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CONTRACT ACT

1872
REMEDIES FOR THE BREACH
OF CONTRACT

BREACH OF A CONTRACT

A breach of contract occurs


where a party to a contract fails
to perform, precisely and exactly,
his obligations under the
contract.
This can take various forms.
Example: the failure to supply
goods or perform a service as
agreed.

KINDS OF BREACH OF
CONTRACT

Actual Breach: it occurs when a


party fails to perform a contract,
when performance was due.
Anticipatory Breach: it occurs
before the time fixed for
performance has arrived which can
be either done expressly or in an
implied manner.

DAMAGES

Damages is the basic remedy


available for a breach of
contract.
It is a common law remedy that
can be claimed as of right by the
innocent party.

OBJECT OF DAMAGES

The object of damages is usually to


put the injured party into the same
financial position he would have
been in had the contract been
properly performed.
Sometimes damages are not an
adequate remedy and this is where
the equitable remedies (such as
specific performance and injunction)
may be awarded.

WHAT ARE DAMAGES?

The major remedy available at


common law for breach of
contract is an award of
damages. This is a monetary
sum fixed by the court to
compensate the injured party.

WHAT ARE DAMAGES?


Contd

In order to recover substantial


damages the innocent party
must show that he has suffered
actual loss; if there is no actual
loss he will only be entitled to
nominal damages in recognition
of the fact that he has a valid
cause of action.

Types of Monetary Damages


Ordinary
Damages

Special
Damages

Nominal
Damages

Liquidated
Damages
Exemplary
damages

ORDINARY DAMAGES

Such kind of damages are those


which naturally arise as a result of a
breach of contract.
In this case the aggrieved party can
claim damages for the actual loss
occurred because of the breach.
Refer to the case of Hadley vs.
Baxendale in your text book

SPECIAL DAMAGES

These arise when a party


makes a special contract
through which he expects large
profits and such profits are likely
to be lost due to breach of
contract.

SPECIAL DAMAGES contd

Remember
these damages
can only be claimed when those
special circumstances are made
clear by the party at the time when
the contract is being made.

Refer to the example given in your


text book

LIQUIDATED DAMAGES

Damages to which parties to a


contract agree in advance if the
contract is breached.
To be lawful,
The

actual damages must be


difficult or impracticable to
determine, and
The liquidated amount must be
reasonable in the circumstances.

NOMINAL DAMAGES

Damages awarded when the nonbreaching party sues the breaching


party even though no financial loss
has resulted from the breach.
Usually awarded in a small
amount, such as Rs.1/-.
Cases involving nominal damages
are usually brought in recognition
of a persons right.

EXEMPLARY DAMAGES

These damages are awarded to


punish the guilty party for the
breach and not to compensate
the injured party for the loss
suffered.
Refer to Westesen vs. OS
bank in your text book.

SUIT FOR SPECIFIC


PERFORMANCE

Court orders the breaching party to perform


the acts promised in the contract.
Such relief is granted by the court
where:
monetary compensation is not an adequate
relief.
The subject matter of the contract is
unique.
Specific performance of personal contracts
are usually not granted because it will be
difficult to monitor performance.

SUIT FOR INJUNCTION

Court order that prohibits a party


from doing a certain act which
the person promised not to do.
Available in contract actions
only in limited circumstances
particularly where monetary
compensation is not an
adequate relief.

SUIT UPON QUANTUM


MERUIT

When a person has done some work


under a contract and the other party
cancels the contract or some event
happens which makes the
performance of the contract
impossible, such party can claim for
quantum meruit.