Skip to content

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

Ravi Traders agrees to supply goods to Kumar Stores and the contract says Rs. 50,000 is payable if Ravi Traders breaks the contract. Ravi Traders breaches it. Under Section 74 of the Indian Contract Act, 1872, what is Kumar Stores entitled to receive?

Kumar Stores can recover reasonable compensation not exceeding Rs. 50,000. Under Section 74 the named sum is a ceiling, not a fixed amount, and the claimant need not prove actual loss. The court decides what is reasonable within that limit.

  1. AReasonable compensation not exceeding Rs. 50,000, whether or not actual loss is provedCorrect
  2. BExactly Rs. 50,000 in every case, as the sum is fixed in the contract
  3. COnly the actual loss proved, even if it exceeds Rs. 50,000
  4. DNothing, unless Kumar Stores proves actual loss

Explanation

Section 74 lets the party complaining of breach receive reasonable compensation not exceeding the named sum, whether or not actual damage is proved. The option of exactly Rs. 50,000 is wrong because the court decides what is reasonable, subject to that ceiling.

Did you get it right without looking?

One question tells you little. A timed set on Breach of Contract and Remedies for Breach of Contract shows your real accuracy, how long you take and where you lose marks.

Practise Breach of Contract and Remedies for Breach of ContractFree diagnostic mock

More Breach of Contract and Remedies for Breach of Contract questions