Breachof Contract
Breachof Contract
Introduction:
A Breach of Contract occurs when a party thereto renounces his liability under it, or by his own act
makes it impossible that he should perform his obligations under it or totally or partially fails to perform
such obligations. A Breach of contract can be Anticipatory or Present. Remedies available under
Common Law are Damages. There is another group of remedies available to the aggrieved party which
are known as Equitable Remedies. These are discretionary remedies at Equity and are only granted
where damages are a not an adequate remedy. Equitable remedies included Rescission, Restitution,
Specific Performance, and Injunction.
Section 73, 74 and 75 of the India Contract Act, 1872 deals with remedies and damages for Breach of
Contract.
Content:
A breach of contract is a violation of any of the agreed-upon terms and conditions of a binding contract.
The breach could be anything from a late payment to a more serious violation such as the failure to
deliver a promised asset.
A contract is binding and will hold weight if taken to court. To successfully claim a breach of contract, it
is imperative to be able to prove that the breach occurred.
The breach of contract is of two types. The following are its types:
Anticipatory
Anticipation by one of the parties is the anticipatory breach. The breach will occur either expressly or
through conduct. The party will intimate eventually that he or she is going to commit a breach. The
aggrieved party will not have sufficient in the loss if there is compensation and if he waits for the actual
breach.
Illustration: In the Hochster v. De La Tour, it was decided that if there is a rejection of the contract
before the performance, then claim for the damages can be made. In accordance with that, De la Tour
agrees to employ Hochster as their for 3 months. De La Tour appoints Hochster in April to start work
from June. But De La Tour withdraws the appointment by May. Hochster sues them. De La Tour argues
that Hochster is under the terms or obligation, stating that he should be ready to perform until the 3
months is due. But Lord Campbell CJ dismisses the argument and awards Hochster with the damages.
Actual
The refusal to abide by the contract is an actual breach. If one of the party withdraws to perform before
the due date or if he performs incompletely, then he commits a breach.
Illustration: Poussard was to perform opera in the London run for 3 months. The producers found a
substitute when she was ill. The producers refuse to take her back when she returned. The court was
with the producers as it discovered their defence justifiably. The court did not award her with the
damages. The contract claims that she must perform from the first day. Failure to oblige by the contract
made the producers reject her contract.
In terms of section 65 of the Indian Contract Act, a company that rescinds a Contract must repay any
benefits received under the specified Agreement a nd section 75 states that the entity withdrawing a
Contract is entitled to claim damages and/or compensation for such Recession.
Such damages will not be paid if the loss is not natural in nature, i.e. not in the normal course of
business. There are two types of damage in terms of the Act,
• Discontinued Damage: Sometimes Contract parties will agree to the amount payable in the
event of a Breach. These are known as liquidated damages.
• Unintended Injury: Here the amount payable for Breach of Contract is assessed by the courts
and any other relevant authorities.
B. Special Damages
Special damages are those damages that are collectable for the loss arising on account of some
special or uncommon circumstances. That is, they undue the natural and probable
consequences of the Breach of the Contract.
D. Nominal Damages
These damages are in little quantity. They’re awarded merely to acknowledge the correctness of
the party to say damages for the Breach of the Contract. Sometimes, the damages aren't
associated with an adequate remedy for Breach of the Contract. In such cases, the Court could,
at the suit of the party not in Breach, direct the party in Breach to hold out his promise as per
the terms of the Contract. This can be referred to as the precise performance of the Contract.
Example: A united to sell associate previous stamp of the pre-independence amount to 8 for Rs.500.
However, afterwards refused to sell it. During this case, B may file a suit against A for the precise
performance of the Contract and therefore the Court could order A to sell the stamp to B as united.
Some of the Cases Wherever the Court Could Direct the Execution Area Unit as Follow
• Once the act is done, compensation in cash, for its non-performance, couldn't afford adequate
relief.
• Once there exists no normal for crucial the particular damages caused thanks to the non-
performance of the Contract.
• Wherever one party abandons or refuses to perform the entire Contract. Here the
compensation for the work done could also be recovered supporting quantum meruit.
• Wherever one thing is finished with non-intention to try and do gratuitously. In such cases, the
opposite person is certain to create the payment if he accepts such services or merchandise, or
enjoys their profit.
• Wherever the Contract is cleavable and therefore the party has enjoyed the advantages of the
work done – In such cases, the halfway in default could sue on quantum meruit if the opposite
party has enjoyed the advantages of the part performance.
Summary:
❖ A contract is the fountainhead of a correlative set of rights and obligation of the parties and
would be of no value if there is no statutory provision for compensation for damage or loss
caused to the aggrieved party.
❖ It provides for the remedy to the non-defaulting party to contract by way of compensation for
damage or loss caused due to breach of contract by the other party, provides for compensation
for actual damage or loss from the party in breach of the contract. Reasonable liquidated
damages are payable without proof of loss .
❖ It provides that contracting parties in the event of breach, may agree that the defaulted party
shall pay a stipulated amount to the other ,or may agree that in the event of breach by one
party any amount paid to him shall be forfeited. If it is not genuine pre-estimate of the loss ,but
an amount intended to secure performance of the contract ,it may be called ‘penalty’. However
mere stipulation does not give right for compensation by way of penalty. Prove has to be
established for loss or damages caused by breach of contract
.Self-Assessment Questions:
a. As much as saved
b. As much as paid
c. As much as retained
d. As much as earned