Remedies for Breach of Contract
Parties to a contract are obliged to perform their respective promises. But situation arises where one of the parties to a contract may break the contract by refusing to perform his promise. This is what is called breach of contract. When one party commits breach of contract, soon the other party is entitled to the following remedies.
When one of the party commits a breach of the contract, the other party becomes entitled to any of the following reliefs:
- Rescission of the contract.
- Damages for the loss suffered.
- Suit for the specific performance.
- Suit upon quantum meruit.
- Suit for injunction.
1. Rescission of the Contract
When one of the parties commits breach of contract, other party shall further treat the contract as void or rescinded. When the contract is rescinded, the affected party is automatically discharged from all the commitments under the contract.
Sec. 64 of the Act provides that the party who rescinds the voidable contract, shall if he has received any benefit there under from the other party, restore such benefit to the person from whom it was received. Further, the person who rightfully rescinds the contract is entitled to compensation for any damage he faced from non-fulfillment of contract.
2. Damages for the loss suffered
The term “Damages” means monetary compensation payable by the defaulting party to the affected party for the loss suffered by him when contract was breached. Therefore, the aggrieved party may bring an action for damages against the party who is guilty of the breach of contract.
The party who is guilty of breach is liable to pay damages to the aggrieved party. The main purpose of awarding damages is to put the injured person in as good a position as he would have been if performance had been rendered as promised. Therefore, the aggrieved party can recover the actual damages and nothing more. Exemplary damages can be awarded only when the feelings of the injured party are considered.
Types of Damages
There are four types of damages, which.can be claimed by the aggrieved party.
1. Ordinary Damages or General Damages: Damages that arise in the ordinary course of events from the breach of contract are called ordinary damages.
2. Special Damages: Special damages are those damages that are payable for the loss arising on account of some special or unusual circumstances. That is, they are not due to the natural and probable consequences of the breach of the contract.
3. Exemplary or Vindictive Damages: These damages are awarded against the party who has committed a breach of the contract with the object of punishing the erring as defaulting party and to compensate the aggrieved party.
Generally, these damages are awarded in case of action on lost or 1br1141each of promise. E.g., breach of contract to marry, is honour of customer’s cheque by the bank without any proper reason.
4. Nominal Damages: Nominal damages are awarded to the aggrieved party when there is only technical violation of the legal rights. Here no substantial loss is caused. These damages are very small in amount. They are awarded simply to recognize the right of the party to claim damages for the, breach of the contract.
Sometimes, the damages are not an adequate remedy for breach of the contract. In such cases, the Court may, at the suit of the party not in breach, direct the patty in breach to carry out his promise as per the terms of the contract. This is known as specific performance of the contract.
Example: A agreed to sell an old stamp of pre-independence period to 8 for Rs.500. But subsequently, A refused to sell it. In this case, B may,file a suit against A for the specific performance of the contract. And the Court may order A to sell the stamp to B as agreed.
Some of the cases where Court may direct specific performance are as follows:
1. When the act agreed to be done is such that compensation in money, for its non-performance could not afford adequate relief.
2. When there exists no standard for determining the actual damages caused due to the non-performance of the contract.
However, specific performance shall not be granted in the following cases:
1. Where the damages are an adequate relief,.
2. Where the contract is determinable in its nature.
3. Where the contract involves personal nature.
4. Where the Courts cannot supervise the carrying out of the contract.
5. Where the contract is not fair and just.
4. Suit upon Quantum Meruit
In literal sense, the expression “Quantum Meruit” means, “as much as earned “. In legal sense, it means payment in proportion to the work done. This principle provides for the payment of compensation under certain circumstances, to a person who has offered the goods or services to the other party under a contract, which under certain circumstance, could not be fully performed.
Cases for Claim on Quantum Meruit
1. Where the work, which has been done and accepted under a contract, is subsequently discovered to be void – Here the party who has effected part of the contract can rightfully the amount for the work he has done. And the party, who accepts and reaps the benefit under such contract, must make compensation to the other party.
2. Where one party abandons or refuses to perform the whole contract. Here the compensation for the work done may be recovered on the basis of quantum meruit.
3. Where something is done without any intention to do gratuitously. In such cases, the other person is bound to make the payment if he accepts such services or goods, or enjoys their benefit.
4. Where the contract is divisible and the party has enjoyed the benefits of the work done – In such cases, the party in default may sue on quantum meruit if the other party has enjoyed the benefits of the part performance.
5. Suit for Injunction
The term”Injunction” may be defined as an order of the Court instructing a person to refrain from doing some act that has been the subject-matter of contract. Where a party has promised not to do something and he does it, and thereby commits a breach of contract, the aggrieved party may, seek the protection of the Court under certain circumstances and obtain an injunction.
Example: A contracted to sing only at B’s theatre and nowhere else for a certain period. Afterwards A made a contract with C to sing at C’s theatre and refused to sing at B’s theatre. The Court refused to order specific performance because the contract was of a personal nature but granted an injunction against A to restrain him from singing anywhere else.