Professional Documents
Culture Documents
2nd Sem Breach Assingment
2nd Sem Breach Assingment
LAW OF CONTRACT
SUBMITTED BY
NAMAN AGRAWAL
1ST YEAR BBA-LLB 1120220069
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TABLE OF CONTENTS
3. Breach Of Contract 5
Remedies for Breach of Contract
4. 11
5. Conclusion 15
6. Bibliography 16
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ACKNOWLEDGEMENT
Every project, however big or small it may be and however important it is, is successful
largely due to the efforts and dedication of a number of persons who have helped in whatever
way they can, by providing information related to it or by giving advice that is essential in the
completion of the project. I sincerely appreciate the assistance of these people and thank
them for their support and guidance that was instrumental in making this project a success.
I would like to extend my last word of gratitude to everyone else involved in helping me with
the assignment.
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INTRODUCTION
Contract is a set of promises, may be oral or written in nature, which is legally enforceable is
known as contract. It is a binding agreement between two or more parties. A contract
includes variety of subjects such as exchange of goods, services, capital or promises of any of
those. Contracts are part and parcel of our life. Contracts can be of various types depending
on the terms and conditions. A contract creates mutual obligation on the contracting parties.
Definitions of Contract
According to Section 2(h) of the Indian Contract Act, 1872 1, An agreement enforceable by
law is a contract.
From this definition, we find that a contract essentially consists of two elements i.e., an
agreement and legal obligation i.e., a duty enforceable by law.
Breach of contract
Breach of Contract' can be defined as a situation when one or more of the parties to the
contract dishonour terms and conditions of a contract by non-performance or interference
with the other party's performance.
1
Anand, Akshat. "A Critical Appraisal of Section 2 (h) of the Indian Contract Act 1872." Issue 3 Int'l JL Mgmt.
& Human. 5 (2022): 2160.
2
Lalsangliani. "Analysis of Section 10 of the Indian Contract Act in Relation to E-Contracts." Issue 6 Int'l JL
Mgmt. & Human. 4 (2021): 1293.
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BREACH OF CONTRACT
Meaning: - In simple terms, a contract means when two parties put into writing an agreement
which contains certain obligations (promises) which are to be performed by such parties, and
when such written agreement becomes enforceable by law, it becomes a Contract.
Enforceable by law means when the agreement has acquired the force of law only for those
who are a party to it and a violation of those obligations would attract legal action, including
repudiation of the entire contract.
As per Section 10 of Indian Contract Act, 1872 3, All agreements are contracts if they are
made by the free consent of parties competent to contract for a lawful consideration and with
a lawful object and are not hereby expressly declared to be void.
Offer
As per Section 2 (a) of the Indian Contract Act, when one person signifies to another his
willingness to do or abstain from doing anything with a view to obtaining the assent of that
other to such act or abstinence, he is said to make a proposal or offer.
The person making the proposal/offer is called the proposer or offeror and the person to
whom the proposal is made, is called the offeree.
Acceptance
A contract emerges from the acceptance of an offer. Acceptance is the act of assenting by the
offeree to an offer. Under Section 2 (b) of the Contract Act 4, when a person to whom the
proposal is made, signifies his assent thereto, the proposal is said to be accepted.
Mutual Agreement
3
Lalsangliani. "Analysis of Section 10 of the Indian Contract Act in Relation to E-Contracts." Issue 6
Int'l JL Mgmt. & Human. 4 (2021): 1293.
4
Patra, Atul Chandra, and Atul Chandra Patra. The Indian Contract Act, 1872. Vol. 1. Asia Publishing House,
1966.
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A situation is referred to as meeting of mind, when both the parties have recognised the
contract and both give consent for entering into its obligations.
Lawful Consideration
The term lawful consideration' simply means something in return (quid pro quo). Any
contract to be enforceable by law must have legal consideration.
According to Section 2(d), consideration is defined When at the desire of the promisor, the
promisee or other person has done or abstained from doing, or does, abstains from doing, or
promises to do or abstain from doing something, such act or abstinence or promise is called
consideration for the promise.
