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

Under the Exception to Section 74, when is a person liable on breach to pay the whole sum mentioned in the instrument?

A person who gives a bail-bond, recognizance or similar bond, or a bond for a public duty or act in which the public are interested, must pay the whole sum on breach. Merely contracting with Government does not create such a public duty under Section 74.

  1. AWhen he gives a bail-bond or recognizance, or a bond for performing a public duty or act in which the public are interestedCorrect
  2. BWhenever he enters into any contract with the Government
  3. CWhenever the contract names any sum payable on breach
  4. DOnly when actual loss equal to the sum is proved

Explanation

The Exception makes the whole sum payable for bail-bonds, recognizances and similar bonds for public duties. Its Explanation says that merely contracting with Government does not mean undertaking a public duty, so option B is wrong. Option C describes the general rule, which allows only reasonable compensation.

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