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Dr. M. Tariq Masood


Additional Commissioner (inland Revenue)
    
(1) Proposal §2
(2) Acceptance §2 &7-
&7-8
(3) Promise §2 & 9
(4) Promise/Promisor §2
(5) Consideration §2,23-
2,23-35, & 57-
57-
58
(6) Agreement §2
(7) Contract §2
|   | 
( There are three components of a
contract::
contract
‡ Proposal
‡ Acceptance
‡ Consideration
ï  | 

( ÿhen one person signifies to another


his willingness
‡ to do or
‡ to abstain from doing anything,
( with a view to obtaining the assent
of that other to such act or
abstinence
ï  | 

- Proposal must contain the terms on which the


proposer is willing to act, but beyond the
expression of willingness their must be
something in the nature of a request. If M says
to N.´I am willing to sell you my horse if you will
buy it´. This would not constitute a proposal. As
there are no terms on which M is willing to sell.

- Proposer cannot dictate terms under which the


offer may be refused. e.g., a person cannot say
that if within a certain
time acceptance is not communicated the offer
would be considered as accepted.
ï  | 

( The offer must be intended to create, and be


capable of creating legal relations e.g. an
invitation to dinner does not constitute an offer.
offer.
Kalai Haldar V. Sheikh,23
Sheikh,23 ÿ.R.217,A
217,A invited B to
dinner.. On B failing to attend A sued B for the
dinner
price of un-
un-consumed food.
food. It was held that A¶s
suit must be dismissed.
dismissed.
( It is necessary that the agreement must have an
express or tacit reference to the legal relation
between the parties.
parties. If two persons agree to help
reciprocally in the field of science/ art etc it will
not be contract.
contract.
ï  

( It is necessary that to amount to a contract there


must be a promise to do or to abstain from doing
something as a legal duty
duty.. A mere statement of
intention does not constitute a binding promise
even though the person to whom it is made acts
upon it.
it. The words used must apply to definite
persons to create legal relations
relations.. Invitations for
tenders and advertisements by an auctioneer for
an intended sale are mere declarations to
transact business and not offers in themselves.
themselves.
ï ï 
( ·  is synonymous with · 
· ..
( A proposal or an offer must, in order to
give rise to a contract, be intended µto
create and capable of creating legal
relations¶..
relations¶
( Social or moral relations not intended to
have a money value will not give rise to
legal obligations.
|   
( There is no offer till it is communicated to the
offeree..
offeree
( Illustration:: ³A´ offers a promise for an act to be
Illustration
done, and B does that act not knowing the offer,
there will be no contract.
contract. If A does some work
without the knowledge or request of B, A cannot
enforce payment for the work done.done.
( M 

 
   Advertisement inviting
tenders is not an offer in itself, it is a mere
invitation.. The person who sends a tender for the
invitation
supply of the goods that is deemed to have made
an offer, which the party inviting the tender may
or may not accept.
accept.
Acceptance«
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Acceptance«
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((-".
à e-mailed to w: ³ ÿill you sell us
Computers? Email me the lowest price .´

w mailed ³Lowest Price $900.´

à mailed again ³ÿe agree to buy Computers


for $900.´
It was held that there was no contract,
because w never made a proposal, i.e.
expressed his willingness to sell Computers
 .
 à   .
Acceptance«
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ï 
( ÿhen the person to whom the proposal is made signifies
his assent thereto, the proposal is said to be accepted.
accepted. A
proposal, when accepted, becomes a promises
( The person making the proposal is called the "promisor,"
and the person accepting the proposal is called the
"promisee"..
"promisee"
( A mere statement of fact is not a proposal unless it is made
with the view of obtaining the assent of the other party
addressed.. ³I am ready to marry you´ or ³ I shall sell this
addressed
book to you for Rs.
Rs.3´ are proposals & not statements when
made with intent to seek acceptance of the other person.
person." I
can die for the country´ ³ I am ready to serve you´. you´.
$
1) V   
ÿhen promise is made in words.
words.

2)  
ÿhere such proposal or acceptance is made
otherwise than in words.
words.

3)      
which form consideration or part of
consideration of each other .Each party gives a promise in
return of a promise.
promise. Both parties have yet to perform their
respective parts.
parts.


