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Unit 1: Laws of Contract

may get help from consumers’ associations; (iii) the other party may bring the breaching party to Notes
an agency for alternative dispute resolution; (iv) the other party may sue for damages; or (v) the
other party may sue for other remedies.

What is the Point of Getting the Breaching Party to Reconside?

One advantage is that it is cheap. Often the only cost is the price of a phone call and a little pride.
The breaching party may have breached the contract because of a misunderstood communication
with the other party. Perhaps the breaching party just needs a little more time. Or may be both
parties could negotiate. That could still leave both of them better off than if they went to court.

If the aggrieved party hires a lawyer, the first thing that lawyer is likely to do is to convince the
breaching party to perform. For this purpose, it is advisable that all records of communication
with the breaching party are kept. Once the aggrieved party sees itself in for a struggle, it must
make a file. Keep copies of any letters that the aggrieved party sends. You should move all

receipts, warranty cards, and the like to this file. In case the breaching party does not budge,

what else the aggrieved party can do. If the dispute is with a merchant, the aggrieved party
might want to contact the manufacturers of the product. If it involves a large chain of stores such
as Bata, contact the management of the chain. This goes for services, too. If it does not help, the
aggrieved party should contact a consumer association, either in its city or state. It may approach
the District Consumer Forum in the district or the MRTP Commission at New Delhi. Sometimes
trade associations such as Chambers of Commerce may be able to help. Some business groups
have consumer grievance cells. One might try print media “action lines”.

Remedies for Breach of Contracts

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), Remedies under the Indian Contract Act, 1872 are: (i) rescission of the contract (s.39) and,
(ii) damages for the loss sustained or suffered.
Rescission of the Contract

When a breach of contract is committed by one party, the other party may treat the contract as
rescinded. In such a case the aggrieved party is freed from all his obligations under the contract.
Thus, where A promises B to supply one bag of rice on a certain date and B promises to pay the
price on receipt of the bag. A does not deliver the bag of rice on the appointed day, B need not
pay the price. A person who rightfully rescinds the contract is entitled to compensation for any
damage which he has sustained through the non-fulfillment of the contract.

1.9.4 Payment of Damages (S.75)

Another relief or remedy available to the promisee in the event of a breach of promise by the
promisor is to claim damages or loss arising to him there from. Damages under s.75 are awarded
according to certain rules as laid down in Ss.73-74. Section 73 contains three important rules:
(i) Compensation as general damages will be awarded only for those losses that directly and
naturally result from the breach of the contract. (ii) Compensation for losses indirectly caused
by breach may be paid as special damages if the party in breach had knowledge that such losses
would also follow from such act of breach. (iii) The aggrieved party is required to take reasonable
steps to keep his losses to the minimum. It is the duty of the injured party to minimize loss. He
cannot claim to be compensated by the party in default for loss which is really not due to the
breach but due to his own neglect to minimize loss after the breach.

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