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IAI Actuarial Core Principles · Business Management · Implied terms, exclusion of liability, contractual remedies and damages

Ravi, an actuary, agreed to build a pricing model for a firm for ₹8 lakh. After he had completed about 70% of the work, the firm unjustifiably cancelled the engagement and refused further access to its data. Which remedy is most directly aimed at compensating Ravi for work already done?

Ravi can claim compensation for loss caused by the firm's wrongful cancellation, or alternatively quantum meruit, a reasonable payment for work already done. The firm caused the non-completion, so it cannot rely on it to avoid paying, and the other options either penalise Ravi or are inapplicable.

  1. ASpecific performance requiring Ravi to complete the model for free
  2. BRescission returning Ravi to a position of owing the firm the advance
  3. CA claim for compensation for loss caused by the breach, or quantum meruit for the work doneCorrect
  4. DLiquidated damages payable by Ravi to the firm
  5. Nothing, since the contract was not completed

Explanation

When one party wrongfully prevents performance, the other may treat the contract as discharged and claim damages for loss suffered, or a reasonable sum for work done (quantum meruit). Ravi is the innocent party, so remedies requiring him to work free or pay damages are wrong, and incompletion caused by the firm does not defeat his claim.

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