rise
in case to
CONTRACT
breach rights
c a nb e
of and
contractobligations
of ations and
a these right The Latin

by way
ay of remedies.
o
 CH 10-ICA, 1872: REMEDIES FOR BREACH OF CONTRACT Para 104
179
Ubi Jus, ibi remediunm' signifies where there is a right, there is a
proverb
occurrence ot breach, the aggrieved party is entitled to one or
On
remedies:
all, of the following
r e m e d y

not
but
more
damages
Suit for
( rescission
Suit for
(in
quantum meruit
Suit upon
it)
performance
tor specific
() Suit
for injunction
(v) Suit 1872
above points is provided under the Indian Contract Act,
aB
lawon
Thelaw
The
o n the
Relief Act, 1963.
and the Specific
remedies are known as equitable remedies.
The last four

DAMAGES
10.4 SUIT FOR
be defined as monetary compensation payable to
The term damages may
for the loss or injury suffered by him in case of breach
the aggrieved party
of awarding damages is to place the
of contract. The primary object
financial position in which he would have been
aggrieved party in the same
breach of contract not occurred. It may be noted that damages
are
had the
and not for the
allowed by way of compensation given to0 aggrieved party
the guilty party.
purpose of punishing

KINDS OF DAMAGES
Thekinds of damages are as follows:
1. General or ordinary damages
2. Special damages
3. Exemplary, punitive or vindictive damages
4. Nominal damages
.General or Ordinary Damages. These are the damages which are
awarded for compensating the loss that arises naturally from the breach
Contract. They are confined to the direct and proximate consequences
n o t cover the remote and indirect losses or consequences of the
breach of a contract.
 OR DREAC

A
CH. 10-

REACH OF CONT
contracts to 181 Monday cert ACT Para
the money on paya sum of 10.4
on
Castle
that day. B, inmoney toB on a specified
N e w

at

the railwaj company, the count of negligen

that day, is unable
to pay his consequence of not
day. A does part of
S, theretore, claimed da
samples eached
rea
and is totally receiving the nages for theonly
make good to B debts n on
he nmoney was over.
onlk
after the exhibi
anything ruined. Pay tion ition. Held, the company was
together with interest upto except A is noti liable as it hadloss of his profits at
the exhibiti

the
the date of principal sum he
liable circumstances, that the the
payment. contractedla
d
thespecial
speci.

Castle exhibition, and ust have

equipments were knowledge of
to oe exhibited att

CASE LAW : Jackson

New

ery might
result in such loss. contemplated that a
delay indeliv.
vs. Watson & Sons
Facts: J's wife died from (1909) Punitive
indictive
by W. Jtook an action Tin poisoning caused by the
or

rule that the damages areDamages.

Exemplary,

These
allowed by way damages are an
3.
against W for the breach of tinned fish sun
entitled to damages incurred exception
to the
e r

contract. not punishment. Where breach of contract

of
by () extra servants Held compensation
services duringEmploying
the loss of the wife's by one
illness, (iî) Medical by reason in monetary loss to the aggrieved party but also subjects himonly
party not
Pecuniary Loss occasioned by the death of his wife. expenses, and
results
and mental suffering,
and.(in disappointment
the need tor to
vindictive damages
2. Special Damages. These are the
arises.

breach of contract due to

consequential
the existence of damages arisine frs The concept
of vindictive damages is not a part of Indian
heen borrowed Contract
damages can be awarded
the contract both the
special
by courts only when at the timecircumstances trom
of Such
and
from the
English Law. These
llowed by the Indian courts in the following two cases: damages are
Act, 1872

will arise.
parties reasonably contemplated that formatio
ation of
(à Breach of a contract to mary. In this
such damoo
ama case the
will depend upon the extent of injury to the amount of damages
EXAMPLE
party's feelings.
(d Where a banker refuses
to honour a
there are sufficient funds to the credit
customer's cheque. When
A, builder, contracts to erect and
a of the customer but
finish a house by the first of then the banker dishonours his
order that B may give
possession of it at that time to C, to whomJanuary,in cheque, he is entitled to these
even

