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CMA Foundation · Fundamentals of Business Laws and Business Communication · Breach of Contract and Remedies for Breach of Contract

Kiran agrees to pay Dev Rs. 5,000 if Kiran practises as a surgeon within a named city, and later does so. Under Section 74, Dev is entitled to:

Dev can claim such compensation as the Court considers reasonable, but not more than Rs. 5,000. Section 74 illustration (b) treats the named sum as an upper limit for breach by practising in the named city, not as an automatic amount.

  1. ARs. 5,000 exactly, since the sum was agreed
  2. BNothing, since the stipulation is a restraint
  3. CSuch compensation, not exceeding Rs. 5,000, as the Court considers reasonableCorrect
  4. DAny amount the Court wishes, even above Rs. 5,000

Explanation

Illustration (b) to Section 74 gives reasonable compensation not exceeding the sum named, here Rs. 5,000. The Court assesses the amount, and it cannot exceed the cap, so the exact-sum and above-cap options are wrong.

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