Remedies for Breach of Contract
When one of the parties to the contract makes a breach of contract, then the other party has the following remedies available for Breach of Contract-
b) Quantum Meruit
c) Specific Performance
e) Rescind the contract and refuse further performance of the same.
Read Also: Contract of Indemnity
The remedy by way of getting damages is perhaps the most common remedy available to the injured party. This entitles the injured party to recover compensation for the loss caused or suffered by him due to the breach of contract, from the party who caused the same.
Section 73 of the Indian Contract Act, 1872 makes provisions in this regard. It talks about the right of an injured party to recover compensation for the loss suffered by him due to the breach of contract. The Section has 18 illustrations to elaborate the section further.
In action for breach for a contract, there are usually two kinds of problems –
- Firstly, the loss suffered by the plaintiff needs to be determined, whether it is a proximate consequence of the breach of contract by the defendant or not. The defendant shall only be liable for the proximate consequences of the breach of contract. He will not be liable for damages which are remotely connected with the breach of contract. This is known as “Remoteness of Damages.”
- Secondly, if it is deciphered that particular damage is in proximate result to the breach of contract, then how much compensation is to be paid by the defendant to the plaintiff, for the same?
This question was answered in the case of Hadley v. Baxendale where it was held that damages which as may fairly and reasonably be considered arsing to the usual course of things from such breach could be recovered. Secondly, damages which as may reasonably be supposed to have been in the contemplation of both the parties at the time they made the contract.
The expression “quantum meruit” means “as much as earned.” In other words, it means reasonable remuneration. The general rule is that when a party to a contract has not fully performed what the contract stipulates, he cannot sue for the same. But when there is one party who hasn't performed part of his contract and is prevented by the other party from further completion, he may bring an action on a quantum meruit, for the amount of work he has done. This claim arises when one party has abandoned the contractor accepts the work done by another under a void contract.
This refers to the actual carrying out of the task by the parties as stipulated in the contract. Where a party fails to perform the contractual obligations, the Court may at its discretion order the defendant to perform his undertaking according to the terms stated in the contract. A decree for specific performance of a contract may be granted along with damages or in place of damages.
Specific performance is not granted when –
a) where monetary compensation is an adequate remedy;
b) where the court cannot supervise the execution of the contract;
c) where the contract is for some personal service;
d) where one of the parties to the contract is a minor.
The law which governs the specific performance of a contract is the Specific Relief Act, 1963.
An injunction refers to an order of a court restraining a person from doing an act. It is a way to secure the specific performance of a negative term of the contract, where the court may give an issue an order to the defendant restraining him from doing something that he promised not to do. Injunctions can be prohibitory or mandatory; and temporary or perpetual.
Rescission of Contract
When a party to a contract has committed a breach of contract, the injured party may put a contract to an end, i.e. rescind it, and he will be absolved from all the obligations under the contract. Section 65 says that when a party treats the contract to an end, then he makes himself liable to restore any benefits which he has received under the contract to the party from whom such benefits were received originally. Section 75 says that if a party to a contract rightfully rescinds the contract, then he is entitled to receive compensation for damage which he has sustained through non-fulfillment of the contract by the other party.
Read Also: Frustration of Contract
No one should get benefit from others unjustly. A remedy must be provided to the injured as quickly as possible. This is just not in morality but also in contractual obligations. The Indian Contract Act, 1872 is the primary legislation governing contractual relations in India clearly mentions five distinct grounds for awarding remedies to the injured party. This helps the parties to freely enter into contracts without any risk of getting cheated or bluffed from the other side. The essence of law is justice and remedy to the affected party is a way to provide justice. Therefore, damages, specific performance, injunction, rescission, and quantum meruit are the five remedies which the court grants in contractual relations.