 à offers Rs.
  
 Rs.50,
50,000 for finding his lost dog and
restoring it to him.
him.
w, in pursuance of the offer , finds the dog and writes to à that
he is arranging to return it.
it.
The consideration for promise of à is partly executed and partly
executory.. The promise to pay and the promise to restore are
executory
nonetheless reciprocal promises for part of the consideration
being executory
executory..
$
4) à 
  M
M


.ÿhen one offers the choice of two


things..
things


: à and w agree that à shall pay w Rs
  
: Rs..1,000,
000, for
which w shall afterwards deliver to à either rice or wheat. wheat.
(S..58)
(S 58). But there are no circumstances to indicate which of
the alternatives was intended to be enforced, the whole
contract will be void for uncertainty, e.g., à agrees to sell to
w his white horse for Rs.
Rs.50,
50,000 or Rs.
Rs.100,
100,000,
000, there being
nothing to show which o the two prices was intended.
intended. (S.
(S.29)
29).
Muhammad Shafi V. Ishaque 1994 CLC 1200 1200..
 Alternative promises
promises one branch being illegal
illegal:: In the case
of an alternative promise , one branch of which is legal and
the other illegal the legal branch alone can be
enforced..(S.
enforced (S.58)
58)
Illustration : A and B agree that A shall pay B Rs. Rs.1,000 for
which B shall afterwards deliver to A either rice or smuggled
opium.. This is a valid contract to deliver rice and a void
opium
agreement as to the opium.
opium.
|  
( ÿhen, at the desire of the promisor, the
promisee or any other person has done or
abstained from doing or does or abstains from
doing, or promises to do or to abstain from
doing, something, such act or abstinence or
promise is called a consideration for the promise.
promise.
( à agrees to sell his house to w for Rs. Rs.10(M)
10(M) .
Here B¶s promise to pay the sum of Rs. Rs.10(M)
10(M) is
the consideration for à promise to sell the
house, and A¶s promise to sell the house is the
consideration for w promise to pay the
Rs..10(M)
Rs 10(M).. These are lawful considerations
|  3
3 
i) Has done, or
abstained form
doing ,or
ÿhen, at the desire Something, such
of the promisor, the ii) Does or abstains act, abstinence or
promisee or any from doing, or promise is called
other persons a µconsideration¶
for the
iii) Promises to do to promise
promise..[§2(d)]
abstain from
doing--
doing
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à agrees to sell his house to w for
Rs..10(M)
Rs 10(M) . Here B¶s promise to pay the
sum of Rs.
Rs.10(M)
10(M) is the consideration for
à promise to sell the house, and A¶s
promise to sell the house is the
consideration for w promise to pay the
Rs..10(M)
Rs 10(M).. These are lawful considerations
considerations..
* 
 

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( A (Insurance Co.
Co.) insures the life of ââ dies
dies.. , his wife,
cannot sue for the money due on the policy, as she is a
stranger to the contract.
contract.55 Cal.
Cal.1315.
1315. She could have sued if
the policy had been assigned to her, or she were a nominee
under the new insurance Act, Section39
Section39,, or a trust had been
declared in her favour under Section 5, Trusts Act. Act.

( 

    
    
   
  
  The Pakistani law is the same as English law
but with this modification that in Pakistan an exception is made in
the case of a beneficiary. In Pakistan a person not a party to the
agreement can sue on the agreement if such person is a
beneficiary (called µcesti que trust¶) and the contract is for his
benefit. In other words, where a contract between à and w is
intended to secure benefit to  as a cestui que trust,  may sue in
his own right to enforce the trust. And this seems to be the
principle underlying the decision of the judicial Committee in the
case of Khawaja Muhammad V. Husani Begum.
ï$!# $#

The words ³ has done or abstained from doing´


declare the law to be that an act done by à at w
 request without any contemporaneous promise
from w may be a consideration for a subsequent
promise form w to à.
·    
  