For a contract to be valid, the parties of a contract must have capacity, i.e., competence to
enter into a contract. Every person is presumed to have capacity to contract but there is
certain person whose age, condition of mental status renders them incapable of binding
themselves by a contract. This incapacity must be proved by the party claiming the benefit of
it.
As per Section 11 of the Act5, it deals with the competency of parties and provides that: every
person is competent to contract who is of the age of majority according to the law to which
he is subject and who is of sound mind and is not disqualified from contracting by any law to
which he is subject.
Minor, Person of unsound mind and person disqualified by any law to which they are subject.
Thus, any contract entered into by the persons mentioned above, are void.
Legality of Contract
Legality of contract is the basis for its future and performance of obligation by the parties. A
contract can be made only for the legal product or services; legality of contract, vary from
one jurisdiction to another. For instance, an arm smuggler's contract with its buyers cannot be
entertained into court of law.
Free Consent
For a contract to be valid, the consent of the parties must be genuine i.e., free. The principle
of consensus-ad-idem is followed which means that the parties entering into contract, must
mean the same thing in the same sense. The parties to the contract must have the same
understanding regards to subject matter of the contract.
As per the Act, free consent is consent, i.e., free from coercion, undue influence, fraud,
misrepresentation or mistake. When the given consent is affected by these elements, it calls
into question whether the consent given was free and voluntary.
5
Swaminathan, Shivprasad, and Ragini Surana. "Minors’ contracts: a major problem with the indian contract
act, 1872." Statute Law Review 42.1 (2021): 101-115.
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What Is a Breach of Contract?
A contract is binding and will hold weight if taken to court. If it can be proved that a contract
was breached, the remedy would generally be to give the victim what they were initially
promised. A breach of contract is not considered a crime or even a tort, and punitive damages
are rarely awarded for failing to perform promised obligations.
Breach of contract is a legal cause of action and a type of civil wrong, in which a binding
agreement or bargained-for exchange is not honoured by one or more of the parties to the
contract by non-performance or interference with the other party's performance. Breach
occurs when a party to a contract fails to fulfil its obligation(s), whether partially or wholly,
as described in the contract, or communicates an intent to fail the obligation or otherwise
appears not to be able to perform its obligation under the contract. Where there is breach of
contract, the resulting damages have to be paid to the aggrieved party by the party breaching
the contract.
If a contract is rescinded, parties are legally allowed to undo the work unless doing so would
directly charge the other party at that exact time.
It is important to bear in mind that contract law is not the same from country to country. Each
country has its own independent, freestanding law of contract. Therefore, it makes sense to
examine the laws of the country to which the contract is governed before deciding how the
law of contract (of that country) applies to any particular contractual relationship.
The first is actual failure to perform the contract as and when specified constitutes
the first and most obvious type of breach. A contract lays down what must be done,
what cannot be done, and when it must be done. If what was prescribed has not been
done within the stipulated or reasonable period, there has been a breach of contract.
Second further form of breach of contract is conduct indicating an unwillingness or
inability to perform an obligation arising from that contract.
These forms of breach of contract overlap, and an actual failure to perform may manifest an
unwillingness or inability to perform. This is not always the case: an individual may fail to
perform a contractual obligation even when willing or able.
These classifications describe only how a contract can be breached; not how serious the
breach is. A judge will make a decision on whether a contract was breached based on the
claims of both parties.
The first type above is an actual breach of contract. The two other types are breaches as to the
future performance of the contract and are technically known as renunciatory breaches. The
defaulting party renunciates the contract in advance of when it is required to performs its
obligations. Renunciatory breach is more commonly known as "anticipatory breach."
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Key takeaways
A breach of contract occurs when one party in a binding agreement fails to deliver
according to the terms of the agreement.
A breach of contract can happen in both a written contract and an oral contract.
The parties involved in a breach of contract may resolve the issue among themselves
or in a court of law.
There are different types of contract breaches, including a minor or material breach
and an actual or anticipatory breach.
A breach of contract is not considered a crime or even tort and rarely results in extra
monetary compensation.