contracted to let it. A is informed of the contract between B he has ages for the loss of his
reputation. dam
andC. A bulds
the home so badly that, before the In case of
unjustified dishonour of a
first of January, it falls down and has to
be re-built by B, who in
consequence, loses the rent which he was to have ascertaining damages is, "the smaller thecheque
cheque,
by a banker the rule of
the greater the damage."
received from C, and is obliged to make Of course, the
compensations to C for the breach actual amount of
of his contract. Held, as the special circumstances were made known toA, of the customer. damages will differ according to the status
he must make compensation to B ) for the cost of
rebuilding of the house
iü) for the rent lost, and (fi) for the compensation made to C. CASE LAW: Westerm vs. O Lathe State Bank
(1925)
racts: Banker after agreeing to advance money for Westem's trip to
t the
special circumstances are already within the knowledge ofthepart Onia failed to credit Western's A/c with the result that the Call-
responsible for the breach of contract, the formality of communicaus ca by him were dishonoured. Western filed a suit against the cheques is
banker tor
them to him may not be necessary. mages. Held, Western was entitled to damages for humiliation and men-
tal suffering.

CASE LAW: Sumpson vs. London& North Western Railway 4. Nominal damag
by way of
ompensation amages. These damages neither allowed
(1876) nor by
are

party to claim damages in case ofsimply

worked
at to
Facts: S, a manufacturer used to exhibit his samples
sa of his equipmen recognize
of the right of aggrieved
way of punishment. These
breach
are

contract. It consists of small amount, say, rupee l00 rupee.

company

agricultural exhibitions. He delivered his samples to the railwayre m u s treach

or
a a
to be exhibited at New Castle, On the consignment he wroe
Para 10.4 UNIT I- INDIAN CONTRACT ACT, 1872 1. 10-ICA, 1872:REMEDIES FOR BREA H OF CONTR
C H

Indian Courts have allowed 182 183 Para 10.4

these damages vs.
Baxendale
in the LAW:Hadley
()Where the party has not suffered any actualfollowing cases
CASE
ases .

H's mill was stopped due to

breakdown of a cranks
(in Where the aggrieved party has failed to
damage or lose
oss.
F a c t s :

common
carrier, to be taken to the naft. He deliv
the shaft B,
to a

prove the loss,

ered

shaf on the basis of old one. H did not manu

new
urer for
(iin Where the actual damage or loss which has making
a
make known to B
arisen, it was me would result in loss of profits.
By some
to the default of the
more au delivery of the shaft was delayed in transit neglecta on the part of B
that
aggrieved party and less from the
the wro
wrongiul
of the defendant.
could not work. H filed a suit : ainst B
beyond
reasonat
and mill claiming damages
(iv) Where the breach is technical and the of
profits because stoppage of mill due to for the
aggrieved
intention to perform his obligation in the contract.party has Bwas not liable for loss of non-availabilitv.
also no
a
shaft. Held, profits
eircumstances communicated to Bdid notduring the period of delay
show that
EXAMPLE elivery of the shaft would entail loss of profits to the mil delay in a
the
he

A contracted purchase
to LG Air
Conditioner froma dealer. Brut he t observed in this case
to purchase the air conditioner. However, the demand Alderson, B
for LG Air C
tioners far exceeded the supply and AC dealer could sell the AC
agreed
where two parties have made a contract which one of
them has
purchased without loss of profits. Here if dealer makes a claim upon be hroken, the damages which the other party
the breach of contract, he will be entitled to nominal Afor ought receive in
to
damages respect of such breach of contract should be such as
only be. may fairly
cause he has not suffered any actual loss. reasonably be considered either arising naturally, ie, accordingandto
the usual course of thing[ from such breach of contract
itself or such
as may reasonably be
supposed to have been in contemplation of
RULES REGARDING ASSESSMENT OF DAMAGES both the parties at the time they made the contract, as the
result of the breach of it." probable
The Indian Contract Act, does not lay down the mode and manner as toho
Thus, the judgment pertains to the special
and in what manner the assessment of damages or compensationhasto allowed where special circumstances are not
damages which cannot be
made. The method used for assessment of damages will depend uponthe the parties. brought to the knowledge of
facts and circumstances of each case.
The rules
Section 73 lays down
regarding the damages based on provisions of Secs. 73 to 75 and
cOurt judgments may be summarised as follows:
"When a contract has been broken, the party who suffers bysuch (9 Damages arising naturally. The aggrieved party is
breach is entitled to receive, from the party who has brokenth* receive such entitled to
damages as may fairly and reasonably be considered
contract, compensation for any loss or damage caused him thet
to to arise naturally from the breach.
by, () which naturally arose in the usual course of things trom Damages in the contemplation of the Unless the
breach, or (i) which the parties knew, when they made thecon parties. specia
Cumstances are brought to theoknowledge of the parties,
parties, special
specha
to be likely to result from the breach of it. Such compensationsdbi damages cannot be recovered.
to be given for any remote and indirect loss or damage sustu
nages for remote and indirect loss. No damages are allowed
reason of the breach. for rer
remote and indirect loss or sustained by of the reason

