Remedies for Breach of Contract_Revised

7/29/2019 Remedies for Breach of Contract_Revised

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Remedies for Breach of Contract

Chapter 13

The Contract Act of Bhutan2013


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How a breach of contract occurs?

A party to the contract makes it

impossible for the other party to the

contract to perform or, A party to the contract has done

something against the intention of the

contract or, A party to a contract absolutely refuses

to perform the contract.


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Remedies for aggrieved party

Suit of damages

Suit for specific performance of

the contract

Suit upon quantum meruit

Suit for injunction


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Suit for Damages

Damages are monetary compensation allowed to

the injured party by the court for the loss orinjury suffered by him as a result of the breach.

The basic aim of awarding damages by the courtis to put the injured party in the position in whichhe would have been, had there been

performance of the contract.

Thus, damages are given not with the aim topunish the guilty party but rather to compensate

the guilty party.


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CAB 2013

U/S 211 (1):

Compensatory damages, which includes

compensation for the loss or damage caused

to him or her which naturally arose in the

usual course of things from such breach, or

which theparties knew, at the time of

making the contract, to be likely to arise froma breach of the contract.


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Suit for Damages (Contd.)

U/S 213: No compensation shall be payable for anyloss or damage which is remote or indirect.

U/S 214: Mitigation of Damages

It is the duty of the injured party to take all thereasonable steps necessary to mitigate, i.e. to reducethe loss caused by the breach of contract.

Injured party cannot claim compensation for loss which

he could reasonably have avoided. Thus he cannot claim compensation for loss which is

really due not to the breach but due to his own neglectto mitigate, i.e. reduce the loss after the breach.


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Liquidated damages and penalty

Damages stipulated during the formation ofcontract by breach of contract.

Liquidated damages: It represents a sum, fixedor ascertained by the parties in the contract,

which is a fair and a genuine pre-estimate of theprobable loss that might incur as a result of thebreach, if it takes place.

Penalty: is a sum named in the contract at thetime of its formation, which is disproportionateto the damage likely to accrue as a result of thebreach. It is fixed up with a view of securing the

performance of the contract.


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Suit for specific performance

Specific performance means actual carrying

out of the contract.

Sometimes in case of breach of contract,

damages are not an adequate remedy. Thusthe court may in such cases, direct the party inbreach of contract to perform his part ofagreement.

The court will order specific performance onlywhere it is just and equitable to do so.


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Specific performance of contract may

be ordered at the discretion of court,

in following cases: When the act agreed to be done is such that

compensation in money for its non-

performance is not a sufficient relief. When there is no standard for ascertaining the

actual damage caused by the non-

performance of the act agreed to be done.

When it is possible that compensation inmoney on non-performance of the contractcant be obtained.


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Suit upon Quantum Meruit

Quantum Meruitliterally means as much as earned

or in the proportion of the work done.

A right to sue upon quantum meruitarises when a

person has done some part of the work under a contract,

there is a breach of the contract or the contract is laterdiscovered void or becomes void.

Then such party who has performed the work can claimremuneration for the work he has already done.

This remedy may be availed: by either without claimingthe damages, or in addition to claiming damages for the

breach of contract.


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Suit for Injunction

Where a party to the contract is doing something, which

he promised not to do, the court may, by issuing an

order, restrain him from doing what he promised not to

do.

Such an order of the court is known as an Injunction

The injunction is, thus a mode of securing the specific

performance of the negative terms of a contract..

Injunction is a preventive relief and is particularlyappropriate in case of anticipatory breach where

damages would not be an adequate relief.

Documents

Remedies for Breach of Contract_Revised