You are currently viewing BREACH OF CONTRACT

BREACH OF CONTRACT

Loading

The Indian Contract Act of 1872 serves as a cornerstone of legal regulations governing contracts in India. It outlines the framework for defining the rights and responsibilities of parties involved in contractual agreements. These contracts are essential for simplifying everyday transactions and ensuring that parties fulfil their obligations without breaching the agreement.

Breach of Contract

When one party fails to meet their contractual obligations, a breach of contract occurs. In such cases, legal remedies are available to address the violation. The Latin Maxim “Ubi jus, ibi remedium” emphasizes that where there is a right, there is a remedy, highlighting the importance of upholding the rights and obligations of contract parties.

Types of Breach of Contract:

There are various categories of breach of contracts, each with unique characteristics:

  1. Anticipatory Breach: In this scenario, one party foresees the breach and may communicate their intent to violate the agreement either explicitly or through their actions. Such anticipation allows the affected party to take appropriate legal action.
  2. Actual Breach: An actual breach takes place when one party to the contract fails to fulfil their obligations as specified in the agreement. This can involve a refusal to comply with the contract terms or an inability to meet the agreed-upon requirements.

Remedies for Breach of Contract:

Several legal remedies are available to address breaches of contract, ensuring that parties are protected and can seek compensation for damages:

  1. Suit for Rescission: When a party breaches the contract, the other party can choose to nullify the agreement, rendering it void and null. This allows the injured parties to seek compensation for the resulting damages. This lawsuit is often preferred as a remedy for contract breaches.
  2. Suit for Injunction: In cases where one party continues to act in violation of the contract, the court can issue an injunction, instructing that party to cease the specific actions causing harm. This legal remedy may be temporary or permanent, depending on the circumstances.
  3. Suit for Performance: This remedy involves the court granting specific orders to the parties involved to ensure they fulfil the agreed-upon tasks as outlined in the contract. It is one of the most common remedies sought in cases of breach of contract.
  4. Suit for Quantum Meruit: Contracts entered into for the value of services rendered are termed “quantum meruit.” If an employer engages someone for a task and the work is incomplete or improperly executed, the employer may seek compensation as mandated by the law. The worker is entitled to receive fair compensation for the services rendered.
  5. Sue for Damages: Section 73 allows a party that has suffered a breach of contract to claim compensation for losses incurred during the normal course of business. These damages can be of two types:
    • Liquidated Damages: Parties may agree on a specific amount payable in the event of a breach, known as liquidated damages.
    • Unliquidated Damages: In cases where liquidated damages are not specified, the court or relevant authorities assess the amount payable for the breach of contract.

Types of Damages:

Damages, in the context of breach of contract, come in several forms:

  1. General Damages: These are typical damages resulting from a contract breach and are incurred as part of standard contractual dealings.
  2. Special Damages: Special damages are recoverable compensation for losses that arise from unusual or special conditions specific to the contract.
  3. Vindictive Damages: These damages are imposed on the party that breaches the contract to punish them and compensate the injured party. Monetary damages are typically awarded in cases related to loss or harm.
  4. Nominal Damages: Nominal damages are symbolic in nature and are awarded to acknowledge a party’s right to claim damages for the breach of the contract.

FAQs:

1. What is the Indian Contract Act of 1872?

The Indian Contract Act of 1872 is a legal framework governing contracts in India. It defines the rights and obligations of parties involved in contractual agreements, simplifying everyday transactions.

2. What is a breach of contract?

A breach of contract occurs when one party fails to fulfil their obligations as outlined in the contract, either by refusing to comply with the terms or being unable to meet the agreed-upon requirements.

3. What is a suit for rescission?

In cases of contract breaches, a party can initiate a suit for rescission, which allows them to nullify the agreement and seek compensation for resulting damages.

4. When can a suit for performance be sought?

A suit for performance is pursued when the court grants specific orders to ensure that parties fulfil the tasks outlined in the contract, addressing the breach.

5. What are special damages in a breach of contract?

Special damages are recoverable compensation for losses that arise from unusual or special conditions specific to the contract, distinct from general damages.

6. What are vindictive damages in contract law?

Vindictive damages are imposed on a party that breaches a contract with the aim of punishing the defaulting party and compensating the injured party, typically awarded in cases related to loss or harm.

7. What are nominal damages in contract cases?

Nominal damages are symbolic in nature and are awarded to acknowledge a party’s right to claim damages for the breach of the contract, even when the actual damages incurred are minimal.

G.Durghasree B.A.B.L (Hons)

G Durghasree B.A.B.L (Hons) is a registered trademark attorney with extensive experience as an Advocate for a period of 8 years. She possesses expertise in trademark law, including trademark filing and trademark hearings. Additionally, she is skilled in contract drafting and reviewing, providing legal advice and opinions, particularly in the areas of Company Law, Insolvency and Bankruptcy Code (IBC), and Goods and Service Tax Law (GST). Her experience encompasses both litigation and non-litigation aspects of these laws.