²²Forbearance
to sue:
sue: consideration may consist either of some
act which the promisee does at the desire of the
promisor or of some omission or forbearance on
the part of the promisee;
promisee; thus, if a promisee
refrains from bringing a suit which, but for the
promise, he may have brought there is good
consideration for the promise.
promise.
| 7 
( Every promise and every set of promises,
forming the consideration for each other,
is an agreement.
agreement.
( All agreements are contracts if they are
made by the free consent of parties
competent to contract, for a lawful
consideration and with a lawful object,
and are not hereby expressly declared to
be void
( An agreement enforceable by law is a
contract
| 7 
An agreement is a wider term than
contract..
contract Contract results from a
combination of two ideas
ideas±± agreement and
obligation.. There may be agreements
obligation
which do not create any legal obligation,
as in the conveyance of gifts, or may only
create it independently.
independently. An agreement
becomes a contract when there are
competent parties, consideration, free
consent and legal object
object.. All contracts are
agreements but all agreements are not
contracts, an agreement, in order to be a
contract, must be enforceable by law.
law.
$  
(a) 6  A valid agreement is one which is enforceable
at law.
law.

(b) 6
6  A void agreement is one which is not enforceable
at law has no legal existence at all agreements where both
the parties are under a mistake as to a matter of fact
essential to the agreement are void (Section 20) 20);
agreements of which the object or consideration is
unlawful (Section 23),
23),
agreements in restraint of trade (Section 27)
27) or of marriage
(Section 26)
26) or of legal proceedings (Section 28), 28),
uncertain agreements (Section 29),
29), agreements by way of
wager, etc.
etc. As soon as it is shown to be void, the whole
transaction falls to be ground.
ground.
$  
( (c ) 6 
6   A voidable agreement is one which is enforceable
at law at the option of one or more of the parties thereto, but not
at the option of other or others.
others. Thus , an agreement induced by
coercion , undue influence, fraud or misrepresentation is voidable.
voidable.
Strictly speaking, an
agreement is void or voidable , because of its substance owing to flaws in
the contract, or for want of free consent is unenforceable is so by
procedure, e.g., by want of stamp, by bar of limitation, etc
etc.. It is valid but
incapable of proof..
proof.. It is good in substance though by reason of some
technical defect one or both of the parties can not sue upon it. it.

(d) 

 


   An unenforceable contract is valid at law but
incapable of proof.
proof.
(e)  
  An illegal agreement is something against the law itself, all
illegal contracts are void but all that are void are not necessarily illegal.
illegal.
7 
( An agreement not enforceable by law
is said to be void
( A contract which ceases to be
enforceable by law becomes Void
when it ceases to be enforceable
7 0(;|.|
( An agreement which is enforceable by law
at the option of one or more of the parties
thereto, but not at the option of the other
or others, is a voidable contract.
contract. A
contract which ceases to be enforceable
by law becomes void when it ceases to be
enforceable.. Voidable contract is a
enforceable
contract with a flaw, of which one of the
parties, may, if he chooses, take
advantage.. Thus agreement induced by
advantage
coercion, undue influence, fraud or
misrepresentation are voidable.
voidable.
;,| 
( ÿhere both the parties have
performed their obligation, it is an
executed contract.
contract. Even when one
party to the contract has performed
his share of the obligation, the
contract is executed though to the
other party is still under an
outstanding obligation to perform his
part of the promise.
promise.
;, $| 
( : Here neither party to the contract has
performed his share of the obligation, for
example, both the parties have yet to
perform their promises, the contract is
executory.. In an executed contract one
executory
party has already performed his part of he
agreement while the other party has to
perform his par
par.. In an executory contract
both the parties have to perform their
mutual promises and the fact that they
have to perform their parts of the contract
does not affect the validity of the contract.
contract.
;,| 
( ÿhen the terms of a contract are
reduced in writing or are agreed
upon by spoken words at the time of
its formation, the contract is express.
express.
 | 
( The terms of a contract are inferred from
the conduct or dealing between the
parties.. ÿhen the proposal or acceptance
parties
of any promise is made otherwise than in
words, the promise is said to be implied.
implied.
Such an implied promise leads to an
implied contract
contract.. For example, A boards a
bus.. It is implied from his conduct that A
bus
has entered onto an implied promise to
purchase a ticket.
ticket.
¢¢| 

