Breach of Contract

Remedies of Aggrieved Party:
In case of breach of contract, the aggrieved party has the following remedies:

1. Suit for specific performance
2. Suit for injunction
3. Suit of damages for the loss sustained
4. Quantum Meruit

Suit for specific performance: By specific performance the court directs the party committing the breach of contract to perform the promise according to the terms of the contract. Specific performance of the contract can be granted under the Specific Relief Act, 1877.

Suit for injunction: An injunction is an order of the Court directing a person to do or refrain from doing some act, which is the subject matter of the contract and which a party undertakes to do or not to do. In cases of breach of contract, Court can on a suit restrain a party by an order of injunction from committing the breach. The power of the court to grant injunction is discretionary and may be granted for a temporary or an indefinite period. An injunction is therefore, used as a means of enforcing a contract or a promise or forbidding the party from committing a breach.

Suit for damages for the loss sustained: In case of a breach of contract, injured party can claim damages for the loss caused by breach of contract:

Damages are given by way of restitution and as a monetary compensation to the injured party. The aggrieved party can recover the actual loss caused to him by the breach of contract and not the exemplary or unusual damages. Exemplary or remote damages can be recovered in case of a breach of promise of marriage where the Courts have regard to the feelings of the aggrieved party. The injured party is placed in the same financial position as he would have been in, if the contract had been performed. Damages are thus given by way of compensation for the loss suffered by the plaintiff and not for the purpose of punishing the defendant for the breach.

Quantum Meruit:

Types of Damages:

Compensatory damages: These damages are calculated to actually compensate or make up the loss suffered by the party.

Nominal damages: damages which naturally arose in the usual curse of things from the breach are called nominal damages. In other words, when breach of contract is committed in the usual course of things and ordinary damages arose, nominal damages may be allowed. These arise from all the reasonably foreseeable consequences of the breach. It is in the discretion of the Court whether to allow or refuse damages. Damages should, however, be actually suffered.

Exemplary damages: As stated above the aggrieved party can recover actual pecuniary loss sustained by him and not exemplary damages. Losses which are due to remote or indirect consequences are not allowed. Exemplary damages are granted for injured feelings, mental pain, suffering etc. Where Courts take into account the feelings of the aggrieved party, exemplary damages may be ordered. For example, breach of contract of marriage, banker refusing to honor the cheque of his client having sufficient funds, etc. Exemplary damages are also called punitive or vindictive damages.

In Westosen v. Olathe State Bank (1925 -78-Colo-217) where the bank agreed to loan Westosen (W) money for trip to California by crediting his account and the bank having failed to credit the account of W after W having reached California. W was allowed damages for humiliation and mental suffering.

Special damages: These arise on account of unusual circumstances. Special damages can be recovered only if stipulated in the contract. Parties to the contract must know of damages likely to result from the breach. Special damages are granted when the parties knew at the time of making the contract that the special loss or damage would result or is likely to result from the reach of contract. This is in the form of additional loss. These are recoverable only when they are brought to the knowledge of the defendant.