Page 77 - DCOM103_COMMERCIAL_LAW

Commercial Law

Notes is the difference between the market price on the date of the breach and the contract price, i.e.,
` 200.
(ii) A contracts to buy B’s ship for ` 2,00,000 but breaks his promise. A must pay to B by way of
compensation the excess, if any, of the contract price over the price which B can obtain for the
ship at the time of the breach of promise.
The ordinary damages cannot be claimed for any remote or indirect loss or damages by reason
of the breach. The ordinary damages shall be available for any loss which arises naturally in
the usual course of things. A railway passenger’s wife caught cold and fell ill due to her being
asked to get down at a place other than the railway station. In a suit by the plaintiff against
the railway company, held that damages for the personal inconvenience of the plaintiff alone
could be granted, but not for the sickness of the plaintiff’s wife, because it was a very remote
consequence.
What is the most common remedy for breach of contracts. The usual remedy for breach of
contracts is suit for damages. The main kind of damages awarded in a contract suit are ordinary
damages. This is the amount of money it would take to put the aggrieved party in as good a
position as if there had not been a breach of contract. The idea is to compensate the aggrieved
party for the loss he has suffered as a result of the breach of the contract.
Special damages. These damages are claimed in case of loss of profit, etc. When there are certain

special or extraordinary circumstances present and their existence is communicated to the
promisor, the non-performance of the promise entitles the promisor to not only the ordinary
damages but also damages that may result therefrom. The communication of the special
circumstances is a prerequisite to the claim for special damages.

Example: (i) A, a builder, contracts to erect and finish a house by the first of January, in

order that B may give possession of it at that time to C, to whom B has contracted to let it. A is
informed of the contract between B and C. A builds the house so badly that before the 1st of
January it falls down and had to be rebuilt by B, who in consequence loses the rent which he was
to have received from C, and is obliged to make compensation to C for the breach of his contract.
A must make compensation to B for the cost of rebuilding the house, for the rent lost and for the
compensation made to C.

(ii) A delivers to B, a common carrier, a machine to be conveyed without delay to A’s mill,
informing B that his mill is stopped for want of the machine. B unreasonably delays the delivery

of the machine and A, in consequence, loses a profitable contract with the government. A is
entitled to receive from B, by way of compensation, the average amount of profit which would

have been made by the working of the mill during the time that delivery of it was delayed. But,
however, the loss sustained through the loss of the government contract cannot be claimed.
(iii) X’s mill was stopped due to the breakdown of a shaft. He delivered the shaft to Y, a common
carrier, to be taken to a manufacturer to copy it and make a new one. X did not make known to
Y that delay would result in a loss of profits. By some neglect on the part of Y the delivery of the

shaft was delayed in transit beyond a reasonable time. As a result, the mill remained idle for a
longer time than otherwise would have been, had the shaft been delivered in time. Held, Y was

not liable for loss of profits during the period of delay as the circumstances communicated to
Y did not show that a delay in the delivery of the shaft would entail loss of profits to the mill.

[Hadley v. Baxendale].
(iv) Where A contracts to sell and deliver to B on the 1st of January certain cloth which B intends
to manufacture into caps of a particular kind for which there is no demand except in that
season. The cloth is not delivered till after the appointed time and too late to be used that year in
making caps. B is entitled to receive from A only ordinary damages, i.e., the difference between
the contract price of the cloth and its market price at the time of delivery but not the profi ts

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