The above mentioned rules regarding damages as per Sec. 54 The lho
hefacs
basedot
bre
breach. damage

Baxandale (1854)
the judgment in the English Case, Hadley vs.
Damages
by
are
compensatory and notpunitive. Damages are allowed

of the case are: way of compensation and not by way of punishment.

Two cases

wher
where this chapter.
these are have been discussedearlierin
allowed
 Para 10.4 UNIT I INDIAN
-

CONTRACT ACT, 1872

1872 : REMEDIES FOR REACH OF
() Damages not allowed where the CONTRA Para 10.4
10-1CA,

CH.

the party did not suffer party did not breach would cause 104
loss, the court may, in suffer los ss.
185 that
lt wasaware mental sufferin
seretion,Whaes
him nominal its discrot Wh Ltd. (1973)1
damages only. Swan Tours (Jarvis
(v) Mitigation of vs.

of contract for sale.

of breach
damages or loss. The Explanation to
Damagesin n case
of breachthe Under a contrad
Under.
estimating the loss or damage arising from a Sec. 1373 a.
lays dow
In in case
sale of goods,
it)
(sale of goods, amount of
the means which existed
of remedying the breach of .
of
difference
the contract price and
between
damages is the
market price
by inconvenienea on the date
non-performance of the contract must be
of the breach.

The injured party is not entitled to recover

taken caused
aken into accou
into acc in quasi contract. The quasi contracts have
been
pla
Damages
formal placed
damages. The court imposes duty upon him unlimited amo in the
same position as
acts
relating to
resulting from the breach of contract.
a
to minimise to be
awarded to
the injured party in case of compensation
breach of
minimise such damages rather than
He should
ould act he lbsy
prudenil
act prudent Tn
other
obligation. Inother words,the amount of contractual
compensation awarded is
accumulate. waiting for the dama. in case of breach of quasi contract and formal
age u contract.
CASE LAW Neki vs. Pirbhu (xi)
Damages for inconvenience
and discomfort.
Damages can be re
covered for physical inconvenience and discomfort Where the
discomtort in-
Facts:A took a shop from B on lease and convenience or
ulting from the breach is
give him possession and, there were other paid
an advance.
Bcould ne the damages can be recovered on the basis of fairness. substantiai
but A chose not to do business for shops available in the vicinit
eight months. After eight
filed a suit against B for breach of
contract claiming months. A CASE LAW: Hobbs Vs. London &S.W. Rail. Co. (1875)
advance and loss of profits for damages includine Facts: Hwith his wife and children took
eight months. Held, he was entitled
refund of his advance and nothing more, as he was to a
ticket for a
midnight train, to be
under duty to minimise transported to a particular place where he lived. They were, however trans
damages and could have done so by taking another
shop in the vicinity at Dorted to a wrong place where they could get neither convevance nor
that very time when he was refused hotel and had to walk several miles to reach their home on a
possession by B drizling wet
night and as a result his wife caught cold and he had to incur medical
(vi) Difficulty of assessment. Difficulty in assessment of damages can expenses. Held, he was entitled to recover compensation tor inconvenience
be a ground for and not for medical
not
preventing the injured party from recovering expenses for the sickness of his wite as it was ver
remote and indirect
them. The court must do its best to consequence.
ascertain the amount of dam
ages and pass a decree for the same.
(xi) Cost of suit. When a party files
a suit in the court of law, he incurs
some
CASE LAW: Chaplin vs. Hicks (1910) expenditure thereby. If the judgment is in his favour, heis
enitled to recover cost of suit along with the damages. However, it
Facts: H (the defendant) organized a beauty competition in which read' IS not the
ers of certain newspapers were to select 50 ladies right of aggrieved partv but is within the discretion of the
by votes. Hhimselt was court to award or
to refuse such costs.
to select 12 out of these 50. The
selected 12 were to be provided
theatrt
jobs. Cthe (plaintiff) was one amongst 50 selected by the readers.
She LIaUIDATED DAMAGES AND PANELTY
not given reasonable opportunity to appear at the final selection through
H's negligence. Breach of contract on the part of Hresulted in alossoftie The
Paidd contracting
Ticulh to
chance to C. Held, Cwas entitled to
damages although it was di in case of parties may stipulate in the contract a sum of money tob
determine them. breach
Cach of contract by cither partv. Whetherit may beterhed