The general law has three categories of breaches of contract, which measure of the
seriousness of the breach. In the absence of a contractual or statutory provision, any breach of
contract is categorized:
Breach of warranty;
Breach of condition; or
Breach of an innominate term, otherwise known as an intermediate term.
There is no “internal rating system” within each of these categories (such as “a serious breach
of warranty”). Any breach of contract is of a breach of warranty, condition or innominate
term.
Minor breach: A minor breach happens when you don’t receive an item or service by the
due date. For example, you bring a suit to your tailor to be custom fit. The tailor promises (an
oral contract) that they will deliver the adjusted garment in time for your important
presentation but, in fact, they deliver it a day later.
Material breach: A material breach is when you receive something different from what was
stated in the agreement. Say, for example, that your firm contracts with a vendor to deliver
200 copies of a bound manual for an auto industry conference. But when the boxes arrive at
the conference site, they contain gardening brochures instead.
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Actual breach: When one party refuses to fully perform the terms of the contract.
Anticipatory breach: When a party states in advance that they will not be delivering on the
terms of the contract.
Legal Issues Concerning a Breach of Contract
A plaintiff, the person who brings a lawsuit to court claiming that there has been a breach of
contract, must first establish that a contract existed between the parties. The plaintiff also
must demonstrate how the defendant—the one against whom a claim or charge is brought in
a court—failed to meet the requirements of the contract.
To avoid a breach of contract lawsuit, you should check any contract you sign for three things
.
Clarity: The language of the contract should be clear and precise. If the other party is not a
native speaker of the language the contract is in, it may be worthwhile to hire an interpreter to
ensure that everyone understands their roles and expectations under the contract.
Expectations: You and any other parties signing the contract should understand the
expectations it outlines and already know that you are able to fulfil them. Your ability to
meet those expectations should not rely on future amendments because those may not
happen.
Legality: In order to be binding, your contract needs to be legal where it is signed. If you are
not sure, work with a lawyer who specializes in contract law before anyone commits to
signing.
You can also avoid breach of contract lawsuits by carefully selecting the people or companies
that you work with. Take time to research their professional reputations and legal history. If
they have previously been involved in breach of contract lawsuits, you may not wish to do
business with them.
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What Is Considered a Breach of Contract?
A breach of contract occurs when one party fails to fulfil its obligations as outlined in the
contract. That could include something relatively minor, such as being a couple of days late
on a payment, or something more serious.
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Remedies for Breach of Contract
When a promise or agreement is broken by any of the parties, we call it a breach of contract. So,
when either of the parties does not keep their end of the agreement or does not fulfil their
obligation as per the terms of the contract, it is a breach of contract. There are a few remedies for
breach of contract available to the wronged party.
Parties to a contract are legally expected to perform their respective obligations, so naturally,
the law frowns upon a breach by either party. Therefore, as soon as one party commits a
breach of the contract, the law grants to the other party three remedies. He may seek to
obtain:
The laws relating to damages are governed by the Contract Act, whereas the laws relating to
injunctions and specific performance are governed by the Specific Relief Act, 19636.
Section 73 of the Indian Contract Act 18727 lays down four important rules governing the
measure of damages.
The well-known rule in this case was stated by the Court as follows:
6
Behari, Avadh. "The Law of Specific Relief." (1965): 561-563.
7
Yechuri, Sumangali Naga. "Damages and Penalty as Held under Section 73 and 74 of the Indian Contract Act,
1872." Available at SSRN 1724542 (2010).
8
Eisenberg, Melvin Aron. "The principle of Hadley v. Baxendale." Calif. L. Rev. 80 (1992): 563.
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“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.”
9
Madras Railway Company v. Govinda Rau, 1898 SCC OnLine Mad 4
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A decree for Specific Performance
According to Section 10 of the Specific Relief Act, 196310, there are seven cases when
specific performance of a contract may be allowed by the Court. They are:
In VIJAYA MINERALS V. BIKASH AIR 199612 CAL. 67, the Hon’ble Calcutta High
Court has observed that since manganese and iron ore are not ordinary items of commerce, if
a contract for sale of iron and manganese ore from a mine has been made, specific
performance of such an act would be allowed.
