REMDEDIES FOR BREACH OF CONTRACT/CONSEQUENSES OF BREACH OF CONTRACT

INTRODUCTION:            Latin maxim “UBI JUS IBI REMEDIUM” — Where there is a right, there is a remedy.

A contract may be discharged by performance, by agreement or consent, by impossibility, by lapse of time, by operation of law, or by breach of contract.

Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract—either by non-performance or interference with the other party’s performance.

In the above perspective, the law of Contract Act, 1872 provides certain remedies against the breach of contract by following the

 

RELEVANT PROVISIONS AND LAW:

• Chapter 6 – Of the consequences of breach of contract

• Section 64 and Section 75

• Damages for breach of contract: Sections 73 and 74

 

WHAT IS BREACH OF CONTRACT?

 

In legal terms, a breach of contract occurs when one party fails to fulfill their obligation under the agreement, or interferes with the other party’s ability to fulfill their obligations. This failure can include:

• Non-performance (not doing what was promised)

• Partial performance (doing it incompletely or wrongly)

• Repudiation (refusing to perform)

• Delaying performance without valid reason

 

TYPES OF BREACH OF CONTRACT:

The breach of contract may be:

i. Actual Breach of Contract:

The actual breach may take place either at the time the performance is due or when actually performing the contract.

ii. Anticipatory Breach of Contract:

The anticipatory breach is a breach before the time for the performance has arrived. This may take place in two ways:

• a. By the promisor doing an act which makes the performance of his promise impossible

• b. By the promisor in some other way showing his intention not to perform it.

 

CONSEQUENCE OF BREACH OF CONTRACT: (Section 64)

When a person, at whose option a contract is voidable, rescinds it, the other party thereto need not perform any promise therein contained in which he is promisor. The party rescinding a voidable contract shall, if he has received any benefit thereunder from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received.

 

REMEDIES FOR BREACH OF CONTRACT / CONSEQUENCES OF BREACH OF CONTRACT:

When a party to a contract has broken the contract, the other party may treat the contract as rescinded and he is absolved from all his obligations. Section 64 of the Contract Act deals with the consequences of rescission of a voidable contract. Under this section, when a person, at whose option a contract is voidable, rescinds it, the other party thereto need not perform any promise therein contained in which he is the promisor. The party rescinding a voidable contract shall, if he has received any benefit thereunder from another party to such contract, restore such benefit so far as may be, to the person from whom it was received.

The law on this issue is dealt with in two statutes, viz., the Specific Relief Act, 1963 and the Contract Act, 1872.

The remedies for breach of contract are:

 

1. SUIT FOR RESCISSION (Section 75):

Rescission means the setting aside of a contract. The aggrieved party may be allowed by the court to treat the contract as at an end, thereby terminating all his liabilities under the contract.

 

2. SUIT FOR DAMAGES OR COMPENSATION (Section 73):

Another remedy available in the case of breach of contract is damages. Damages may be of any of the following four types:

i. Ordinary Damages
ii. Special Damages
iii. Exemplary Damages
iv. Nominal Damages

 

3. SUIT FOR QUANTUM MERUIT (Sections 65 & 70):

‘Quantum Meruit’ means ‘as much as merited’ or ‘as much as earned’.

This principle provides for payment of compensation under certain circumstances to a person who has rendered goods or services to another person, under a contract which could not have been fully performed.

The aggrieved party can claim reasonable compensation for the act he has done under the contract.

Further, when a contract is discovered to be unenforceable due to some technical defect, any person who has done something under the contract is entitled to a reasonable compensation, in spite of the fact that the agreement is void.

 

4. SUIT FOR SPECIFIC PERFORMANCE:

Courts can, at their discretion, order specific performance of a contract according to the provisions of the Specific Relief Act, in those cases where:

• Monetary compensation will not be an adequate remedy, or

• Actual damages cannot accurately be assessed.

However, specific performance will not be granted if:

• The agreement was made without consideration

• The court cannot supervise its execution

• It is inequitable (i.e., not fair or just)

• The contract is of a personal nature

In contracts for the sale of land and rare articles, courts generally order specific performance.

 

5. SUIT FOR INJUNCTION:

Where a contract is negative in nature (i.e., a party has promised not to do something), and he does it, thereby committing a breach, the aggrieved party may, under certain circumstances, seek the protection of the court and obtain an injunction.

An injunction is an order of the court instructing a person to refrain from doing something which was the subject matter of the contract.

Courts may, at their discretion, grant either:

• A temporary injunction, or

• A perpetual injunction for a definite period.

 

6. SUIT FOR RESTITUTION (Sections 64 & 65):

Restitution means an act of restoration. According to Alison, a person who has been unjustly enriched at the expense of another must make compensation to the other.

The principle of restitution applies in the following cases:

1. In case of a voidable contract: (Section 64)

2. In case a contract becomes void

3. In case an agreement is discovered to be void

 

CONCLUSION:

The breach of contract is a critical aspect of the law of contracts, addressed comprehensively under the Contract Act, 1872, particularly in Sections 64 to 75 and Sections 73 and 74 regarding damages.

Whenever a contract is broken, the injured party is entitled to seek remedies as per law—these include rescission, damages, quantum meruit, specific performance, injunction, and restitution. These remedies ensure that justice is delivered in accordance with the principle "Ubi jus ibi remedium", which emphasizes that wherever a legal right is violated, a remedy must be available.

The law strives to protect the sanctity of contracts and uphold fairness, equity, and justice by ensuring that parties are either compensated or the performance is enforced where possible. Therefore, a clear understanding of these remedies is vital for any party entering into a contractual relationship.