(vii) Damages for mental agony and liquidated damages or

otallowed

for
suffering. Damages arc i
injured feelings except where thepany
or mental agony penalty, depends upon facts of each particular casc.
Para 10.4
UNITI- INDIAN CONTRACT ACT,
English Law 1872 ICA, 1872 REMEDIES FOR
CH. 10- REACH OF
It makes
distinction between
187
74
CONTRACT Para 104
Pneumatic Tyre liquidated damages and to S e c .

Therules are: Company vs. New Garage and Motorpenalty in. sgcep
Exception

the following one exception

CompanyDun
provides
section
(a) Liquidated any (1914, This
person
gives any bond, under the
flow damages are a fair here any
provisior
from the breach of pre-estimation
contract."
of the
losS " .
the orders of the or theCentral
State of any law
(b) Penalty is a sum which has no relation to
pertormance of any public .
duty or act in which Government
or
for the
erally is interested, o n the breach of the condition the
disproportionate to the damages the
of the probable loss nd
likely a liable pay
shall be to the whole sum
of any such public are
instrument, he
(c)Under
non-performance of the contract. to
accrue a
resut
as
mentioned therein
English Law, liquidated EXAMPLES
tion, damages are awarded as
irrespective of the fact whether the sum so
less than the comnpensa 1. A contracts with B to
pay B 1000 if he fails to
actual loss suffered specified is mo A fails to pay B 7500 on that B7
day. B is entitled topayrecover500 on a given
have by the aggrieved day.
authority to reduce or
no
party.
enhance the amount The cocours tnensation not exceeding K l000 as
the court from Asuch
damages. of
liquidated A contracts with B that,
considers reasonah
( In case of
penalty, it does not allow the sum Nuill pay B 75000. A practicesif A practices as a Surgeon within
as a
Surgeon in Calcutta B is entitled Calcutta, he
this case, only the reasonable sum is
specified as penalty.h compensation; not exceeding 500 as
the court considers to such

Indian Law allowed. 3, A borrows 7 100 from B and

reasonable
gives him a bond ?
Indian Law does not vearly instalments of 40, with a stipulation that, inof 200 payable by five
recognize the distinction between any instalment, that whole shall become due. This isdefault of payment of
and penalty Sec. 74 contains the following rules: liquidated damages a
stipulation by wav
of penalty.
(a) The contracting parties may stipulate in advance the sum
to be paid as of money
liquidated damages or penalty, on the occurrence
breach of contract. of DISTINCTION BETWEEN LIQUIDATED DAMAGES AND PEN
ALTY
(b) The aggrieved party is entitled to only reasonable
Case of breach. compensation in The similarity between the
(c) The amount of reasonable payable when the breach ofliquidated damages and penalty is that both are
contract takes place.
compensation
shall not exceed the amount fixed as
payable in breach
case of
liquidated damages' or pen Basis
alty' by the parties to the contract. Liquidated Damages Penalty
1. Essence
The essence of liquidated The essence of penalty is
Thus under Indian Law, the sum named in the damages is a genuine,
contract is not awarded
damages. The court has the discretion in the matter of ascertaining tea
pavment ot money stipu
covenanted pre-estimate of lated in terrorum' (with
actual loss or reasonable
compensation and awards the same. damages. the object of coercing the
party to pertom the
contract).
EXAMPLE 2. Purpose
hal The purpose of fixing a sum The purpose of providing
A agreed to sell his DDA Flat to B for 75 lakh. The
in case the contract is broken, the
agreement providet as liquidated damages is to penalty in a contract is to
party default
at will pay l compensate the aggrieved discourage a party from
damages to the other party. B breached the contract and A resold ne recower
party for the loss arising breaching it.

