Remedies for Breach of Contract

Remedies for Breach of Contract

Introduction

When one party performs a breach of contract, the other sufferer parties are provided with the remedies. The following are the remedies provided to the other parties:

  • DAMAGES
  • QUANTUM MERUIT
  • SPECIFIC PERFORMANCE AND INJUNCTION

This article discusses all these remedies in detail.

Damages

Remedy through damages is one of the most common remedy available to any injured party. Damages empower the injured party to recover compensation for the loss suffered by him due to breach of contract. Damages are recovered from the party d has done breach of Contract. Sections, 73, 74 and 75 provides with its provisions.

Section 73 of the Indian Contract Act, 1872 provide with the provisions regarding the right of the injured party to recover compensation for the loss suffered which is caused to him by the breach of contract. There are numerous illustrations in the bare act which clears all the fog regarding this section. In order to proceed for the damages for the breach of contract, one comes across two kinds of problems i.e. “Remoteness of Damage” and “Measure of Damage”.

Remoteness of Damage

The first thing which needs to be identified is that whether the loss suffered by the Plaintiff is proximate result of the breach of contract by the defendant. The person who breaches the contract is only liable for the close consequences of the breach of contract. The party which breaches the contract is not liable for the damages which are remotely connected. The famous case of Hadley v. Baxandale provides us with the two branches of rules to determine whether the damage is proximate or the remote consequence of the breach.

  • First Branch of Rule: The first branch of rule permits damages for the loss sustained naturally due to breach of contract. Compensation can be claimed for any damage that arose in usual course of things from the breach of contract. For example, party delays in the carriage of good, so here the damage arose in usual course of thing.
  • Second Branch of Rule: This second branch of rule deals with the recovery of more loss arose from the special circumstances. Briefly, If the loss on the breach of contract does not arise in the natural course of time but it arose due to some special circumstances. However if a person making a breach of contract has no knowledge of special circumstances which resulted in the loss of other party, he cannot be made liable for the breach of contract.
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Measure of Damages

When it is clear that the plaintiff deserves to be compensated, the next question which arises is that what will be the measure of damages. Damages are to be compensated. The ultimate of providing damages to the aggrieved party is to put him in the same position in which he would have been if the contract had not been breached. Therefore damages are also measured on the same basis.

Quantum Meruit

The provisions of Section 70 of the contract act are based on the doctrine of Quantum Meruit. The provision of the act provides more liberal presentation than the doctrine provides. The general rule is that if a person has agreed to do some work or to provide some services but he only partly completed his work of what he was required to do, he is not at all entitled to claim anything of what he has done. In simple words, non completion of any work does not entitle a party to a contract to any remuneration even the part it has done.

There is an important legally provided exception to this rule by way of an action for “Quantum Meruit”. This action can be easily understood by an illustration. If two persons (A and B) have entered into a contract and A has performed a part of his work and later he is prevented from performing the rest work by the other party. So here A is entitled to recover the part of remuneration for what he has already performed.

This action merely entitles the injured party to be compensated for whatever act already performed. It is also to be noted that this action doesn’t seems to be an action for compensation for the breach of contract by the other side. It is an action which is alternative to an action for breach of Contract.

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Essentials of an action of Quantum Meruit are:

  • Either of the Parties makes a breach of Contract, or prevents the performance of it by the other side.
  • The party who is affected by the breach of contract, who has already performed a share of it, made to be discharged from further performance of the contract and brings an action to get compensated for the work he has already done.

Specific Performance and Injunction

These both remedies are covered under Specific Relief Act, 1963.

Specific Performance of contracts is covered under the sections 9 to 25 of Specific Relief act, 1963. Specific performance of the contract means that the contract should be performed as per the terms and conditions agreed by both the parties while forming a contract, rather than providing with the compensation for damages. Halsbury defined Specific Performance of Contract as, “It is an equitable relief, given by the court in case of breach of contract, in the form of Judgment that the defendant do actually perform the contract according to its term and stipulation.

According to Section 36, Preventive relief (Injunctions) is granted at the discretion of the court by the injunction temporary or permanent.

An Injunction is an order of the Court preventing a party from doing something which he is under a legal duty not to do. It is discretion of the court to grant or refuse the relief asked. However court is to be guided by the principles of justice and equity. Under Section 36 and 37, there are two different types of Injunctions, i.e. Temporary and Permanent. Temporary injunctions are those injunctions that remain in the force for a particular period of time Whereas Permanent Injunctions are those which are a part of Decree passed by the court after full hearing.

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Conclusion

There are enormous remedies available for breach of contract whether it is in the Indian Contract Act or in the Specific Relief Act. But none of them are simple and easy to attain. A party needs to cross several hindrances to get remedy for breach of contract. In theoretical sense it might sound simple and clear but when it comes to practical work the work is full of enormous challenges.

Author: Dheeraj Diwakar,
Dr. Ram Manohar Lohia National Law University Lucknow, 1st Year

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