Remedies for breach of

contract suit for damages

Q1) Remedies for breach of contract suit for damages

YEAR

MARKS

QUINTION

April 2015

14

What is meant by breach of contract? What remedies are

available to a person in the event of breach of contract?

March 2014

Remedies are for breach of contract.

Remedies for breach of

contract suit for damages
Damages mean monetary compensation payable by the defaulting party to
the aggrieved party in the breach of an object of a contract. The object of
providing is to put the aggrieved in the same in the same position, so as
money can do, in which he would have been, had the contract been
performed.

Types of Damages
Damages may be of four types as shown in the following chart;

Remedies for breach of

contract suit for damages

1) Ordinary damages:

Damages which arise in the ordinary course

of events the breach of contract are called ordinary damages. These damages
constitute the direct loss suffered by the aggrieved party. They are estimated
on the basis of circumstances prevailing on the data of the breach of the
contract. Subsequent circumstances tending to change the quantum of the
damages are ignored.

Example:

A) A contracts to sell and deliver 50 quintals of farm wheat to

Bat Rs. 775 per quintal, the price to be paid at the time of delivery. The price
of wheat rises to RS.800 per quintal and a refuses to sell the wheat. B can
claim damages at the rate of Rs.25 per quintal.
B) A contracts to buy of B at Rs.950 per quintal of rice, on
time being fixed for delivery. A afterwards informs B that he will not accept
the rice if tendered if tendered to him. The market price of rice on that day is
Rs.930 per quintal. B is entailed to receive from A compensation at the rate
of Rs.20 per quintal.

2) Special damages:

These damages result from the breach of the

contract under special circumstances. They constitute the indirect loss
suffered by the aggrieved party on account of breach of the contact. They
Can be recovered be recovered only when the special circumstances,
responsible for the losses were made known to the party at the time of the
making of the contract. Other party should be aware of the damages and it is
not matter of right of the plaintiff so court may or may not grant this
damages.

Example:

A) S sent some specimens of his goods for exhibition at an

agricultural show. After the show he entrusted some of his sample to an
agent of a railway company for carriage to another show ground at new
castle. On the consignment note he wrote Must be at New castle Monday
certain. Owing to a default on the part of the railw ay company, the sample

Remedies for breach of

contract suit for damages
arrived late for the show. Held, S could damages for the loss of profit at the
show.
B) G, a tailor delivered a sewing machine and some to a
railway company to be delivered at a place where a festival was to be held.
He expected to earn same exceptional profit at the festival but he did not
bring this fast to the notice of the railway authorities.

3) Exemplary or vindictive damages:

They are quite heavy in

amount in amount and are awarded by way of punishment only in the
following cases;
A) Breach of a contract to marry.
B) Dishonor of a customers cheque by the bank without any proper reason.
These damages are awarded with the intention of punishing the
defaulting party. They are of a deterrent nature and their object is to
prevent the parties from committing breach. In the case of a breach of
a contract to marry, damages will include compensation for the loss of
the feelings and the reputation of the aggrieved party. In the case of a
dishonor of cheque damages are awarded taking into consideration the
loss to the prestige and to the prestige and goodwill of the customer
and the general rule is that smaller the cheque the greater is the
amount of damages.

4) Nominal damages:

These damages are quite small amount. They

are never granted by way of compensation for the loss. In such cases,
usually the loss is very negligible. They are awarded simply to recognize the
right of party to claim damages for the breach of the contract.

Example: A) Agreed to supply to the railway administration according to

one of the terms of the contract, T was required to pay damages to the
railway on his failure whether the Railways suffered any loss or not. T failed
to supply but the railways not suffer any loss. A case was filed against T. The
high court disallowed the suit.
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Remedies for breach of

contract suit for damages
B) A firm consisting of partners employed B for a period of
two years. After six months tow partners retired, the business being carried
on by the other two. B declined to be employed under the continuing
partners. Held, he was only entitled to nominal damages as he had suffered
on loss.

Rules Regarding the Determination of Damages

The rules regarding damages been very well explained in the English case of
Hadley v. Baxendate. The case is discussed below:

Example:

Hs mill stopped on account of the breakage of a crankshaft.

B, a common carrier was entrusted with the delivery of this machine for
taking it to its makers at Greenwich a pattern for a new one. B did not have
this information that delay in carrying the machine would result in loss of
profit. The delivery was delayed beyond reasonable time by some neglect on
the part of B.H claimed from B compensation for the wages of wages of
workers of workers depreciation which were incurred during the period the
factory was idle for the working. The first two items were allowed because
they were the natural consequences of breach but the loss profit was
disallowed as it was special or remote loss which could be recovered only
when the party had information of it.

Rules regarding the ascertainment of the amount of

damages can be summarized as follows:
1) The principle upon which damages are to be assessed is that where a party
sustains a loss by reason of breach of contract, he is so far money can do, to

Remedies for breach of

contract suit for damages
be placed in the same situation with respect to damages as if the contract has
been performance.

Hadley v/s Baxendale

A) Where two party is have a made contract and one of them has
broken it, other party adult to receive damages
B) These damages should reasonably and fairly be consider that is
they arise naturally in useval Corse of thinks
C) They should be in such nature that ad the time of making contract
both party can centigrade what would be the result (loss) of breach
of contract by other party
2) The right to claim damages rests in the party who was sustained loss on
account of breach of the contract. The liability to pay damages lies on party
of contract.