for 74,80,000 to C. A sued B for a claim of T 50,000 Held, Acannotu the from the breach.
50,000 as liquidated damages or penalty. He was entitled to ger on
actual loss suffered by him i.e., F20,000.
Para 10.5 UNIT 1-INDIAN CONTRACT
ACT, 1872
10-ICA, 1872 REMEDIES FOR BRE
Basis OF coM
Liquidated Damages l8 189 CT Para 10.6
3. Position under English Law draws the Penalty who rightfully rescinds a contract is
different laws distinction between the Section 74 of ICA, (iv) tion any damage which he entitled to
does ot the contract (Sec. 751 sustained roughcompe
mpensa-
two. not draw any 1872 fulfilment the non
distinction between the
two.
4. Basis of Assessment of liquidated EXAMPLE

assessment damages is based

upon
Penalty is neither A, a singe with the
contracts
nanager of a theatre,i to sing at his
actual or
probable loss. actual loss nor based ono nights in every weeke during the next two theatre
loss. It is lump on probable
two
for months,
sum her 100 rupees jor each night's, andB engages
which is imposed amount Day
wilfully absents herself from the theatre. a d n the sixth nigh
to
the theatre, and B, in
party
preventing upon a wilju et B is entitled to claim consequence, rescinds
commit a breach.him to con.
compensation for the damage which he
stairned through the non-fulfilment of the contract.
inle of restitution B must pay According to
10.5 SUIT FOR RESsCISSION
prin
five nights.
for the performance given by her the
for
Rescission repudiation or termination of contract. When one
means
to acontract commits breach, the other e party m
10.6 SUIT UPON QUANTUM MERUIT
party may sue for
refuse further performance. If rescission allowed rescission.
by the court. the The Iatin maxim Quantum meruit
aggrieved party is discharged from all his
obligations under the contraet means 'as much as is
much as is merited ie., in proportion to the extent of work earned' or 'as
based on the doctrine of quantum meruit done. The claim
EXAMPLE usually arises where a
done some work under a contract and the other person has
A promises deliver 10 packets of Real Juice to B on a certain
to or agreement is discovered to
party rescinds the contract
day andB be void or where a
agrees the
to pay price after receipt of the goods. On the due date, A does of a non-gratuitous act. person enjoys the benefit
not deliver the goods. B is discharged from his
obligation to the pay prie The right to claim
quantum meruit does not arise out of the contract as the
right to damages does. One can claim on the
When the court may grant rescission? when the original contract basis of quantum meruit only
is discharged. This
According to Sec. 27(1) of the Specific Relief Act, 1963, the court maygranl meruit is restitutory to be distinguished fromremedy by way of quantum
rescission in the following which is allowed in a
compensatory remedy
wocases: Cases where
case of
damages
suffered.
()Where the contract is voidable at the option of the plaintif. claim for
quantum meruit arises
(b) Where the contract is unlawful for causes not apparent onis I Where work has been done in pursuance ofa contract, which has
and defendant is more to blame than the plaintiff. een discharged due to breach by the defendant. The aggrieved party
entitled to claim reasonable compensation based on quantum
Consequences of Rescission meruit in of
() When rescission is granted by the court, the aggrieved pary
isdis case
wrongful breach of contract.
charged from his obligation under the contract. CASE LAW: Planche vs. Colburn
other le I ren Facts P(the plaintiff) was
: (1831)
() The aggrieved party becomes entitled to exercise engaged by C(the defendants) write book to a

edies TCent armoury to be published by instalments in penodieal c lled

"The a
against the breaching party. rescind
Juventile Library. He had collected material and prepared consider
other party elc om hehä able porti on of the
(iii) In case of voidable contract where the
t, he shall restore the benefits to another party frou
the project been
manuscript. After three volumes had
was abandoned. Held, Pwas entitled to recover on quantum
published.
meruit for the work
he had done under the
received it (Sec. 64). contrac.
Para 10.6 UNIT I - INDIAN CONTRACT ACT, 1872 1872: REMEDIES FOR
10-ICA,
BREACHO
(id Where services have been rendered
under an agreemen
discovered to be void or under a contract
190 191
CH.

