When you put a limit on what you will do, you have put a limit on what you can

do.
Charles Schwab

Legal Remedies for Breach of Contract

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Breach of contract A breach of contract occurs when a party to the contract renounces his liability under the contract, or by his own act, makes it impossible that he should perform his obligations under it, or totally or partially fails to perform such contractual obligations.

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Hochester v. De La Tour (1853) UK

Frost v. Knight (1872) UK

Ms. Sunandha Sridhar v. Mr. Busi Anurag (2012)

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Anticipatory Breach of contract :

An anticipatory breach of contract occurs, when, prior to (before) the promised date of performance has arrived, the promisor absolutely repudiates the contract. It is an announcement by a contracting party of his intention not to fulfill the contract. Effect of anticipatory breach : Sec. 39 Contract Act : When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance.

Breach of contract : The legal remedies The legal solutions if you suffer breach of contract (1) Suit for damages; (2) Suit for specific performance; (3) Suit for injunction; &

(4) Suit for quantum meruit.

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Suit for damages

What is the meaning and the difference between the terms: damage and damages ?

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Damages means : compensation in money terms (monetary compensation) for the loss suffered by the injured party / plaintiff in the contract, as a result of breach committed by the defendant. Every suit for damages involves these two following main issues = (a) Remoteness of damage ; & (b) Measure of damages.
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(a) Remoteness of damage : Ram Kumar v. Lakshmi Narayan (1951) Calcutta

Ms. Sunandha Sridhar v. Mr. Busi Anurag (2012)

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Sec. 73 of the Contract Act : When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, (1) which naturally arose in the usual course of things from such breach, or (2) which the parties knew, when they made the contract, to be likely to result from the breach of it.

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Classification / types of damages :

(1) General damages ; (2) Special damages ; (3) Nominal / Notional damages ; (4) Exemplary damages ; (5) Liquidated damages / Penalty ; (6) Statutory damages.

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(1) General damages: General damages are those which arise naturally, in the usual course of things from the breach itself, i.e., the defendant will be liable for all the loss which naturally happened in the usual course of things as a result of the breach.

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(2) Special damages : Special damages are those which arise on account of unusual circumstances affecting the plaintiff. A court will award special damages only if these special circumstances were brought to the knowledge of the defendant at the time of entering / making the contract, so that the possibility of the special loss, was in the contemplation of both the parties at the time of entering contract.

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What are these special circumstances ? :

Heron II, The Koufos v. C. Czarnikow Ltd. (1969) UK

Ms. Sunandha Sridhar v. Mr. Busi Anurag (2012)

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special circumstance : The bonus clause ; The incentive clause

a tool for efficiency in commerce ; the new face of business

Let us always be aware about the legal rules / terms of our contracts

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(3) Nominal / Notional damages :

Where the plaintiff has suffered no actual loss as a result of the breach, but if such breach results in the violation / infringement of some legal right of the plaintiff, then the court would award nominal or notional damages. As the term suggests, the amount awarded by the court would be small.
Ashby v. White (1703) UK

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(4) Exemplary damages : Exemplary damages differ from ordinary damages. They are punitive in nature, and while awarding such damages, the aim is also to punish the person for the wrongful act, and are intended to make an example of the defendant. Purpose being so, the quantum awarded is usually on the higher side. However, it is a principle of law that exemplary damages should not be awarded / should only be rarely awarded in contract matters, except in cases of breach of contract to marry.

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According to the American Restatement, exemplary damages may be allowed where the breach was wanton or reckless and / or caused bodily harm. Prema v. Mustak Ahmed (1987) Gujarat HC

Jit Ram Shiv Kumar v. National Insurance Co. Ltd. (2001) SC Diesen v. Samson (1971) US
Joseph v. Dr. George Moonjel (1994) Kerala
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(5) Liquidated damages / Penalty : The parties to contract, may beforehand decide among themselves, the amount of compensation that shall become payable in the event of breach. Damages are said to be liquidated, when they are fixed and agreed upon by the parties. If the sum represents a genuine pre-estimate of the probable loss, then they can be recovered and the court will award the whole liquidated sum, and not more.