( Certain relations resemble those created by a
contract.. Certain obligations which are not
contract
contracts in fact but are so in the contemplation
of law.
law. These are called Quasi
Quasi--Contracts
Contracts..
( Illustration::
Illustration
( µA¶ supplies necessities to µB¶ who is not capable
of contracting and reimbursing to µA¶.
µA¶. A is entitled
to be reimbursed from B¶s property.
property.
( Quasi contracts raise out of obligation enjoyed by
one person from the voluntary acts of the other
which are not intended to be performed
gratuitously
| | 
( A contingent is one in which a
promise is conditional and the
contract shall be performed only on
the happening of some future
uncertain event.
event.
( Illustrations
Illustrations::
( µA¶ contracts to pay B Rs 10
10,,000,
000, if
B¶s house is burntburnt.. This is a
contingent contract
|   
( A contract of record is one which is
taken to the records of a Court, for
example judgment of a court.
court. Such
judgments create a binding effect
through the authority of the Court.
Court.
"$| 
( A specialty contract is a contract
which is in writing signed, sealed and
delivered by the parties.
parties. It is also
called a contract under seal.
seal.
Consideration is not necessary in a
specialty contract
contract..
" | 
( A simple contract s one which is not under seal.
seal.
All contracts which are not under seal are simple
contracts..
contracts All simple contracts require
consideration.. They may be made by written or
consideration
spoken words.
words. Contracts of Record and Specialty
Contracts are also known as Formal Contracts.
Contracts.
The classification of contracts into Contracts of
Record, Specialty and simple is under the English
Law.. Indian Law does not recognize contracts
Law
without consideration
consideration.. All contracts must have
consideration in order the valid subject to
exceptions under section 25 of the Act.
Act.
" $| 
ÿhen all or some of the terms and
conditions of contract are statutory
then the entire contract, or that
extent as the case may be, would be
regarded as statutory contract.
contract.
 |  | 
( Every person is competent to
contract
‡ who is of the age of majority according
to the law to which he is subject, and
‡ who is of sound mind, and
‡ is not disqualified from contracting by
any law to which he is subject
subject..
 '< $
( every person domiciled in Pakistan
shall is deemed to have attained his
majority when he has completed his
age of eighteen years, and not
before..
before
" '
( A person is said to be of sound mind for
the purpose of making a contract if, at the
time when he makes it, he is capable of
understanding it and of forming a rational
judgment as to its effect upon his
interests..
interests
( A person who is usually of unsound mind,
but occasionally of sound mind, may make
a contract when he is of sound mind.
mind.
( A person who is usually of sound mind,
but occasionally of unsound mind, may
not make a contract when he is of
unsound mind
| 
( Two or more persons are said to consent
when they agree upon the same thing in
the same sense.
sense.

( Consent is said to be free when it is not


caused by:
by:
(1) coercion,
(2) undue influence,
(3) fraud,
(4) misrepresentation,
(5) mistake
Performance and Contracts
of Contracts
",  ï=' 
ï   | 
1. ÿhere, by the contract, a promisor is to perform
his promis withour application by the promisee
and no time for performance is specified the
engagement must be performed within a
reasonable time.
time. ÿhat is a reasonalbe time is a
question of every particular case, the usage of
the business and the facts which the parties had
in view at the time when the contract was
entered into.
into.
- But, when a day is fixed for performance by the
contract, the rule is that the promisor has to
perform it at any time during the usuall
business hours on the day fixed and at the place
at which the promise ought, to be performed.
performed.
",  ï='
ï   | 
2. ÿhen a promise is to be performed on a
certain day and only on the appilication by
the promisee, it is the duty of the
promisee to demand performance at a
proper place and time.
time. ÿhat is a proper
place and time is in eache particualr case
a question of fact.
fact. ÿhen a promise is to
be performed for the performance it is the
duty of the promisor to apply to the
promisee to fix a reasonable place for
performance and to perform it at the place
so fixed.
fixed.
",  ï='
ï   | 
3. The performance of any promise may be
made in any manner or at any time which
the promisee prescribes or santions.
santions.
Illustration:: B owes Rs.
Illustration Rs. 2000/
2000/-. A desires B
to pay the amount to A¶s account with C, a
banker.. B, who also banks with C, orders
banker
the amount to be transferred from his
account to A¶s credit, and this is done by
c. Afterwards, and before A knows of the
transfer, C fails.
fails. There has been a good
payment by B.
",  ï='
ï   | 
4. ÿhen a party to a contract promises to
do a certain thing at or before a specified
time or times, and fails to do any such
thing at or before the specified time, the
contract (or so much of it as has not been
performed) becomes voidable at the
option of the promisee, if the intention of
the parties was that time should be of the
essence of the contraft.
contraft.
",  ï=' 
ï   | 