contract is entire
CONTRA Para 107
65 lays down: which becomes
mes voud. Se
whic if the
money is promised
non-divisible, ie, wh
or
to be paid for the e lump surn
complet rk, a part
When agreement is discovered to be void, or
an a n c e
will not entitle a
party to claim any payr perfor-
becomes void, any person who has when a
ment
received any
such agreement or contract is bound to advantage ntrau
restore it, or to
CASE LAW: Sumpter vs. Hedges (1898)

pensation for it to the person from whom he has mak. Facts 5 (the plaintiff) had agreed to erect upon Hs (the
received it land,
and stables for £565. After
two houses an
part dependant's)
performance
he ahan-
EXAMPLE doned the contract. , arterwards, himself completed the buildinos se
A contracts with B to deliver to him Suiit for value of
maternals and labour expended. Held, S cOuld net
250 maunds of rice ver anything on the onginal COntract because the payment
May. A delivers 130 maunds only before that day, and nonebefore the fe
first
after.B ret. de on the completion of the entire work. However, he was heldwas to be
the 130 mnaunds after first of May. He is bound to recover the value of material left on the síte and used by Bfor entitled
pay for them retains
A to
unfinished work. compiet.
ing the
CASE LAW : Craven-Ellies Cannons Ltd. (1936)
vs.
(s Where an indivsible (entire) contract is completeb performed bur
Facts CE was employed as a managing director in a hady When an indivisible contract for a lump sum has
Written contract. Subsequently it was tound that the company under a
been com-
directors were ne pletely performed though badly, the defaulting party can recover
qualified to appoint him. Held, CE was entitled to recover remuneration subject to deductions for bad workmanship.
for the services rendered by him on the basis of quantum meruit.
EXAMPLE
(ii) Where a person enjoys the benefit of a non-gratuitous act. Sec. 70 A agreed to decorate B's flat for lump
a sum of T1000, ceran
requirements
lays down been laid down. A did the work but B complained of jaulr work
having B
Where a person lawfully does anything for another person, a manship. had to pay 250 to get the defect removed A entiled o
recover1000 less a deduction in respect of defective work ?250 m other
was

deivers anything to him, not intending to do so gratuitously, and

words, he could recover 750
such other person enjoys the benefit thereof, the latter is bound tu
make compensation to the former in respect of, or to restore, t
(9 Where there is an express or implied contract to render services but
thing so done or delivered."
There is no agreement as to remuneration. In such a case, a person
who has enjoyed the services has to pay the reasonable remunera
EXAMPLE tion.
What is reasonable remuneration is determined by and
facts
1. A, a tradesman, leaves goods at B's house by mistake. B Ireals the goa Rural District Coun
Circumstances of each particular case. [Uptron
as his own. He is bound to pay A for them
omB VS Powell (1942). For facts of this case. please refer to Chapier
2. A saves B's property from fire. A is not entitled to compensation jro Meaning and Kinds of Contract
if the circumstances show that he intended to act gratuitousy
10.7 SUIT FOR
each mar
SPECIFIC PERFORMANCE
(1) Where contract is divisible. A person who is guilty of
a
also sue on the basis of quantum meruit if both the followu
ond

pecific performance means actual execution of the terms of the contract

as
agreed in which the party
tionsare satisfied: between
may be directedt hthe
e parties.
p It is an order of the court undertaken
which he has
to perform the very obligation
(a) the contract is divisible, and is a discretionary in certain special «
of what
has been remedyand granted
(b) the other party has enjoyed the benefit
he had the option
f
declining

under the contract although

Para 10.8 UNIT I- INDIAN CONTRACT ACT, 1872 10-ICA, 1872 REMEDIES FOR BREACH OF
CH.
Cases where specific performance may be enforced 19 193 CONTRACT
Chapter I of the Specific Relief Sec. 36 of the
to Specific
Relief Act, 1963
this
Act, 1963 lays down nd
discretionary and may
Accordin,
it be granted for a specified preventive relief
performance of any contract
may, in the discretion
that th.
injunction) or for an indefini
period (knowna
enforced in the following of the Peci is
temporary period
(known as
(a) Where monetary
cases

compensation is not
court, be injunction), The failure to comply with an
etion'). The
of c o u r t .
injunctionmay resu
'perpetual
in being
performance of contract.
an
adequate relief f held in
contempt