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Dunlop Pneumatic Tyre Co. v. New Garage & Motor Co. Ltd. (1915) UK Sec. 74 of the Indian Contract Act : When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, .. to receive from the party who has broken the contract, reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
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The utility of provision for liquidated damages

(i) it facilitates the calculation of risk; (ii) it removes difficulty of proving actual damage; (iii) it voids difficulty in assessment, even where damages are ascertainable; (iv) It gives the promisee, an assurance; (v) It enables parties to make special provision for different sums for specified breaches. United Breweries Ltd. v. State of AP (1997) SC

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(6) Statutory damages : Certain Acts such as the Railways Act, 1989, the Motor Vehicles Act, 1939, the Carriage of Goods by Sea Act, 1925, etc., provide for compensation in cases of loss of life, injury to limb / body, and damage or loss of goods in transit. The quantum of such compensation is usually provided in specific provisions of the Act, or by specific provisions supplemented in Schedules appended to the Act.
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(b) Measure of damages :

Once the extent of recoverable loss is determined, it is to be evaluated in terms of money. This is the aspect of measure of damages, and while computing the same, the court will be guided by the following principles : (i) Plaintiffs Plaint Claim & Court Fees payable / paid thereon (ii) Damages are compensatory, and not penal ; (iii) In matters of contract, damages for mental pain and suffering, will generally be excluded.

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(ii) Damages are compensatory, and not penal ; The primary aim or principle of the law of damages for a breach of contract, is to place the plaintiff in the same position he would be in if the contract had been fulfilled, or to place the plaintiff in the position he would have occupied had the breach of contract not occurred. When this is accomplished, the primary aim or principle of the law of damages has been fulfilled. Shepherd & Wellington, Contract & Contract Remedies, 1957, p.912

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(iii) In matters of contract, damages for mental pain and suffering, will generally be excluded : Refer earlier Slide Nos. 17 & 18

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Duty of Mitigation of damage

Explanation to Sec. 73 Contract Act : In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by non-performance of the contract must be taken into account. Injured party has to make reasonable efforts to avoid losses resulting from breach, so as to keep his loss to the minimum. Bismi Abdullah & Sons v. FCI (1987) Kerala
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Suit for specific performance :

A suit for specific performance can be filed when (a) compensation in money (damages) would not be adequate relief (remedy) for non-performance; or (b) There is no standard for ascertaining the actual damage caused by non-performance. However, relief of specific performance is discretionary, and subject to the provisions of the Specific Relief Act, 1963. In simple terms: the remedy of specific performance, calls upon the defendant = to perform his part of the contract.
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Prithvi Raj Singh v. Dalip Kulkarni (1999) Rajasthan HC Order of specific performance to discharge liabilities of a company

Jabalpur Cable Network Pvt. Ltd v. ESPN Software India Pvt. Ltd (1999) MP HC Order of specific performance to continue sending messages & signals

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Suit for injunction :

Injunction is a judicial process by which one who has invaded or who is threatening to invade the rights, legal or equitable, of another, is restrained for continuing or commencing such wrongful act.
Encyclopedia of the Laws of England Vol.6, p.464

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Why is a suit for injunction = a very important and a much-sought-after legal remedy ?

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Do you remember / recall the Cases of =

Niranjan Shankar Golikari (1967) SC

Gujarat Bottling Co. Ltd. v. Coca Cola Ltd (1995) SC

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Suit for quantum meruit :

A suit for quantum meruit is based on Sec. 65 Contract Act, which states

When an agreement is discovered to be void, any person who has received any advantage under such agreement or contract, is bound to restore it, or to make compensation for it, to the person from whom he received it.

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A suit for quantum meruit has its basis in Sec. 65 Contract Act, and contains the principle of restitution where, after a benefit has been received, the agreement is later discovered to be void. The Section aims at preventing unjust enrichment and to prevent a party from avoiding an agreement and at the same time, retaining the benefits received under it. It is effected by an order of restitution (to restore / return) the benefit.

quantum meruit = as much as he deserved

quantum valebat = as much as it was worth
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Man Singh v. Khazan Singh (1961) Rajasthan HC

SVTM Carriers v. State of Kerala (2002) Kerala HC

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