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CA Foundation · Business Laws · The Indian Contract Act, 1872

Mohan agreed to sell 100 bags of rice to Nisha for Rs 2,00,000, delivery on 10 April. Mohan told her on 1 April that he would not deliver. The market price fell to Rs 1,80,000 on 10 April but Nisha could have bought elsewhere on 2 April at Rs 2,10,000. Nisha waited and bought on 10 April at Rs 1,80,000. What is her claim for damages?

Nisha gets nothing. After an anticipatory breach, if the aggrieved party waits for the due date, damages are measured by the market price on that date. The price then was Rs 1,80,000, below the contract price of Rs 2,00,000, so she suffered no loss.

  1. ANil, because the market price on the due date was below the contract priceCorrect
  2. BRs 10,000, being the loss on 2 April
  3. CRs 20,000, being the fall in market price
  4. DRs 30,000, being the total price difference

Explanation

Where there is an anticipatory breach and the aggrieved party waits, damages are measured by the market price at the time of performance. On 10 April the market price (Rs 1,80,000) was below the contract price (Rs 2,00,000), so Nisha suffered no loss and gets no damages. The 2 April price is irrelevant to the measure.

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