5. If it was not the intention of the


parties that time should be of the
essense of the contract, the contract
does not become voidle by the
failure to do such thing as or before
the specified time, but the promisee
is entitled to compensation from the
promisor for any any loss occasioned
to him by such failure.
failure.
",  ï='
ï   | 
6. If, in case of contract voidable on account
of the promisor¶s failure to perform his
promise at the time agreed, the promisee
accepts performance of such promise at
any time other than that agreed, the
promisee cannot claim compensation for
any loss occassioned by non-non-performance
of the promise at the time agreed unless
at the time of such acceptance, he gives
notice to the promiser of his intention to
do so.
so.
% 

   

  
'()*

The parties to a contract must either


perform or offer to perform, their
respective promise, unless such
performance is dispensed with or excused
under the provisions of this Act, or of any
other law.
law.
- Promises bind the representatives of the
promisors in case of the death of such
promises before performances unless a
contrary intention appears from the
contract..
contract
  


(   

( (a) A promises to deliver goods to B, on a certain
day on payment of Rs.Rs. 1,000.
000. A dies before that
day.. A's representatives are bound to deliver the
day
goods to B, and B is bound to pity the Rs.
Rs. 1,000
to A's representatives.
representatives.

(b) A promises to paint a picture for B by a


certain day, at a certain price.
price. A dies before the
day.. The contract cannot be enforced either by
day
A's representatives or by B.

  
 
 


+


(  ÿhen a party to a contract has


M
refused to perform, or disabled
himself from performing, his promise
in its entirety, the promisee may put
an end to the contract, unless he has
signified;; by words on conduct, his
signified
acquiescence in its continuance
continuance..
  

( (a) A, a singer,-
singer,-enters into a contract with B, the
manager of a theatre, to sing at his theatre two
nights in every week during the next two months,
and B agrees to pay her 100 rupees for each night's
performance:: On the sixth night A willfully absents
performance
herself from the theater.
theater. B is at liberty to put an
end to the contract.
contract.
(b) A, a singer, enters into a contract with B, the
manager of a theatre, to sign at his theatre two
nights in every week during the next two months,
and B agrees to pay her at the rate of 100 rupees
for each night.
night. On the sixth night A willfully absents
herself.. ÿith the assent of B, A signs on the
herself
seventh night.
night. B has signified his acquiescence in
the continuance of the contract, and cannot now
put an end, to it, but is entitled to compensation for
the damage sustained by him through A's failure to
sing on the sixth night
night..
ï
%+

 
% 

',-*
( If it appears from the nature of the case that it was the
intention of the parties to any contract that any promise
contained in it should be performed by the promisor
himself, such promise must be performed by the promisor.
promisor.
In other cases the promisor or his representatives may
employ a competent person to perform it.
it.

  

( (a) A promises to pay B a sum of money.
money. A, may perform
this promise either by personally paying the money to B, or
by causing it to be paid to B by another;
another; and, if A, dies
before the time appointed for payment, his representatives
must perform the promise, or employ some proper person
to do so.
so.
( (b) A, promises to paint a picture for B, A must perform
this promise personally.
personally.

  


 


( 
M ÿhen a promisee accepts
performance of the promise from a third
person, he cannot afterwards enforce it
against the promisor.
promisor.

There is no occasion to discuss the point


as the words of the Act leave no room for
doubt.. It need hardly be added that this
doubt
section applies only when a contract has
in fact been performed by a third person
person..
.