3) Compensation can be claimed for damages.

A)

Which arise naturally in the usual course of things from breach of

contract itself, since damages are paid only for the proximate consequences
of the breach of a contract, or

B)

As may reasonably be supposed to have been in the contemplation of

both the parties, at the time they made the contract as the probable of its
breach. Claim for damages must be fair and reasonable.

Example:

1: A contracts to sell deliver 50tonnes of saltpeter of B at a

certain price to be paid on delivery. A breaks his promise. B is entitled
receive from A by way of compensation the sum if any by which the
contract price falls shot of the price for which B might have obtained 50
tones of saltpeter of like quality at the when the saltpeter to have been
delivered.

2:

A contracts to buy of B stated price, 50 tonnes of rice, on

time being fixed for delivery. A afterwards informs B that he will not accept
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Remedies for breach of

contract suit for damages
the rice if tendered to him. B in entitled to receive from A by of
compensation, the amount, if any, by which the contract price exceeds that
which B can obtain for the rice time when A informs B that he will not
accept it.

3:

A contract to buy Bs ship for RS. 60,000 but breaks his

promise. A must pay to B, by way of compensation, the excess, if any,
contract price over the which B can obtain for the ship at the time of the
breach of promise.

4:

A contracts to repair Bs hour in a certain manner, and

receives in advance. A repairs the house but not according to the contract B
is entitled to recover from cost of making the repairs conforming to the
contract.

4) Mitigation of damages:
It is the duty of the injured party to take all reasonable steps to
mitigate the loss caused by the breach. He cannot claim to be compensated
by the party in default for loss which he ought reasonably to have avoided.
That is he cannot claim compensation for loss which is really due not to the
breach but due to his own neglect to mitigate the loss after the breach. This
rule is incorporated in the explanation to (sec.73).

5) Difficulty of assessment:
Although damages which are incapable of assessment cannot
be recovered, the fast that they are difficult to assess with certainty or
precision does not prevent the aggrieved party from recovering them. The
court must do best to estimate the loss and a contingency may be taken into
account.

Remedies for breach of

contract suit for damages

Example:

H advertised competition by which readers of certain

newspapers were to select fifty ladies. He himself was to select twelve out of
these fifty. The selected twelve were to be providing theatrical engagement.
C was one of the fifty and by Hs breach of contract she was not present
when the final selection was made. Held, C was entitled to damages
although it was difficult to assess them.

6) Cost of decree:
The aggrieved party is entitled, in addition to damages, to get
the cost of getting the decree for damages. The cost of suit for damages is in
the discretion of the court.

7) Damages agreed upon in advance in case of breach:

If a sum named in a contract as the amount to be paid in its case of its
breach. Or the contract contains any other stipulation by way of a penalty for
perform the obligation, the aggrieved party is entitled to receive from the
party who has broken the contract, a reasonable compensation not
exceeding the amount so named (sec.74).

Example:

A) A contract with B to pay B to pay 1,000 if he to pay B

Rs.500 on a give day. B is entitled to recover from A such compensation not
exceeding Rs.1, 000 as the court considers reasonable.
B) A give B a bond for the payment of Rs. 1,000 with interest
at 12% at the end of six months, with a stipulation that in case of default,
interest shall be payable at the rate of 75% from the date of default. This is a
stipulation by way of penalty, and B is only entitled to recover from
compensation as the court considers reasonable.

8) Ordinary damages: They are estimated on the basis of circumstances

prevailing on the data of the breach of the contract. Subsequent
circumstances tending to change the quantum of the damages are ignored.
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Remedies for breach of

contract suit for damages

9) Special damages: They constitute the indirect loss suffered by the

aggrieved party on account of breach of the contact. They Can be recovered
be recovered only when the special circumstances, responsible for the losses
were made known to the party at the time of the making of the contract.

10) Nominal damages:

They are awarded simply to recognize the

right of party to claim damages for the breach of the contract. They are
never granted by way of compensation for the loss.

11) Damages for loss of reputation:

Damages for loss of

reputation case of breach of a contract are generally not recoverable an
exception to this rule exists in the case of a banker who wrongfully refuses
to honor a customer chive. If the customer happens to be a tradesman He can
recover damages in respect of any loss to this trade reputation by the breach
and the rules of law is the smaller the amount of the chaque dishonored the
larger the amount of damages a warded.

12) Damages for inconvenience and discomfort:

Damages can be recover for physical
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Remedies for breach of

contract suit for damages
Inconvenience and discomfort the general rule in this connection is that the
measure of damages is not affected by the motive or the manner f the breach
Example: H with his wife and children took a ticket for a midnight train to
be transported to a particular place where he lived. They were however
transport to a wrong place and they have to walk several miles home on a
drizzling wet night. Held h could recover the sum of $8 to compensate him
for the inconvenience. But nothing for the nothing for the medical expenses
of his wife who caught cold has this consequence was too remote [Hobbs
v/s Landon and s.w.co. (1875) l.r.10 q.b.111]
If however the convenience of discomfort caused by a breach
is substantial the damages can be recovered on the ground of Fannies.

BOOKS: Elements of mercantile law, Modern business

law
REFRIANS:
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1) N. D. KAPOOR

Remedies for breach of

contract suit for damages
2) S.N. MAHESHWARI, S.K. MAHESHWARI.
3) TEJPAL SHEATH.
4) S.K. AGGARWAL

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