Page 80 - DCOM103_COMMERCIAL_LAW

Unit 7: Remedies for Breach of Contract

Notes
Example: A, the owner of a ship, fraudulently representing the ship to be seaworthy
induce B, an underwriter, to insure the ship, B may obtain the cancellation of the policy.

7.3 Summary

As soon as either party commits a breach of the contract, the other party becomes entitled
to certain reliefs. These remedies are available under the Indian Contract Act, 1872, as also
under the Specific Relief Act, 1963. There are three remedies under the Specific Relief Act,

1963: (i) a decree for specific performance (s.10); (ii) an injunction (s.38-41); (iii) a suit on

quantum meruit (s.30).
Thus, the loss or damages caused to the aggrieved party must be such that either (i) it arose
naturally or (ii) the parties knew, when they made the contract, was likely to arise. In other
words, such compensation cannot be claimed for any remote or indirect loss or damage
sustained by reason of the breach of the contract.
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.
There are other remedies in a contract suit besides damages. The main one is specifi c
performance. Where damages are not an adequate remedy, the court may direct the party
in breach to carry out his promise according to the term of the contract. This is called
specific performance of the contract.

7.4 Keywords

Nominal damages: These are awarded in cases of breach of contract where there is only technical
violation of the legal right but no substantial loss is caused thereby.
Ordinary damages: Cannot be claimed for any remote or indirect loss or damages by reason of
the breach.
Special damages: These damages are claimed in case of loss of profi t.

Vindictive or punitive damages: These damages are awarded with a view to punish the defendant
and not solely with the idea of awarding compensation to the plaintiff.

7.5 Self Assessment

Fill in the blanks:

1. When a ............................. is committed by one party, the other party may treat the contract
as rescinded.
2. ............................. as general damages will be awarded only for those losses that directly and
naturally result from the breach of the contract.
3. ............................. provides that if the parties agree in their contract that whoever commits
a breach shall pay an agreed amount as compensation, the court has the power to award a
reasonable amount only, subject to such agreed amount.
4. The ............................. of the special circumstances is a prerequisite to the claim for special
damages.

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