/
 %   
(  ÿhen two or more persons have
M 
made a joint promise, then, unless a
contrary intention appears by the
contract, all such persons, during their
joint lives, and after the death of any of
them, his representative jointly with the
survivor or survivors, and after the death
of the last survivor, the representatives of
all jointly, must fulfill the promise


/


 %


 

(  ÿhen two or more persons


M 
make a joint promise, the promisee
may, in the absence of express
agreement to the contrary, compel
any [one or more] of such joint
promisors to perform the whole of
the promise.
promise.
ï  |  | 
( r       
  
   

      

 
  
The agreement between the parties did not
specify the date on or the period within which the
contract was to be perfumed, it was required to
be performed within a reasonable time.
time. ÿhat is
"reasonable" time must necessarily depend upon
the facts and circumstances of each case,
including in the case of a commercial contract for
the sale of goods, the usage of the trade, the
nature of goods, the place and mode of delivery
and whether the goods are already available with
the seller and in a deliverable stage or have to be
manufactured or acquired by the seller or put in
deliverable state
ÿ#
  0
 



 
( r     
 

 
    

     

 
 
In the case of mercantile and commercial
contracts for sale of specific ready goods,
where no time has been specifically fixed,
it is permissible for one of the parties, by
notice, to fix the time for the performance
of the contract provided such time is
reasonable..
reasonable
0 | 
M   
 
    

     
 
ÿhen a contract has been broken, the party who
suffers by such breach is entitled to receive, from
the party who has broken the contract,
compensation for any loss or damage caused to
him thereby, which naturally arose in the usual
course of things from such breach, or which the
parties knew, when they made the contract, to
be likely to result from the breach of it. it.
Such compensation is not to be given for any
remote and indirect loss or damage sustained by
reason of the breach.
breach.
!
 

  
  
% 


(  
 
    
  
  
   

 
( ÿhen an obligation resembling those created by
contract has been incurred and has not been
discharged, any person injured by the failure to
discharge is entitled to receive the same
compensation from the party in default as if such
person had contracted to discharge it and had
broken his contract
contract..
( V 
 


In estimating the loss or damage
In
arising from a breach of contract, the means
which existed of remedying the inconvenience
caused by the non-
non-performance of tile contract
must be taken into account
account..
  

( (a) A contracts to sell and deliver 50
maunds of saltpetre to B at a certain
price, to be paid on delivery.
delivery. A, breaks his
promise B is entitled to receive from A by
way of compensation, the sum, if any, by
which the contract price falls short of the
price for which B might have obtained 50
maunds of saltpetre like quality at the
time when the saltpetre ought to have
been delivered.
delivered.
 . 
( u   
  There is not any general rule that
There
damages cannot be recovered for loss of market on a
voyage by sea:sea: wherever the circumstances admit of
calculations as to the time of arrival and the probable
fluctuations of the market being made with the same
degree of reasonable certainty in the case of a sea as of a
land transit, there can be no reason why damages for the
delivery should not be calculated according to the same
principles in both cases.
cases.
A Contracts to repair B's house in a certain manner, and
receives payment in advance.
advance. A repairs the house, but not
according to contract.
contract. B is entitled to recover from A the
cost of making the repairs conform to the contract.contract.
 . %   
(     
 

à

à
  
 
  If the iron was to be delivered by
If
installments at certain dates, e.g., at the end of
the three months of September, October, and
November, the measure of damages is the sum
of the differences between the contract and the
market price of the several installments on the
respective final days for performance;
performance; and the
same rule is applied where the seller, before the
expiration of the whole time for performance, has
refused to complete the contract, and the buyer
has treated the refusal as an immediate breach
unless the seller can show that the buyer could
have obtained a new contract on better terms
ÿ 
( ÿ
  The Court of Appeal has emphasized that in a
case of breach of warranty the plaintiff cannot combine a
claim for capital loss with a claim for loss of profit.
profit. A
hypothetical case elucidates the position.
position. If A sells B a
heifer for pound 100/
100/-, and warrants it a four gallon a day
cow for the next five lactations, whereas in fact it is a one
gallon a day cow worth pound 10/ 10/-, B can claim as
damages either pound 90/90/-, or the loss of three gallons a
day, but he cannot combine the two claims
claims..
A contracts to pay a sum of money to B on a day specified.
specified.
A does not pay the money on that day . B, in consequence
of not receiving the money on that day, is unable to pay his
debts, and is totally ruined
ruined.. A is not liable to make good to
B anything except the principal sum he contracted to pay,
together with interest up to the day of payment. payment.
ÿ 
  0
 . 
( ÿ 
     
  If in the
If
case put above A gave notice to B that he would
not take delivery beyond a certain date, and
delivery is not made within that time, the
measure of damages would be the difference
between the contract price and the market price
on that date.
date.