10
Specific Performance and Hardship in Case of Residential Houses, 32 JILI (1990) 242
11
Dawson, Norma M. "The double life of Duke of Somerset v Cookson, or a legal excavation of the Corbridge
Lanx." The Journal of Legal History 35.3 (2014): 258-280.
12
Vijaya Minerals Pvt. Ltd. v. Bikash Chandra Deb, 1995 SCC OnLine Cal 181
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ordinary relief and specific performance is exceptional. However, it must be noted that these
presumptions are rebuttable.
In BANK OF INDIA V. CHINOY, AIR 1949 13 PC 90, it was held that if shares are freely
available in the market, then specific performance would not be granted. If shares of a
particular company, for instance a private company are not readily available in the market,
specific performance would be granted.
Suits for enforcement of a contract to execute a mortgage
In a suit for the enforcement of a contract to execute a mortgage or furnish any other security
for the repayment of any loan which the borrower is not willing to pay at once, specific
performance may be allowed. However, where only part of the loan has been advanced by
the lender, he must be willing to advance the full amount of the loan.
Contracts for the purchase of any debentures of a company.
Suits for the execution of a formal deed of partnership.
Suits for the purchase of partner’s share.
Suits for the enforcement of a building construction contract or any other work on land,
provided the following 3 conditions are fulfilled:
The building or other work has been described in the contract in a reasonably precise manner,
so as to enable to Court to decide the exact nature of building or work;
The plaintiff has substantial interest in the performance of the contract, and the interest is
such that financial compensation for non-performance of the contract would not be adequate
relief; and
After the contract, the defendant has obtained possession of the whole or any part of the land
in question.
It is important to remember that specific performance is an equitable remedy, and is therefore
left to the discretion of the Court, rather than to the right of a person by law.
Quantum Meruit
The concept of Quantum Meruit can be understood from an example. A and B have made a
contract, and A has already performed a part of the contract. After that B prevents him from
performing the rest of his obligation. In this case, A can recover from B reasonable
remuneration for whatever he has already done.
There are two essentials of this rule which are as follows:
One of the parties makes a breach of contract or prevents the performance of it by the other
side.
The party injured by the breach of the contract, who has already performed a part of it, elects
to be discharged from further performance of the contract and brings an action to compensate
for the value of the work he has already done.
It should be taken into account that no compensation would be paid in case the party has not
suffered any loss or damage. Therefore, the sufferance of damages is a precondition for the
applicability of the rule of quantum meruit.
In KAMIT V. CENTRAL DAIRY FARM. there was a contract to supply 3000 live sheep
and goats to the respondent at the rate of Rs. 786/- per quintal. The plaintiff had deposited a
sum of Rs. 2,60,000 as security for the good performance of the contract but was not able to
13
Indu Bala Bose v. Manindra Chandra Bose, (1982) 1 SCC 20
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do his obligations. The security was claimed to be forfeited. It was held that since there was
no sufferance of actual damages by the respondent, he cannot forfeit the security amount.
An injunction
Under Sections 36 & 37 of the Specific Relief Act 196315, there are two types of injunctions –
temporary and perpetual, whereas Section 39 governs mandatory injunctions.
CONCLUSION
To conclude, it is thus evident that there are several remedies available in case of breach of a
contract, none of which are very simple. One would have to overcome an abundance of
challenges and rebuttals to prove a case of breach of contract.
14
State of Haryana v. State of Punjab, (2004) 12 SCC 673
15
A Critical Note of Section 22 of the Specific Relief Act, 47 of 1963, (2009) 1 LW (JS) 7
16
Anees v. State of Kerala, 2017 SCC OnLine Ker 10432
17
Thakamma Mathew v. M. Azamathulla Khan, 1993 Supp (4) SCC 492
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BIBLIOGRAPHY
1. BOOKS
2. WEBSITES
https://www.scconline.com/Members/SearchResult.aspx
https://millerlawpc.com/6-remedies-breach-of-contract/
https://www.litem.in/breach-of-contract.php
https://legalstudymaterial.com/remedies-for-breach-of-contract/
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