CMA Foundation · Fundamentals of Business Laws and Business Communication · Breach of Contract and Remedies for Breach of Contract
Arjun gives a bond to a State Government, under the orders of that Government, for the performance of a public duty in which the public are interested, and he breaches the condition of the bond. What is his liability under Section 74?
Arjun is liable to pay the whole sum mentioned in the bond. The Exception to Section 74 covers bonds given for performing a public duty or an act in which the public are interested, so the reasonable-compensation limit does not apply.
- AReasonable compensation not exceeding the sum in the bond
- BOnly actual loss proved by the Government
- CLiability to pay the whole sum mentioned in the bondCorrect
- DNo liability, since governments cannot claim damages
Explanation
The Exception to Section 74 says that a person giving a bond for performance of a public duty or an act in which the public are interested, under any law or Government orders, is liable on breach to pay the whole sum mentioned. The general rule of reasonable compensation therefore does not apply. Note that merely contracting with Government does not by itself create a public duty.
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