REMEDIES FOR BREACH

 contract is breached or broken when any of the parties fails or refuses to perform its promise under the contract.
 Breach of contract is a legal cause of action in which a binding agreement is not honored by one or more parties by non-
performance of its promise by him renders impossible.
 Section 37 of the Indian Contract Act,1872 provides that the parties to the contract are under obligation to perform or offer
to perform, their respective promises under the contract, unless such performance is dispensed with or excused under the
provisions of the Indian Contract Act or of any other law.
 According to Section 39, where the party has refused to perform or disabled himself from performing, his promise in its
entirely, the other party may put an end to the contract, , unless that other party has expressly or impliedly signified its
consent for the continuance of contract.
 If the other party chooses to put an end to the contract, the contract is said to be broken and amounts to breach of contract
by the party not performing or refusing to perform its promise under the contract. This is called repudiation. Thus
repudiation can occur when either party refuses to perform his part or makes it impossible for him to perform his part of
contract in each of the cases in such a manner as to show an intention not to fulfil his part of the contract.
CONTENTS

 INTRODUCTION
 REMEDY
 TYPES OF REMEDIES
 SUIT FOR RESCISSION
 SUIT FOR DAMAGES
 SUIT UPON QUANTUM MERUIT
 SUIT FOR SPECIFIC PERFORMANCE
 SUIT FOR AN INJUNCTION
 BREACH OF CONTRACT

1. Breach Of Contract Occurs When

 Any party to the contract fails to perform his part of the contract
 Any party to the contract makes it impossible for the other party to
perform his obligation under the contract
2. Breach of contract may occur in two ways –
 Anticipatory Breach of Contract
o A party declares his intention of not performing the contract before the
performance is due
 Actual Breach of Contract
o On Due Date of Performance
o During the Course of Performance
BREACH OF CONTRACT

 Protectionof contractual expectations is

the primary purpose of law of contract.
 These expectations are met where parties
perform their respective promises, but if
any one party fails to perform his
obligations and breach the contract, the law
provides certain remedies to the promise.
 Breaches of contract can also be termed as minor breach or material breach. A minor breach, sometimes known as a partial
breach also.
 The slight violation of the terms of a contract is such, that it does not weaken the entire contract is called minor breach.
 A minor breach means that one party fails to perform some part of the contract and failure to perform such part does not
render the entire contract as repudiated.
 A severe violation of the terms of the contract which can repudiate the contract as a whole is known as material breach.
 A breach is considered to be material if one party ends up with something very significantly different from what was
specified in the contract.
 In most of the cases, a material breach means the non-breaching party is no longer required to perform further his or her part
of obligation and has a right to invoke remedies.
 REMEDY

 A legal remedy is a court order that seeks to uphold a person’s rights or to redress a breach of the law.
 When one party breaches a contract, the other party may ask a court to provide a remedy for the breach. The court
may order the breaching party to pay money to the non-breaching party.
 There are several remedies for breach of contract:
 Compensatory Damages: The most common legal remedy, compensatory damages are a monetary award to
compensate the aggrieved party. A court can order the person who breached the contract to pay the aggrieved party
enough money to get what they were promised by the terms of the contract.
 Restitution: A court orders restitution if they order the breaching party to pay back the other person the amount the
aggrieved party paid initially to make the aggrieved party “whole” again.
 Punitive Damages: If the breach of contract is especially heinous, a court may order punitive damages, meant to
punish the breaching party for breaking the terms of the contract.
 Specific Performance: A court can force the breaching party to perform the service or deliver the goods that were
promised in a contract.
TYPES OF REMEDIES

SUIT FOR RESCISSION

SUIT FOR DAMAGES

SUIT FOR QUANTUM MERUIT

SUIT FOR SPECIFIC PERFORMANCE

SUIT FOR AN INJUNCTION

 SUIT FOR RESCISSION

 The term Rescission refers to the cancellation of contract.