(b) Where there exists non CASELAW: "Lumley vs. Wagner (1852)
no standard for
ascertaining the actual da.
caused by the A/ agreed to sing at Ls theater, and during a
non-performance of the promise by the partu certain period to sing
else during that period. Subsequently Wsigned a contract
nowhere else.
(c)When it is
probable that the compensation in terms of at anothe, theater and retused to
with Z
perform the contract with L
not be to sing
obtained for the moneu
non-performance of the
contract y can Held, Lcouldobtain injunction order
against Wrestraining him from sing-
(d) In a contract of sale of goods, specific ing for 2

granted where the goods are specific goodsperformance can onle t

and that too
goods are not available in the marketuniqu particularly
order remedy is
rare goods. These que or Injunction appropriate in cases of 'anticipa
for pur tory reach of contract' where damages do not provide an adequate relief.
chase. For instance, specific
performance of contract
ordered by the court in contracts for sale of rare or is general This remedy is exercised only where negative terms are contained in the
antiques etc. unique article
es,
contract. For the pertormance of the positive terms of the contract, the
aggrieved party may avail of other remedies discussed in this chapter.
Exceptions where Specific Performance of Contract will not be Granted:
(a) Where monetary compensation is an adequate relief TEST QUESTIONS
mitted by dealer in the contract for sale of CTV.
eg, breachcom
1. What do you mean by breach of contract. How does the contract get dis
(b) Where the contract is of a personal nature ie, the performance i charged by breach of law? Explain with examples. (Ref. Paras 10.1, 102)
dependent upon special skills and talent of the promiser, eg,co 2. Discuss the various remedies available to an aggrieved party in case of breach
tract of marriage, contract made with the dancer or actor etc. of a contract. (Ref. Paras 10.3 to 10.8)

(c)Where the contract is made by a company in excess of its powersax8 3. (a) What are the effects of an anticipatory breach? (b) When may aourt
grantrescission in case of breach of contract? (Ref. Paras 102. 105)
laid down in its Memorandum of Association.
(c)Where the court cannot supervise its execution, particularlywhae 4.theExplain the various rules regarding the assessment of damages foldowed by
courts. (Ref. Para 10.4) (2006)
the pertormance needs to be supervised on continuous basis, eg.a

building construction contract or road construction contract. . Explain the facts and the judgment given in the leading case ot Hadley is
Baxendale. (Ref. Para 10.4)
(e) Where the contract is made by trustees in breach of their trust. n a t is specific performance ? When can the court enfonve specihe perto
mance of the contract ?
(Ref.
Para 10.7)
of
10.8 SUIT FOR INJUNCTION term 'quantum meruit'. When does the claim arise on the basis
QuantasC
from doing quantum meruit ?(Ref. Para 10.6)
Injunction is an order of the court requiringa person to refrain t faut
|8. Comment on the following:
some act.In other words, it is an order of the court directing a party ofthe Faa 4)
to actually perform the negative obligation or negative termsandhe Damages are allowed not by way of punishment. (Ret.
(6) Anticipatory breach does not result in termination of contract automat
contract. Thus if the party has promised not to do some
cally. (Ref. Para 10.2)
commits breach of contract, the court may, at the suit of the
ISsue an
injunction order refraining him from doing that
 UNIT I INDIAN CONTRACT ACT, 1872
-

10-ICA, 1872:REMEDIES FOR

CH. BREACH OF
( Nominal damages are allowed only to
194 195 CONTRACTI
recognize decree f ofssale of goods, in case of
(Ref. Para 10.4) for damage
market price onbreach the am
contract

In the
Hint: In between the
(d) Injunction is a preventive relief. (Ref. HInthe difference
a g e si st h o the date
date
unt of dam-
Para 10.8) herefore, B is
. Write notes on: and
the.
ontract price. entitled to recover 7
cotton bales to Bon 15th
500 from
A.]
erformance
to sell 500 July at
(a) Ordinary damages (Ref. Para 10.4) greed
business of B. A failed to deliver e
a certain price. A
nprice. Aknows
ut the cotton
hing aboas forced to close the mill. Can he recover bales. Having no knows
(b) Special damages (Ref. Para 10.4) the
cotton

