Breach of Contract and Remedies for Breach of Contract

What this chapter covers

Breach of Contract and Remedies for Breach of Contract: topics in the order to study them

1. 1Meaning and Types of Breach of ContractYou must know what a breach is, and the actual and anticipatory types, before any remedy makes sense.
2. 2Remedies Available for Breach of ContractThis gives you the full list of remedies as a map, so each later topic slots into place.
3. 3Damages and Their KindsDamages are the most common remedy, and the kinds (ordinary, special, vindictive, nominal) are a frequent MCQ source.
4. 4Liquidated Damages and Penalty under Section 74It builds on damages and covers the pre-agreed sum, where the key point is that the court allows reasonable compensation.
5. 5Specific Performance, Injunction and Quantum MeruitThese are non-money remedies, easiest to learn last once you know when damages are not enough.

How to prepare Breach of Contract and Remedies for Breach of Contract

1. Read the meaning of breach and write one example each of actual and anticipatory breach in your own words.
2. Make a one-page table-style list on paper: remedy, what the injured party gets, and when it applies.
3. For damages, learn the kinds and the idea that damages compensate for loss that naturally arises or was in the parties' contemplation. They are not meant to punish.
4. For Section 74, learn the contrast with a penalty in plain words: the court can award reasonable compensation not exceeding the sum named, whether it is called liquidated damages or penalty.
5. Link each non-money remedy to its trigger: specific performance when damages are inadequate, injunction to stop a negative act, quantum meruit for payment for work already done.
6. Solve 15 to 20 MCQs on the chapter, and for every wrong answer write the fact that decided it.
7. Revise your list the day before the exam and again just before you enter the hall.

Common mistakes in Breach of Contract and Remedies for Breach of Contract

• Treating damages as punishment for the defaulting party.

  Fix: Remember that contract damages only make up for loss. Punishment is not their aim.

• Mixing up actual and anticipatory breach.

  Fix: Ask when the refusal came. Before the due date means anticipatory; at or after it means actual.

• Assuming a penalty clause is enforced exactly as written.

  Fix: Recall Section 74: the court gives reasonable compensation not exceeding the named amount.

• Choosing specific performance when money would be enough.

  Fix: Specific performance is for cases where damages are not an adequate remedy. Check whether money can fix the loss.

• Confusing injunction with specific performance.

  Fix: Specific performance orders you to do what you promised. Injunction stops you from doing what you promised not to do.

• Applying quantum meruit to every unfinished contract.

  Fix: Use it when one party has done part of the work and the contract cannot be completed, usually due to the other party's act.

Last-day revision: Breach of Contract and Remedies for Breach of Contract

• ✓Breach of contract is failure or refusal to perform a contractual promise.
• ✓Actual breach happens on or at the due date of performance, or during performance.
• ✓Anticipatory breach is a refusal declared before the due date.
• ✓On anticipatory breach, the injured party may sue at once or wait until the due date.
• ✓Remedies: rescission, damages, specific performance, injunction, quantum meruit.
• ✓Damages compensate for loss; they are not meant to punish.
• ✓Nominal damages are a token sum when a right is broken but no real loss occurs.
• ✓Remote or indirect loss is not recoverable as damages.
• ✓Section 74 applies whether the agreed sum is called liquidated damages or a penalty; the court allows reasonable compensation not exceeding that sum.
• ✓Specific performance means the court orders the party to perform the contract, usually when money is not enough.
• ✓Injunction restrains a party from doing something it promised not to do.
• ✓Quantum meruit means payment in proportion to work done, when the contract cannot be completed.

Breach of Contract and Remedies for Breach of Contract practice questions

• Sunil borrows Rs. 100 from Tara and gives her a bond for Rs. 200 payable by five yearly instalments of Rs. 40, with a stipulation that on de…
• In the law of contract, which of the following best describes an 'anticipatory breach'?
• A contract between two firms states that the defaulting party will pay Rs. 50,000 if it breaks the contract. The contract is broken, but the…
• Anil borrows Rs. 1,000 from Bimal and gives a bond promising to repay it with interest at 12 per cent at the end of six months. The bond add…
• Nisha, who owes money to a money-lender Gopal, undertakes to repay him by delivering 10 maunds of grain on a fixed date. She also stipulates…
• Under Section 74 of the Indian Contract Act, 1872, when a sum is named in a contract as payable on breach, the party complaining of the brea…
• Under the Indian Contract Act, 1872, a contract names a sum payable if either party breaks it. When the contract is broken, what is the part…
• Ravi gives a bond to the State Government for the performance of a public duty, and promises to pay Rs. 20,000 if he breaches its condition.…

Breach of Contract and Remedies for Breach of Contract in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

• CMA IntermediateIndian Contracts Act, 1872
• CA FoundationThe Sale of Goods Act, 1930
• Actuarial Core Principles (IAI)Implied terms, exclusion of liability, contractual remedies and damages
• CS ExecutiveContract Law