 In such cases, if one party has broken his contractual relations, the
other party may treat the breach as discharge and refuse to perform
his part of performance.
 Thus in case of rescission of contract, the aggrieved or injured
party is discharged from all his obligations of the contract.
UNDER FOLLOWING CASES THE COURT
MAY REFUSE TO GRANT RESCISSION

 The parties cannot be restored to their original positions due to changed

circumstances.
 The party(s) has acquired rights in good faith and value during
subsistence of contract.
 Only a part of the contract is rescinded and this part can’t be separated
from rest of the contract.
 But if a person rightfully rescinded, he is entitled to compensation for
any damage which he has sustained through non fulfilment of the
contract by the other party.
 EXAMPLES

 'A' contracts to supply 10kg of tea leaves for Rs. 8,000 to 'B' on
15 June. If 'A' does not supply the tea leaves on the appointed
day, 'B' need not pay the price. 'B' may treat the contract as
rescinded and may sit quietly at home. 'B' may also file a ‘suit for
rescission’ and claim damages
 A promises B to supply 10 Bags of cement on a certain day. B
agrees to pay the price after the receipt of the goods. A does not
supply the goods. B is discharged from liability to pay the price
 SUIT FOR DAMAGES

 Damages are a monetary compensation allowed to the

injured party for the loss or injury suffered by him as a
result of the breach of contract.
 The fundamental principle underlying damages is not
punishment but to compensate the aggrieved party for
the loss suffered by him in the original position as he
would have been.
 The word „damage‟ is simply a sum of money given as compensation for loss or harm of
any kind. The term “damages” in general sense, is compensation for causing loss or injury
through negligence or a deliberate act, or an estimate of court or award of a sum as a fine
for breach of a contract or of a statutory duty.
 It is the amount of money which the law awards or imposes as pecuniary compensation,
recompense, or satisfaction for an injury done or a wrong sustained as a consequence of a
breach of a contractual obligation.
 Damages are a monetary payment awarded for the invasion of a right at common law.
 According to Black Law Dictionary:
 “Money compensation sought or awarded as a remedy for a breach of contract or tortuous
acts.”
 Although the words, “damages”, “damage” and “injury”, are sometimes used
as synonyms, yet there is a material difference between them.
 The difference between these words can be discussed as: - “Injury is the
illegal invasion of illegal right.”
 While “damage” is the loss, hurt, or harm which results from the injury.
 Theword “damages” means the recompense for compensation awarded for the
damage suffered.
TYPES OF DAMAGES

• ORDINARY
There are • SPECIAL
4 types of • EXEMPLARY
damages: • NOMINAL
DAMAGES.
 . Ordinary Damages or General
Damages

 Damages that arise in the ordinary course of events from the breach of contract are called ordinary damages. Damages
arising out of natural and probable consequences of breach of contract are also considered an ordinary damage. General
damages are such damages, which the law presumes from the breach of the contract.
 Generally they are awarded to compensate the affected party and its intentions was not to punish. General damages are
usually judged taking into account of the actual loss suffered by the affected party.
 The quantum of damages which the court can award will be just that amount which would place the innocent party in the
same position, which he would have occupied, had the contract been performed, and not broken.
 A contracted to sell and deliver B 50 bags of rice at Rs. 1, 450 per bag, the price to be paid at the time of delivery. The
price of rice rose to Rs. 1, 500 per bag and A refused to sell the rice. B can claim damages at the rate of Rs.50 per bag.
 They constitute the direct loss suffered by the aggrieved party. They are measured by estimating the ordinary loss caused by
the breach of contract. As per law, compensation is not to be given for any remote or indirect damage.
 HADLEY VS. BAXENDALE

 Brief Fact Summary. Plaintiffs operated a mill, and a component of their steam engine broke causing them to shut down the mill.
Plaintiffs then contracted with Defendants, common carriers, to take the component to W. Joyce & Co. to have a new part created. When
delivery was delayed due to Defendants’ neglect, causing Plaintiffs’ mill to remain closed longer than expected, Plaintiffs sued to recover
damages.

Synopsis of Rule of Law. The damages to which a nonbreaching party is entitled are those arising naturally from the breach itself or those
that are in the reasonable contemplation of the parties at the time of contracting.


