Page 81 - DCOM103_COMMERCIAL_LAW

Commercial Law

Notes 5. ............................. means an order of the court prohibiting a person to do something where
a party is in breach of a negative term of contract (i.e., where he does something which he
promised not to do), the court may by, issuing an order, prohibit him from doing so.
6. The phrase ............................. means as much as is merited (earned).

7. The ............................. differs from other branches of law in a very important aspect.
8. The freedom of the parties is limited by ............................. .
9. The .......................... cannot be claimed for any remote or indirect loss or damages by reason
of the breach.

7.6 Review Questions

1. What are the different ways in which a breach of contract may arise?
2. Whether time is the essence of a contract or not?
3. What are the main types of remedies for breach of a contract?
4. State the principles on which damages are awarded for breach of contracts.

5. Give some examples of ordinary damages. Can ordinary damages be claimed for any
remote or indirect loss or damage by reason of the breach?
6. Give some examples of special damages. Is it that the communication of the special
circumstances a prerequisite to the claim for special damages?
7. What is meant by liquidated damages and penalty?
8. What is specific performance? Under what circumstances, it is (i) granted (ii) not

granted?
9. What is a penalty clause? Why is it that the court will not enforce a penalty clause?
10. Explain (i) exemplary damages (ii) quantum meruit.
11. In a bond there is stipulation for payment of compound interest on failure to pay simple
interest at (a) the same rate as simple interest. (b) a higher rate as was payable on the
principal. Discuss whether this stipulation is a penalty.
[Hint: Payment of compound interest on default (a) at the same rate as simple interest is
not a penalty within the meaning of Sec. 74 (Ganga Dayal v. Bachu Mal, (1906) 25 All. (25).
(b) at rate higher than simple interest is a penalty within the meaning of Sec. 74 [Sunder
Koer v. Rat Sham Krishan, (1905) 34 Cal. 150.]
12. S agreed to act as sales manager for Company X for a period of three years at monthly
salary of ` 1000. S worked for six months and then left and joined another company at a
higher salary. What are the rights of Company X?
[Hint: Company X may not only treat the contract as rescinded but also bring suit against S
to recover any monetary loss suffered by it as a result of the breach].
13. M, a retailer of milk, supplied C with milk which was consumed by C and his family. The
milk contained typhoid germs and C’s daughter was infected thereby and died. Discuss
the legal position of the parties.
[Hint: C can recover damages from M (Frost v. Aylesbury Diary Co. Ltd., (1925) 1 K.G. 608.
Also refer to Problem 6 of this Unit.]

74 LOVELY PROFESSIONAL UNIVERSITY