Breach of contract and

remedies
Saroj ghimire, advocate
ll.m.uk, ll.m.india
 BREACH AND REMEDIES

 The question of remedies does not

become important until it is first
determined that the contract was broken.

 How to determine that there is breach of

contract?
 Definition of Breach:

 A breach is the failure to act or perform a

promise in the matter called for by the
contract.
 When the contract calls for performance,
such as the painting of the owner's house,
the failure to paint or not to paint properly is
a breach of contract.
 Where a promisor has neither performed his
contract nor performed fully or not excused
from performance by mutual consent, he is
said to be in breach of contract
 Section 82
 In case any party to a contract does not
meet liability under the contract, or gives
a notice to the other party that he/she will
not perform the work to be performed
under the contract, or in case his/her
action or conduct shows that he/she is
incapable of performing the work under
the contract, he shall be deemed to have
breached the contract.
 Thus a breach of contract occurs when a
party to a contract thereto renounces his
liability under it, or by his own act makes it
impossible that he should perform his
obligations under it or totally or partially
fails to perform such obligations.
 The failure to perform or renunciation may
take place when the time of performance
has arrived or even before that. Thus
breach is of two types:
 Actual breach
 Anticipatory
 English Law
 Where the contract provides that
performance to be made within
the time and date stipulated, the
time is considered to be the
essence of the contract even a
delay of ten minutes cannot
prevent the contract being
rescinded or cancelled.
 Union Eagle Ltd vs. Golden
Achievement Ltd.
 The purchaser enter into written contract with
the respondent seller to buy a flat and
deposited 10% of the price.
 The contract provided that the sale and
purchase transaction to be completed before
5:00 Pm on 30th September, 1991 and the time
being the essence in every respect of the
contract, if the purchaser failed to comply with
any of the terms and conditions the deposit is
absolutely liable to be forfeited.
 The purchaser was 10 minutes late in
tendering the purchase money and other
documents. The respondent rejecting the
price money rescinded the contract
forfeited the deposit money which the
Privy Council (Court) found to be
reasonable.
 Actual Breach
 Not performing contract at the time of
performance
 Anticipatory Breach
 An anticipatory breach of contract is a breach
of contract occurring before the time fixed for
performance has arrived.
 A party to a contract communicates to the
other party, before the due date of
performance, his intention not to perform it.
 For example, A contracts with B to supply 10
bags of wheat for Rs 15000 on first March.
On 15th Feb. A inform B that he will not be
able to supply the wheat.
 A party by his own voluntary act disables
himself from performing the contract.
 For example, A contracts to sell a
particular horse to another on Ist of June
and before that date he sells the horse to
somebody else.
 in case his/her action or conduct shows
that he/she is incapable of performing the
work under the contract, he shall be
deemed to have breached the contract.
 Hochestor v De La Tour
 Hochestor was courier. He was engaged by the
De law Tour to accompany him on a tour to
commence on june 1, 1852. Nearly a month
before this date the De La Tour wrote to
Hochestor that he had changed his mind, and
declined his service. Hochestor sued him for
breach of contract and claimed for damages?
However, De La Tour argued that there could
be no breach of the agreement before the day
when the performance was due?
 Held
 There was anticipatory breach.
 Hochestor could sue for damages
immediately and need not to wait for the
performance date.
 The option is at the aggrieved party to sue
at once or wait for performance.
 Once, he realised of anticipatory breach,
he need not require to wait until the date
of performance has arrived.
No satisfactory performance
 Rights of the sufferor in case of
breach [Section 82]
 In case the contract is breached or
 In case the conduct justifies that the contract
is breached or
 in case his/her action or conduct shows that
he/she has not basically compiled with the
contract
 The other party shall not be compelled to
perform the contract, and may cancel the
contract by furnishing a notice thereof to the
other party.
 Remedies for Breach of
Contract:
 Self help remedy
 Damages
 Specific performance
 Injunction
 Quantum meriut
 Damages
 A breach of contract entitles the non
breaching party to sue for money
damages.
 Damages are designed to compensate the
non breaching party for the loss of the
bargain.
 Often, courts say that innocent parties are
to be placed in the position they would
have occupied had the contract been fully
performed
 How much damages?
Section 83
 In case a contract has been breached, the
aggrieved party may realize from the party
who has broken the contract, the actual
loss or damage suffered by him/her as a
result of such breach of contract (actual
loss)
 or the loss or damage, which the
contracting parties had anticipated at the
time of signing the contract. (anticipatory
loss)
 Nature of damages
 1. liquidated damages
 2. Unliquidated damages
 Liquidated damages
 In case the contract provides that any
specific amount or compensation shall be
paid in the event of breach of contract,
the aggrieved party may recover from the
other party a reasonable amount not
exceeding that amount. [83(2)]
 Unliquidated Damages, Section
83(3)
 In case the amount of compensation is
not mentioned, the party making a claim
for such compensation may realize a
reasonable amount in consideration of the
direct and actual loss or damage that has
resulted form the breach of contract, or in
consideration of the breach of contract, or
in consideration of compensation.
 No compensation may be recovered for
any indirect or imaginary loss or damage.
 Damages may not be available
if
 damages claimed are too remote:
Hadley v Baxandles

