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Unit 6: Remedies for Breach of Contract

by the courts and then included in the statute by codification. The best example of this process is Notes
provided by law relating to the sale of goods.

6.4 Summary

z 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).
z 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.
z 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.
z 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.

z The freedom to contract has been intervened in three ways, thereby making it a myth.
These are: (i) enactment of laws by the welfare states to protect the interests of those parties
to the contract which have a weak bargaining power, (ii) intervention by the courts, which
refuse to enforce, and even rewrite terms in private contracts in order to protect the real
or presumed victims of one sided or unfair or unconscionable contracts, (iii) widespread
adoption of ‘form contracting’ by business.

6.5 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.

6.6 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.

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