Ans 3: Section 73 

provides compensation for loss or damage caused by the

breach of contract. When a contract has been broken, the party that suffers
from such infringement is entitled to receive compensation for any loss or
damage resulting from such infringement. Such compensation shall not be
given for any remote and indirect loss or damage sustained as a result of the
breach. Damages, in simple terms, refer to a form of compensation due to a
breach, loss or injury. As explained by Fuller and Perdue, damages may seek
protection of “expectation interest”, “reliance interest” or “restitution
interest”.

Damages have attained importance particularly in commercial transactions

and also as punitive measures for the violation of the rights of the persons
concerned. The nature of the damages awarded across different regions
varies widely. They are commonly granted in cases of tort or contract breach

In the case of contracts, parties might agree to pay a certain amount on

breach of the contract. When such provisions are created in the contract,
they are known as liquidated damage. On the other hand, unliquidated
damages are granted by the courts on the basis of an assessment of the loss
or injury caused to the party suffering such breach of contract. Section
73 deals with actual damages resulting from infringement of the contract
and the injury arising from such infringement which is in the nature of
unliquidated damages since such damages are granted by the courts on the
basis of an evaluation of the loss or injury caused to the party against which
the infringement occurred. Section 74 deals with liquidated damages,
relating to stipulated damages. Thus, there has to be a breach of the
contract In order for the plaintiff to claim damages. In cases where there
may be a reasonable revocation of the contract without any breach of the
terms of the contract, the claim for damages should not arise as there is no
breach per se.

Damages are normally claimed and awarded to restore the plaintiff’s

situation in which he would have been if the breach had not occurred. These
damages are generally to be claimed from the party that causes such an
infringement. In the event of liquidated damages under Section 74, both the
complainant and the defendant may make claims. In the case of liquidated
damages, there is compensation assurance as an appropriate compensation
is decided upon. Therefore, it would be expected that since the risks of a
party causing a breach would be lower, damages are already specified.

Section 13 of the Indian Contract Act (ICA) defines consent as the meeting of
minds of the parties i.e. consensus ad idem.
Duress can be defined as unlawful threat or coercion that causes another person to
commit acts that he would otherwise not commit. Initially the doctrine of duress
was only confined to actual or threatened violence. Over the years, this doctrine
has evolved to include various forms of duress including economic duress, duress
by public officials, threat to seize or detain goods, threat to property, threat to a
man’s trade or business, and so on.
The doctrine of economic duress applies where illegitimate pressure has been
applied to a party that has been induced to enter into a contract that he would
otherwise not enter into. Such a contract can be avoided as it is voidable, rather
than void, at the option of the party who has been threatened or induced into
entering into the contract without his free consent. It is an established law that
economic pressure can in law amount to duress; and that duress, if proved, not only
renders voidable a transaction into which a person has entered under its
compulsion but is actionable as a tort, if it causes damage or loss.

In Puri Construction P. Ltd. and Ors. v. Larsen and Toubro Ltd. and Ors.,[ii] it
was observed that the basis of duress does not merely depend upon the absence of
consent, but on the combination of pressure and absence of practical choice. In this
context, two questions become all-important. The first is whether the pressure or
threat is legitimate; and secondly, its effect on the victim. Thus there are two
universally accepted elements to establish economic duress namely:
(i) the exertion of illegitimate pressure by one party on the other; and
(ii) significant causation i.e. a significant cause compelling or pressurizing the
other party to act as he did.
Section 16 of ICA states that ‘a contract is said to be induced by undue
influence where the will of the party consenting is able to be dominated by
the other one due to the existence of the relation subsisting between them’.
One party influence the other while the contract is formed to get an unfair
advantage over the other.