The injured party did not do any thing to

avoid damage.

If the sufferor has contributed to the loss.

 Appropriateness of damages
 Purpose is to compensate the injured
party for loss arising from breach.
 Damages are compensatory not penal.
 Even when there is no loss, nominal
damages are given recognising breach of
contract.
 Damages may be recovered for pre
contract expenditure.
 Damages can also be awarded in mental
pain or suffering.
 Aim
 To put the injured party in the financial
position which he or she would have
enjoyed if contract had been performed.
 Specific performance
Section 86
 Damages are discretionary.
 The court has choice whether or not to
award.
 In specific performance, the Court orders
a party to perform his or her cpntractual
obligations.
 They are rarely granted.
 Not granted when……
 (a) the amount paid in cash as
compensation for breach of contract is
adequate;
 (b) the court can not supervise whether or
not the work to be performed under the
contract has been actually performed;
 When…………
 (c) the contract has been signed for
providing services relating to personal
expertise, skill or knowledge;
 (d) the situation is -such that the contract
can not be executed as stipulated;
 (e) the party violating the contract
him/herself demands that the contract be
executed as stipulated.
 Injunction or other order of the
court
 In case it becomes impossible to execute
the contract because any party about to
take any action or behave in a manner
contrary to the nature of the contract, the
party aggrieved by such action or conduct
may file a complaint with the Appellate
Court to stay such action or conduct.
 In case a complaint is filed in the
Appellate Court, the Appellate court may
issue an appropriate order to any party to
immediately stop his/her specific action or
conduct with a provision to settle the
dispute resulting from that contract
according to the contract or prevailing
law.
 Warner Bros v Nelson
 The Film star, Bette Davis, breached her
contract, under which she had argued not to act
on stage or screen for anybody except Warner
Bros for one year, by agreeing to make a film
with UK Company.
 Held: An injunction would be granted to restrain
Bette Davis from making film for rival company.
The contract restrained her from acting for any
one other than warner, but did not prevent her
from earning her living in other ways. The
injunction did not force her to perform the
contract if she was prepared to earn her living in
a less profitable way
 Quantum meriut
 In case a contract has been signed for
completing any work within a specific
period, and in case provision has been
made for payment of compensation for
failure to complete that work within the
specific period, the party paying
compensation may request for extension
of the period for completing the contract
in proportion to the amount paid by
him/her as compensation.
 Return of benefit/ reasonable
amount
 In case a contract is terminated with the
mutual consent of both parties or it is no
longer necessary to perform the contract ,or
in case the contract is made void under the
law or becomes void or cancelled and in such
situation where one party has already
received some amount in cash or in kind or
any other benefit from the other party as per
the contract, the cash or goods which have
to be refunded after adjusting the accounts.

 In case any service or benefit other than
cash or goods has been provided, the
beneficiary must pay a reasonable amount
to the other party in consideration thereof.
 Right to recover a reasonable
amount
 The aggrieved party may claim payment in
proportion to the work performed or the amount
paid by him/her in cash or in kind in any of the
following circumstances;
 (a) In case the contract is terminated due to the
mistake of the other party at a time when he/she
has already completed the work to be performed
under the contract or was performing it;
 (b) In case the other party utilizes any service or
commodity that has been given to him/her without
the clear intention of giving it free of cost.