Remedies for Breach of Contract


- Sakshi Shitole and Rhea Samuel


The Indian Contract Act, 1872 classifies the lawful standards that administer the agreements which specify the rights and obligations of different parties in order to facilitate transactions in everyday life. The principal rationale behind the Indian Contract Act, 1872 was to guarantee that any two parties getting into a "contract" ought to enter it with the aim to perform and finish their respective obligations and duties without any breach of contract.


Meaning of Breach of Contract:

As per the Oxford dictionary, a breach is an inability to accomplish something that must be done by law.[1] Breach of Contract simply implies when one party neglects to convey as indicated by the provisions of the agreement in an official understanding which can be failed to deliver according to the terms of the contract in a binding agreement. It can be intentionally or unintentionally. Failure to agree with the conditions of the agreement, Inability to comply with the terms of the contract. Complete failure to perform is some of the many reasons which cause the breach of contract.[2]


A breach can occur in an Anticipatory Contract and Actual Contract.

Anticipatory Contract:

It implies when the promisor won't play out his obligation or commitment even before the predetermined time of execution and manifests his reluctant behavior to the promisee.

[FROST vs. KNIGHT (1872) LR 7 Ex. 111].

Actual Contract:

It characterizes where one party breaches the contract by refusing to deliver the promise on the due date to the other party.


So the main question here is, are there any remedies for breach of contract?

All things considered, indeed, there are numerous remedies as a contract.

As the famous legal maxim goes, ‘Ubi jus, ibi remedium’, that is where there is a right, there is a remedy.


What exactly do we mean when we say remedy in this context?

A remedy is the course of action accessible to an aggrieved party (i.e. the party not at default) for the enforcement of a right under a contract.



Remedies for Breach of Contract:

  1. Rescind the Contract

If one party breaks the contract, the other party has the option to rescind the said contract. He therefore becomes absolved from the contract and need not perform or complete his obligations. The aggrieved party who receives some advantage or benefit under the contract is bound to restore it to the person from whom he received it.[3]


Example- A agrees to supply 20 tons of rice to B on 29th November. B promises to pay for the goods on its receipt. A fails to supply rice on the due date. Here, B is discharged from the liability of paying the price. B is entitled to rescind the contract and to claim compensation for the damage he suffered.

2. Suit for Specific Performance

In certain situations of breach of contract, damages may not be an adequate remedy. In such a case, the court may direct the party in the breach for the specific performance of the contract. Suit of specific performance implies that the party must carry out his promise as per the conditions of the contract. Any suffering party can file the suit for specific performance and the court may order to complete the promise for a positive contractual obligation.[4]


Specific Performance is granted in the following cases of Contract:

  • Sale/Purchase of land.

  • Sale of unique goods.


Specific Performance is not granted in the following cases of Contract:

  • Any personal service.

  • Damages are an adequate remedy.

  • One party is minor.

  • Execution cannot be supervised by the court.


Example- A buys a famous painting at an auction. But later he does not receive the painting. The authorities are ready to compensate for the damage but the buyer is not ready to accept it. In this case, the court may order to give the painting to A as it is a unique product.[5]


When the specific performance is impossible:

  1. When the contract is too vague

  2. When the element of ad-idem-consensus is missing,

  3. When the contract was made for no consideration

  4. When the contract is void


There is an ongoing debate between legal theorists and economists regarding the desirability of specific performance. Economists, generally, take the view that specific performance should be reserved for the rarest circumstances. This is for two reasons. Firstly, it is costly to administer. Second, it may deter parties from engaging in what is known under law and economics as “efficient breach”. (The idea that it is sometimes better to breach the contract if the compensation to be provided is of a lower cost to the party that breaches as opposed to the actual performance of the contract.

3. Suit for injunction

This remedy is opposite to the remedy of specific performance. In this case, when the suffering party brings a suit against the other party, the court stops the party from performing a particular act. The party breaks the contract by doing something which he promises not to do.[6] Hence, injunction is the method to prohibit the party from doing so. Suit for injunction may also be granted where personal skill or quality is involved in a contract.


Types:


Temporary or interim injunctions - Order 39 of Civil Procedure Code 1908 states that these are injunctions that last for a specified period of time. This can be, for instance, 20 days, or till the next hearing. Such injunctions can be granted at any juncture of the proceeding.

Permanent or perpetual injunctions - Sections 38 to 42 of the Specific Relief Act, 1963 mention perpetual injunctions which are contained in the decree passed by the Court. Such an injunction permanently prohibits the defendant from committing an act which would be contrary to the plaintiff’s rights.


Example- A enters into a contract where he agrees to attend a function at B’s hall on 25th December. During the contract, A made a contract with C to attend a function at another hall and refused to perform the contract with B. It was held that A could be prohibited by injunction from attending the function at C’s hall.

4. Suit for Quantum Meruit


'Quantum Meruit' in a real sense signifies "as much as acquired" or "as per the amount of work done". The suit for Quantum Meruit basically expresses that when an individual or a party has finished their particular work however needs to keep their work incomplete is qualified for get pay on the grounds that another gathering has made the work difficult to finish. Another occurrence is the place where an individual delivers something to someone else with the goal of getting paid; the other individual should pay him in the event that he acknowledges the conveyance.[7]