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Wednesday, 10 August 2011

What is breach of contract and discuss its remedies available to an aggrieved party?

Breach of Contract :-
Breach means violation of law. The breach of contract means to break the contract or not to act upon the contract. When any party fails to perform its duties in a lawful contract it is called breach of contract. The injured party has a right to take action against the party who has failed to perform his part of contract.


REMEDIES or RIGHTS OF AGGRIEVED PARTY :-
On the breach of contract following remedies are available to an injured party.


1. Claim for Damages :-
If contract is broken, the injured party has a remedy to claim for damages and losses suffered by him. Injured party is entitled to receive compensation of loss from the party who has broken the contract.The aim of this remedy is to provide the injured party the same benefits which it would receive in case of the performance of contract.

Following are important types of damages :


i. :- Special Damage :- Under a special circumstances special damages takes place from breach of contract.

Example :- If the machinery of any factory arrives late and due to this reason one party suffers a loss or profits it is called special damage.


ii. General Damage :- If injured party suffers a loss due to non performance of the contract it is called general damage. The injured party can recover from the guilty party the ordinary damages suffered by him.

Example :- Mr. Robin contracts to pay 3 lac to Mr. Peter on 1st April. Mr. Robin does not pay the money on that day. Mr. Peter is unable to pay her debts and suffer a loss. Mr. Robin is liable to pay Mr. Peter principal amount and also interest on it.


iii. Exemplary Damages :- These damages are awarded in order to punish the guilty party for the breach of contract and not to compensate the loss of the injured party.

These damages are awarded in dishonor of cheque and case of breach of contract to marry.


iv :- Nominal Damages :- When the injured party suffers no loss the contract may award him nominal damages to recognize his right.


2. Suit For Injunction :-
Injunction means the order of the court. It may be used to prevent any wrongful act. In case of contract it is used to prevent that act which is involved in breach of contract.

Example :- Suppose Mr. Yuvraj a film producer contracts with Miss. Neha to sign in his movies for ten years and not to sign in any other film. After one year she contacts with other film producer Mr. Sethy during the period of contract. The court may issue injunction on a suit by Mr. Yuvraj to restrain Miss. Neha from signing in film of Mr. Sethy.


3. Specific Performance :-
A degree of specific performance is an order of the court. It is usually granted in those contracts related to house, land and plot. In some cases compensation to pay. So court may issue the degree of specific performance and can compel to defaulter party the performance of contract.

Example :- Mr. Tipu agrees to sell his house to Mr. Amir, who agrees to purchase. But due to some reasons Mr. Tipu commits breach . At the suit of Mr. Amir court may ask Mr. Tipu to carry out the contract.


4. Recession Of The Contract :-
For the breach of contract it is an equitable remedy. When one party of the contract commits breach and other party may rescued the contract that he may get free from all its obligations for the performance of contract. Due to such recession and non performance injured party is entitled to get compensation for the damages and loss.

Example :- Mr. Sanjay pledges the defence savings certificates to Mr. Panday and get loan. But Mr. Sunjay does not return the loan. Mr. Panday may file a suit for recession of the contract responsibility to return the defence savings certificates on payment.


5. Quantum Merit :-
It means"So much as deserves" we can explain it by the following example :

Example :- Suppose Mr. Ali entered into contract with Mr. Shawn that they will construct one room jointly. Mr. Ali will construct the wall while Mr . Shawn will build the roof. Now Mr. Ali completes his job but Mr. Shawn fails to build the roof of the room. Now in this case Mr. Ali is entitled to receive the award according to his work done by him.This claim of Mr. Ali will be called a claim of "Quantum Merit." The court will award to Mr. Ali keeping in view the work or services performed by him.

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