REMEDIES FOR BREACH OF

CONTRACT
 BREACH OF CONTRACT

• When a party breaks the contract by refusing to perform his promise the breach
of contract takes place.
 M O D E S O F R EM E D I E S F O R B R E AC H O F C O N T RA C T

Following remedies are

available to the
aggrieved party against
the guilty party.

Suit upon Quantum

Meruit- ( payment in
Suit for Specific
Suit for Rescission Suit for Damages proportion to the work Suit for Injunction
Performance
done or reasonable
value of work done)
(1) Suit for Rescission
Rescission means cancellation of a contract. When one
of the parties breaks the contract, the other party is
released from his obligation under the contract. If the
aggrieved party wants to sue the guilty party for
damages for breach of the contract, he must sue for
rescission of the contract. When the court grants
rescission, the aggrieved party is free from his
obligations and becomes entitled to compensation.
(Sec. 75)
Example : A contracts to supply cement to B on 15
April. B agrees to pay the price on receipt of goods. A
does not supply on due date. B is discharge from
liability to pay. B can rescind and claim damages.
 REMEDIES FOR BREACH

• 1) Restitution
• Return of benefits received by one party from the other under void contract.
• When the contract becomes void it needs not to be performed by either party.
• 2) Damages
• Monetary compensation is allowed for loss suffered by aggrieved party .
• Object is not punishing the party at fault but to compensate the aggrieved party.
• (2) Suit for damages
The aggrieved party may sue for damages. Damages
are a monetary compensation allowed to the injured
party for the loss suffered by him as a result of the
breach of contract. In case of breach of contract, the
aggrieved party can claim the following damages.
• (Sec. 19)
(a) Ordinary Damages

These are also called general damages. When a contract is broken,

the aggrieved party can recover ordinary damages from the
guilty party. Ordinary damages are usually assessed on the basis of
KINDS OF
actual loss. In a contract of sale of goods, the damages payable DAMAGES
are the difference between the contract price and the
market price at the date of breach. (Sec. 73)

Example :A contracts to pay 1 lac to B on 1st Jan. A does not pay

on that day. B, as a result is totally ruined. A is liable to pay B only
principal sum and interest on it.
• (b) Special Damages
These damages arise under some special circumstances. These damages include
indirect loss which may arise due to breech of contract. The parties must be
aware of the loss which may arise from the breach of contract. The notice to this
effect must have been given to the other party: otherwise he is not
responsible for special damages. Subsequent knowledge of special circumstances
will not create special liability on guilty party. (Sec. 21)
Example : A contracts C to buy 1 ton of iron for Rs. 80,000. A also contracts to
sell B, 1 ton iron for Rs. 1 lac. A informs C about the purpose of contract. C
fails to supply, As a result, A cannot supply to B. C is liable for loss of profit
which A would have earned form B.
(c) Exemplary Damages
These damages are awarded to punish the guilty party for the breach of contract.
The breach of contract results in monetary loss to the aggrieved party and causes
disappointment. Exemplary damages have no place in law of contract and are not
recoverable. These are awarded in the following cases
Exemplary Damages
• A) In case of breach of a contract to marry, the amount of damages will depend
upon the extent of injury to the feelings of the party.
• B) In case of dishonor of a cheque by a banker when there are sufficient funds
to the credit of the customer. The rule is, the smaller the cheque dishonored, the
greater the damage.
• (d) Liquidated Damages
• When parties to a contract fix the amount of damages for the breach of contract
at the time of formation of contract, such damages are called liquidated damages.
Where a sum is agreed in the contract to be paid by the defaulting party, in
case of breach of contract, the court will allow the reasonable damages, not
exceeding the amount already agreed. If the actual loss is more than the agreed
amount, damages will be payable to the agreed amount. (Sec. 74)
• Example :A contracts to pay Rs. 20,000 as damages to B. if he fails to pay him
Rs. 5 lac on a given day. A fails to pay on that day, B cant recover damages not
exceeding Rs. 20,000.
• (e) Nominal Damages
• These are neither awarded to compensate the aggrieved party nor to punish the
guilty party. When the aggrieved party suffers no loss, the court may award
nominal damages in recognition of his right. The court has discretion in this
case. The court may refuse to award damages.
• Example : A promises to sell cement to B for Rs. 200 per bag. A does
not supply. At the time of breach, the market rate of cement is the same. B is
entitled to nominal damages.
 (3) SUIT UPON QUANTUM MERUIT

• The term quantum meruit means payment in proportion to the work done or
reasonable value of work done. Where a person has done some work under a
contract and the other party cancels the contract or an event happens, which
makes the performance of the contract impossible; such party can claim
remuneration for the work already done. The right to claim for quantum meruit
arises when the original contract is discharged. If the original contract exists,
the party may sue for quantum meruit. The aggrieved party may sue in the
following cases:
 SUIT UPON QUANTUM MERUIT 

(a) When an agreement becomes subsequently void.

(b) When there is a promise to render services but no agreement about
remuneration.
(c) Where something is done without any intention to do so gratuitously.
(d) When the contract is divisible.
(e) When the completion of the contract is prevented by the other party.
 EXAMPLE :

• (a) B contracts to build a 3-story house for A. When one story is complete, A
stops B’s work. B can get compensation for work done.

• (b) C was employed MD in a company. After 3 months it was found that the
directors were not authorized to appoint him. C sued for remuneration. Held, C
could recover for the work done. (Craven Ellis vs. Canon Ltd.)
 (4) SUIT FOR SPECIFIC PERFORMANCE

• Specific performance means the actual carrying out of the contract by a party.
In some cases where the damages are not an adequate remedy the court may
direct the guilty party to fulfil the contract. The aggrieved party can sue for
specific performance in the following cases:
• Suit for Specific Performance
• (a) Where compensation in money is not an adequate remedy.
• (b) Where it is difficult to calculate the actual damages.
• (c) Where compensation in money cannot be obtained.
• Specific performance is not granted in the following cases:
• (a) Where damages are an adequate remedy.
• (b) Where the court cannot supervise the execution of the contract, e.g, a
construction contract.
• (c) Where one of the parties is a minor
• d) Where contract is of personal nature
• Example :
• (a) A agrees to sell his plot to C, who agrees to buy to erect a mill. A commits
breach. On the suit of C, A is directed by the court to perform the contract.  
• (b) A agrees to sell B his painting, but commits breach, B cannot sue for
damages. A shall be ordered to make specific performance to B.
 (5) SUIT FOR INJUNCTION

• Injunction is an order of a court restraining a person from doing something which he

promised not to do. It is a preventive relief. If is a discretionary remedy of the court.
It is appropriate in cases of anticipatory breach of contract.
• Example :
• (a) W agreed to sing at Lu’s theatre and for no one else. Afterwards W contracted
Z to sing at another theatre and refused to sing for Lu. Held, W could be restrained
by injunction from singing for Z. (Lumly vs. Wagner) 
• (b) G agreed to take the supply of electricity only from M company. G was,
restrained by an injunction from buying electricity from any other company.
(Metropolitan Electric Supply Co. vs Ginder).