Facts. Plaintiffs operated a mill, which they were forced to shut down when the crank shaft of their steam engine broke. They contacted the
manufacturer of the engine, W. Joyce & Co. (Joyce), and Joyce agreed to make a new shaft from the pattern of the old one. Therefore, a
servant of Plaintiffs went to the office of Defendants, common carriers, to have the crank shaft taken to Joyce. Plaintiffs’ servant told
Defendants’ clerk that the mill was shut down and the shaft must be sent immediately. The clerk informed Plaintiffs’ servant that if the shaft
were given to them by twelve o’clock any day, it would be delivered by the next day. Plaintiffs took the shaft to Defendants the next day
before noon. Due to Defendants’ neglect, the delivery to Joyce was delayed, and Plaintiffs did not receive the new shaft for several days
after they should have received it.
 Judgment:
 The trial judge should instruct the jury not to consider lost profits in awarding damages.
 Reasoning:
 At the time both parties entered into a contract, Hadley failed to tell Baxendale that any delay in shipping would result in Hadley’s lost
profits. Since Baxendale did not know of Hadley’s special circumstances, that his mill was inoperable until the new shaft was delivered,
the special circumstances were not reasonably foreseeable at the time the contract was formed.
 The court of exchequer held that when one party breaches, the other party may recover damages that are reasonably foreseeable to both
parties at contract formation. In addition, the non-breaching party may also recover damages arising out of any special circumstances so
long as those circumstances were communicated to and known by all parties.
 Here, Hadley’s failure to disclose his special circumstances prevents him from recovering damages. Hadley never informed Pickford and
Co. that his mill operation was entirely dependent on receiving a new shaft. The court points out that not all broken mill shafts render the
mill inoperable resulting in lost profits. For example, some may have a a temporary mill shaft for use when the broken one is out for
repair. As a result, Baxendale is not liable for the damages arising out of Hadley’s unknown circumstances.
 Significance:
 Hadley v. Baxendale established a limitation on damages to those which naturally result from a breach and are reasonably contemplated by
the contracting parties at contract formation. These damages are known as CONSEQUENTIAL DAMAGES.
 2. Special Damages
 Special damages are those damages that are payable for the loss arising on account of some special or unusual
circumstances. That is, they are not due to the natural and probable consequences of the breach of the contract. Indirect
loss experienced by the affected party out of breach of contract is treated as special damage.
 Special damages can be recovered only when the other party, while signing the contract, is informed of the special
circumstances which are responsible for the special losses. Subsequent knowledge of special circumstances will not create
any special liability.
 A contracted with B to supply a particular type of machinery at Rs.5, 000 to be delivered on a fixed day. A did not deliver
the machinery on the day specified. So B had to purchase the same from another dealer at Rs.6,500. Moreover, B was also
prevented from performing a contract with C which he had already made based on the contract with A, and was compelled
to make compensation to C for the non-performance of the contract.
 Here the amount of compensation paid by B to C are the special damages because they arise on account of the special
circumstances i.e. B’s contract with C at the time of the contract. These damages can be recovered only if A was informed
of the contract between B and C. However, the difference amount of Rs.1,500 between the contract price and the price paid
 Exemplary or Vindictive Damages
 These damages are awarded against the party who has committed a breach of the contract with the object of punishing the
erring as defaulting party and to compensate the aggrieved party. Generally, these damages are awarded in case of action on
lost or breach of promise. E.g., breach of contract to marry, dishonor of cheque by the bank without any proper reason.
 Such damages are awarded due to its difficulty in measuring the amount of the mental suffering or the extent of the injury to
the feelings of the aggrieved party. The main aim of awarding such damages is to deter a person from committing a breach of
such contract.
 EX 1 -A libel was committed by an author and its publisher against a distinguished naval officer. The officer sued for
damages. He was awarded £ 15, 000 compensatory and £ 25, 000 exemplary damages against both defendants.
 Example 2
 The bank disobeyed the customer’s order to stop payment of a particular cheque and as a consequence another cheque for £
25,000 was dishonored due to inadequate funds. The court awarded £ 250 as damages to the plaintiff.
 4. Nominal Damages
 Nominal damages are awarded to the aggrieved party when there is only technical violation of the legal rights. Here no
substantial loss is caused.
 These damages are very small in amount. They are awarded simply to recognize the right of the party to claim damages for
the breach of the contract.
 Example
 A contracted to purchase a Scooter from B, a dealer. But he failed to purchase the scooter. However, the demand for the
scooters far exceeded the supply, and B could sell the scooter agreed to be purchased without loss of profit. B is entitled only
to nominal damages.
 RULES REGARDING DAMAGES

