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Corporate Legal Framework

Notes provided for payment of interest at 12% p.a. with a provision that if the debtor pays interest
punctually at the end of every year the creditor would accept interest at the rate of 9% p.a.
Such a clause is not in the nature of penalty and hence interest @ 12% shall be payable.

Vindictive or Punitive Damage

These damages are awarded with a view to punish the defendant and not solely with the idea
of awarding compensation to the plaintiff. These have been awarded (a) for breach of a promise
to marry; (b) for wrongful dishonour of a cheque by a banker possessing adequate funds of the
customer. The measure of damages in case (a) is dependent upon the severity of the shock to the
sentiments of the promisee. In case (b), the rule is smaller the amount of the cheque dishonored
larger will be the amount of damages awarded.

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. The damages granted in such cases are called
nominal because they are very small, for example, a rupee. This small amount is awarded as a
matter of course.

Case Study Robinson
obinson, a college football player, signed a contract on December 2 with the Detroit
Lions, a pro football club. The contract was a standard form that contained a clause
Rstating, “This agreement shall become valid and binding upon each party only when
and if it shall be approved by the League Commissioner.” In late December, Robinson
informed the Detroit Lions that he would not be playing for them because he had signed on
with the Dallas Cowboys. On January 12 the Commisioner approved the contract. Detroit
then sued Robinson for breach of contract.
Question
Was there ever a contract between Robinson and the Detroit Lions? Why or why not?

Ans: When Robinson signed the contract it was subject to the approval of the Comissioner.
This was an express condition precedent and by Robinson signing, he has an implied
good faith effort to allow the Commisioner the opportunity to accept. Robinson’s power
of revocation was temporarily suspended while he was waiting to be approved by the
Comissioner. His later revocation is considered a antipatory repudiation. Subsequently,
when the Commisioner approved the contract, it was binding and Robinson’s repudiation
can be considered a material breach by the Detroit Lions.
Source: http://www.askmehelpdesk.com/corporate-law/case-study-breach-contract-11531.html

1.10 Summary

In this unit, you studied about contracts. The law relating to contracts is contained in the
Indian Contract Act, 1872. For business executives, contract law is tremendously signifi cant
because it underlies or is related to all major areas of law affecting business.
A contract is an agreement, enforceable by law, made between at least two parties by which
rights are acquired by one and obligations are created on the part of another.

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