loss ofprofits
due to closure of mill? damages and the
()Exemplary damages (Ref. Para 10.4)
titled
entitled to recover general damages but he cannot
(d) Nominal damages. (Ref. Para 10.4) He is
Hint:
profitsd u eto the closure of mill because this is due to the remote recover loss of
i0. Distinguish between ordinary damages and special damages. (Ref Para vs. Baxendale case)] consequences
, (Refer to Hadiey
singe
e e s to sing at Y's theatre
for one month and
to X a at
6. sing agreesfora
any other theatre afterraweek Xagrees to sing at Zs theatre withhigher
Ynot
PRACTICAL PROBLEMS
money.
What1 remedy is available to Yagainst X?
I. sum of
A agreed to purchase from
B under two contracts, 100 tons of
rice o where a party does something, which he promised not to
first contras be
lelivered at different dates. A failed to take delivery under the Hint. do, the court
icsing an order known as an injunction, restrain him from
doing what
laimed to put an end to both the contracts. Was he entitled to put an B may,
hepromisednot todo. Therefore,Xcould be restrained by injunction order from
oth the contracts on the basis of anticipatory breach? end to singingat Zs theatre. Ret. to case law: Lumley vs. Wagnerl
Hint: No, Bwas not entitled to put an end to both the contracts on
the basis 7, A tailor, ordinarily residing in Agra, wanted to move to Delhi during the
anticipatory breach because A did not retuse to pertorm the contract in its marriage reason, so as to earn substantial income. He delivered to the railwav
entirety. (Refer to the case RB Shah vs. N. Gopal)] company for transmission a package containing his sewing machine and other
2. A, furniture dealer, agreed to supply sofaset to B on 1st of July at a certain
a ancillary tailoring materials. But there was inordinate delayin transmission and
price. On 15th June he informs B that he will not deliver the sofaset to himon the package arrived in Delhi too late for him to take advantage of the marriage
he due date. Suggest a legal remedy available to B season. What damages can the tailor recover from the railway company and

Hint :It is an anticipatory breach on the part of A. Bhas two options:(9 Hecan why?
rescind the contract on 15th June and recover damages or (i) He can keep Hint. A person is entitled to claim special damages if special circumstances are
disclosed to guilty party at the time of formation of contract. In the given case
contract alive till the date of performance. If performed, he will have to paythe
as the disclosure about the marriage season was not made to railway company
price and if not performed, he will recover damages.]
at the time of contract. Hence A is entitled to claim ordinary damages from the
condition that B(the
3. A, a contractor, agrees to whitewash two floor on the railway company].
owner) will make payment in two instalments : (i) on the completion of the
whitewashing of the first floor and (i) on the completion of the whitewashng TRUE OR FALSE STATEMENTS
of the second floor. A completed the whitewashing of the but
first floor

retused to pay. Suggest suitable remedy to A which he

can exercise against a State with reasons whether the following statements are true or false

Hint:In this the contract is divisible therefore A

case the basi51
can sue on 9
Exemplary damages are available only in case of breach of promise to

d to the worK
quantum meruit. He is entitled to get payment in proportion marry. (2008)
certain is punish the per
n e object of damages, in case of breach of contract
a to
4. A agrees to deliver LG Washing Machine' to B for T10,000
on

On the due date he refuses to deliver the same. Market price of the
a rom
SOn, who fails to perform his obligation. [Sem. I(2011)]
machine on that day is 10,500. What amount of damages can Breco the damages, which are for compensat-
awarded
n a r y damages are
A?
tne loss that arises naturally from the breach of contract
 (i) If special damages are to be claimed, special
(h)
brought to the knowledge of the other party. ircumstances
circumstane
must be
( In case of breach of a contract, the injured party is not required o take a
.

reasonable steps to mitigate loss resulting trom the

breach of.
(vi) Liquidated damages are the pre-estimated probable.e damages.
damages. contract
(vi) Vindictive damages are awarded by way of punishment.
(vii) Quantum meruit means as much as is earned.
(2x) A specific pertormance can be granted by the court
where a m
compensation is not an adequate remedy. nonetary
() Injunction is an order of the court requiring a person to refrain fr
doing some act. rom
Hints to True or False Statements
True Statements: (ii), (iv), (v), (vi), (vii), (x) and (x)
False Statements:
(Exemplary damages are available in case of breach ot a contract to marrv
and also in case of wrongful dishonour of a cheque by the banker.
(in The object of damages, in case of breach of contract is not to punishthe
person, who fails to perform his obligation. But it is to compensatethe
person who has suffered loss due to breach of contract.
( The injured party is not entitled to recover unlimited amount of damages
The court imposes a duty upon him to mitigate the loss resulting from the
breach of contract. He should act prudently to minimise such damages
rather than waiting for the damage to accumulate.