What is Breach of Contract? Breach of contract means the volition of the parties while performing the contract. When any one of the contracting parties fails to perform his part of obligation in a lawful contract, the breach of contract takes place. In simple meaning when a party breaks the contract, it is known as breach of a contract. When a party fails or refuses to perform the contract, another party has a legal right to take action against such party (defaulter).
REMEDIES FOR BREACH OF CONTRACT
The following remedies (rights) are available to an aggrieved party on the breach of contract.
(1) RESCISSION OF THE CONTRACT:
When one of the contracting parties fails to perform his part of obligation, the other party may rescind the contract and can get free from all obligation required for the performance of the contract Section 75 of The Contract act says that when a party rightfully rescinds a contract. he is entitled to get compensation for the damages and loss sustained by him due to such rescission and non-performance of the contract.
Illustration: A promises to deliver 100 units of his product to B within 10 days for Rs.1000 which will be paid later on. A fails to supply goods to B. B can refuse to made payment and can also claim for damages against A.
(2) CLAIM FOR DAMAGES:
When one party commits a breach of contract, the other party can have legal right to claim for damages and losses sustained by him. According to section 73, when 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.
Illustration: A promise to sell 1000 units of his product to B for Rs.10000. In the meanwhile the price increases in the market up to Rs. 20000 and A refuses to deliver the goods. Now B will not send the price and can claim for the recovery of his profit of Rs.10000.
The damages by an aggrieved party are of two types;-
(a) General damage
(b) Special damage.
(a) General Damage:
The loss actually suffered by an aggrieved party due to nonperformance of the contract is called general damage.
Illustration: A promises to sell his goods for RS 500000 to B It is decided that B will pay Rs. 100000 in advance and remaining on the delivery of goods after six months. B pays Rs 400000 to A. At the time of delivery after six months, A refuses to deliver the goods to B. Now B will not only claim for the recovery of Rs.100000 but also for a reasonable profit of Rs. 100000 for six months.
(b) Special Damages:
If at the time of the contract any type of compensation is decided in between the contracting parties for non-performance or breach of contract such damage is called special damage.
Illustration: A promises to delivery 1000 units of his product to B for RS 10 each within five days after the payment of a price. They further decided that in case of default, the defaulter will pay Rs. 1000 compensation to an aggrieved party. It is a special damage that can be imposed at the time of breach of a contract.
(3) SPECIFIC PERFORMANCE:
Sometimes the compensation for the breach of contract cannot be measured In monetary term and it is not adequate to pay for it. So under such situation, the court may order for the specific performance of the contract and can compel the defaulter party for the performance of the contract.
Illustration: A agrees to purchase a piece of land from B for a certain amount for the construction of the house. But B refuses to perform the contract. In a suit by A, court orders B to perform the contract.
(4) SUIT FOR QUANTUM MERUIT:
Quantum merutt means to clam for the value of so much as has already been done Sometimes one of the contracting parties has done a part of his obligations but the other party commits a breach of the contract, in this case, the party who has done some work has right to claim for damage or can sue for the value of work done by him (quantum meruit).
Illustration: A agrees to purchase 100 units of B’s product for Rs.10 per unit and pays RS 500 in advance, Later on, B refuses to perform the contract and A files a suit against B to deliver only 50 units for the amount already paid by A to B.
(5) SUIT FOR INJUNCTION:
Injunction is a negative remeay. These are contracts where one party promises not to do some act or thing but afterward he commits a breach of the contract, In this case, the court may order the defaulter party not to do some act or thing as promised by him. This court order is known as injunction order.
Illustration: A film actress agrees to act exclusively for X’s film for one year and not for anyone else- But during this period, she contracts to act for Zs film also On an action by X, the court may issue an injunction order restraining A from acting for Zs film.