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Remedies available for Breach of Contract in India

Remedies available for Breach of Contract in India

In India, the Indian Contract Act, 1872 lays down the law regarding contracts. Civil advocates in Delhi lay great emphasis on defining the term contract and rely on various definitions given by famous scholars, researches and jurists.

Sir William Anson has defined the term contract as “A contract is a legally binding agreement between two or more persons by which rights are acquired by one or more to acts as forbearance on the part of the other or others.”

Sir William Anson has also observed that “The law of contract is intended to ensure that what a man has led to expect shall come pass; that what has been promised to him shall be performed.”

The Indian contract Act, 1872 is said to be largely based on the English common law which consists of the judicial precedents. It is important to note that the Indian Contract Act does not deal with all forms of contracts and separate laws have been enacted to deal with contacts pertaining to negotiable instruments, transfer of property, the sale of goods, partnership, insurance and many more.

The Indian Contract Act, 1872 discusses in detail remedies available for breach of a contract. A contract is said to have been breached when;

  1. A party renounces his liability under the contract
  2. When by his own acts either of the party to the contract makes it impossible to perform his obligation under the contract
  3. When either of the parties to the contract partially or entirely fail to perform their part of the contract.

The basic remedies available under the Act for the breach of a valid contract are:

  1. Damages for breach
  2. Specific performance and
  3. Quantum Meruit

Damages for breach:

Damages in legal language means compensation in terms of money. Claiming compensation for the loss caused by the breach of contract to the opposite party is one of the most common remedies available against the breach of contract. It is important to note that in order to claim damages for the breach of contract the party injured has to apply before a court of law for the rescission of the contract.

Compensation for the breach of a contract is always given for the direct loss or injury caused and not for any remote or indirect loss sustained by the breach of the contract. The object of awarding damages to the aggrieved party is to put him in the same position in which he would have been if the contract had not been breached. The nature of damages is said to be compensative and not punitive and this point has been argued by Supreme Court lawyers in Delhi time and again.

Specific performance:

It is a relief given by the courts to the injured party wherein the Court orders the party who has breached the contract to perform the contract exactly according to the terms stipulated in the contract. It is often referred to as an equitable relief given under the Specific Reliefs Act. The Court orders the specific performance of the contract when no other relief is considered to be adequate enough and all other remedies are inadequate or insufficient. This relief is granted mostly in situations where monetary relief is not adequate and does not put the aggrieved party in any better or even the existing situation.

Quantum Meruit:

The term quantum meruit in the literal sense means “as much as is earned”. When the party injured by the breach of contract has performed his part of the obligation under the contract and thereafter the contract is breached by the other party then the aggrieved party is entitled to recover the value of what he has done. 

 

Shailza

Shailza

Shailza Sharma, BA LLB (Hons.) Graduated from University of Legal Studies, Himachal Pradesh. Working with LawzGrid a part of Karmasquare as an In-House Lawyer. My objective is to be sincere in all my endeavours as In-house legal counsellor wherein would like to be a valuable resource in contributing quality services to the best of my abilities an expertise in the field of law.

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