( A contracts to buy B's ship for 60,


60,000 rupees, but
breaks his promise
promise.. A, must pay to B, by way of
compensation, the excess, if any, of the contract
price over the price which B can obtain for the
ship at the time of the breach of promise.promise.
  


(  

 
 
 Settled law, but
treated as anomalous.
anomalous. Illustration (n) to S. 73 "does
not confer upon a creditor a right to recover interests
upon a debt which is due to him, when he is not
entitled to such interest under any provision of the
law...
law ...As
As observed S. 73 is merely declaratory of the
Common Law as to damages.damages. "The law does not
regard collateral or consequential damages arising
from delay in the receipt of money.
money.³
( A gives an ijara patta of certain properly to B. It is a
condition of the patta that B should pay to the
superior landlord the rent which A was bound to pay
to him.
him. B fails to pay the rent.
rent. The superior landlord
thereupon sues A for the rent, and, in execution of
the decree obtained by him in the suit, the tenure is
sold.. B is not liable to A for the loss of the property,
sold
for A could have paid the rent on default by B, and
saved the property from sale.
sale.
 
 
( w   
 
 
    
*nder section 73 the plaintiffs can get
compensation for such loss or damage as
was caused to them by the commission of
the alleged breach and which naturally
arose in the usual course of things or
which the parties knew, when they made
the contract, to be likely to result from the
breach.. But they cannot claim remote or
breach
indirect damages
 
(        

      
 
 
 

 
  
    The fact that
the appellants had been guilty of breach of
contract would not absolve the
respondents to establish that they were
always ready and-
and-willing to perform their
part of the contract.
contract. In law, unless this
fact is proved, a party is not entitled to
claim any damages.
damages.
+ 
  . 
( 
      
      
  
 
    
 
  
   
       
In determining reasonable compensation a Court
of law shall have to take into consideration the
means available to a party to mitigate the
damages.. But the fact that a party failed to utilise
damages
such opportunity would not necessarily absolve
the party at fault from his liability under the
contract.. It would be for consideration in each
contract
case whether any such opportunity was not
accepted for good and reasonable grounds. grounds.
ÿ
 
  . 11 
ÿ
 
  . 

( ÿ
          

         In
In
disputes arising between master and
servant ordinarily the measure of
damages would be determined according
to the covenants in the contract.
contract. But the
party at fault would be entitled to claim
the exclusion of any earning made by the
servant during the period for which
damages are claimed on the possible
chance of obtaining a suitable
appointment elsewhere.
elsewhere.
   
% 

 2

(      

( The principal remedies for breach of
contract are:
are:
( (a) damages;
damages;
( (b) specific performance of the
contract;; and
contract
( (c) injunction
injunction..
   
% 

 2
( ÿhen a contract has been broken, the party who suffers by
such breach is entitled to receive, from the party who has
broken the contract, compensation for any loss or damage
caused to him thereby, being loss or damages which
naturally arose in the usual course of things from such
breach or which the parties knew, when they made the
contract, to be likely to result from the breach of it.
it.
( Such compensation is not to be given for any remote and
indirect loss of damage sustained by reason of the breach.
breach.
( The same principle applies for determining damages for
breach of an obligation arising from quasi-
quasi-contract
contract..
( In estimating the loss or damage arising from a breach of
contract, the means which existed of remedying the
inconvenience caused by the non- non-performance of the
contract must be taken into account
account.. This is referred to, as
the duty to mitigate.
mitigate.
   
% 

 2

(   

( A stipulation for increased interest


from the date of default may be
regarded as a stipulation by "way of
penalty", if the amount is excessive.
excessive.
The court is empowered to reduce it
to an amount reasonable in the
circumstances..
circumstances
   
% 

 2
( M      
 


 

( In certain special cases dealt with in the Specific
Relief Act, the court may direct against the party
in default "specific performance" of the contract,
that is to say, the party may be directed to
perform the very obligation which he has
undertaken, by the contract.
contract. This relief is
awarded only in exceptional cases.
cases.
( That Act also deals with permanent injunctions.
injunctions.
Temporary injunctions are governed by the
provisions of order of the Code of Civil Procedure,
1908..
1908