 The damages must naturally arise in the usual course of things from such breach i.e. the
damages must be the proximate or direct consequence of the breach of contract.
 The aggrieved party must have suffered damages by breach of contract.
 Damages are awarded to compensate the loss caused by a party but not to punish the party
at default for the breach of contract.
 Amount of damages can be decided at the time of agreement by the mutual consent of both
the parties.
 EXAMPLES

 Mr. Robin contracts to pay 3 lac to Mr. Peter on 1st April. Mr. Robin does not pay the
money on that day. Mr. Peter is unable to pay her debts and suffer a loss. Mr. Robin is
liable to pay Mr Peter principal amount and also interest on it.

 If the machinery of any factory arrives late and due to this reason one party suffers a
loss or profits.
 SUIT FOR QUANTUM MERUIT

 It means “AS MUCH AS EARNED” or “in proportion to the work

done.”
 The phrase ‘Quantum Meruit’ literally means
 When a person has begun the work and before he could complete it,
the other party terminates the contract or does something which
make it impossible for the other party to complete the contract, he
can claim for the work done under the contract so far party.
 EXAMPLES

P agreed to write a volume on ancient armour to be published in a magazine

owned by C. For this, P was to receive 100 pounds on completion. When P
had completed part of the work, but not the whole, C abandoned the magazine.
P was held entitled to get damages for breach of contract and payment
quantum meriut for the part already completed.
 A, engages B, a contractor, to build a three storied house. After a part of the
house is constructed, A prevents B from working any more. B, the contractor,
is entitled to get reasonable compensation for work done under the doctrine of
quantum meriut in addition to the damages for breach of contract.
 SUIT FOR SPECIFIC PERFORMANCE

 Specific performance means the actual carrying out of the contract

as agreed.
 Under certain circumstances an aggrieved party may file a suit for
specific performance, i.e., for a decree by the court directing the
defendant to actually perform the promise that he has made.
 Such a suit may be filed either instead of or in addition to a suit for
damages.
Cases Which Fall Under Specific
Performance

 When the act agreed to be done is such that compensation in money

for its non-performance is not an adequate relief.
 When there exists no standard for ascertaining the actual damage
caused by the non-performance of the act agreed to be done.
 When it is probable that the compensation in money cannot be got
for the non-performance of the act agreed to be done.
 Specific Performance Will Not Be Granted
Where:

 Damages are an adequate remedy

 The contract is not certain, or is inequitable to either party
 The contract is in its nature revocable
 The contract is made by trustees in breach of their trust
 The contract is of a personal nature E.g: contract to marry
EXAMPLES

 A agrees to buy and B agrees to Sell a picture and two China

Vases . A may Compel B specifically to perform the Contract, for
there is no standard for ascertaining the actual damage which
would be caused by its non performance.
 Mr. Tipu agrees to sell his house to Mr. Amir, who agrees to
purchase. But due to some reasons Mr. Tipu commits breach . At
the suit of Mr. Amir court may ask Mr. Tipu to carry out the
contract.
 SUIT FOR AN INJUNCTION

 ‘Injunction’ is an order of a court restraining a person from doing

a particular act.
 It is a mode of securing the specific performance of the negative
terms of the contract.
 To put it differently, where a party is in breach of negative term
of the contract (i.e., where he is doing something which he
promised not to do) the court may, by issuing an injunction,
restrain him from doing, what he promised not to do.
EXAMPLES

 A, a singer contracts with B the Manager of a theatre to Sing at

his theatre for one year and to abstain from Singing at other
theatres during the theatre. She absents herself , B cannot compel
A to sing at his theatre, but he may sue her for an injunction
restraining her from Singing at other theatres .
 G agreed to take the whole of his supply of electricity from a
certain company. The agreement was held to import a negative
promise that he would take none from elsewhere. He was,
therefore, restrained by an injunction from buying electricity
from any other company.
THANK

YOU…