Liability for damages
Breach of contract entitles the injured party to file a suit for damages, which are the monetary compensation awarded to a person by the court. Thus the liability for the damages may be classified as under;
(a) Liability for ordinary damages: These damages arises in the ordinary course of events from the breach of contract. These Damages constitute the direct loss suffered by the injured party.
(b) Liability for special damages: Where a party to a contract receives a notice of special circumstances affecting the contract, he will be liable not only for damages arising naturally and directly from the breach but also for special damages.
(c) Liability to pay vindictive or exemplary damages: These damages may be awarded only in two cases, viz
(i) for breach of promise to marry; and
(ii) wrongful dishonour by a banker of his customer’s cheque. In a breach of promise to marry, exemplary damages may be awarded to the other party taking into consideration the injury caused to his or her feelings. The amount of damages recoverable by the drawer of cheque from his banker in case of wrongful dishonor of his cheque may be quite heavy, depending upon the loss of credit and reputation suffered on that account.
(d) Liability to pay nominal damages: Nominal damages are awarded where the plaintiff has proved that there has been a breach of contract but he has not in fact suffered any real damage. It is awarded just to establish the right to decree for the breach of contract. The amount may be a rupee or even 10 paise.
(e) Damages for deterioration caused by delay: In the case of deterioration caused to goods by delay, damages can be recovered from carrier even without notice. The word ‘deterioration’ not only implies physical damages to the goods but it may also mean loss of special opportunity for sale.
- Suit upon ‘quantum meruit’
The phrase ‘quantum meruit’ literally means “as much as is earned” or “according to the quantity of work done”. When a person has begun the work and before he could complete it, the other party terminates the contract or does something which make it impossible for the other party to complete the contract, he can claim for the work done under the contract. He may also recover the value of the work done where the further performance of the contract becomes impossible. The claim on quantum meruit must be brought by a party who is not at default. However, in certain cases, the party in default may also sue for the work done if the contract is divisible. Following are the cases in which a claim or quantum merit may arise:
(a) Where an agreement is discovered to be void: Where the work has been done and accepted under a contract which is subsequently discovered to be void, in such a case, the person who has performed the part of the contract is entitled to recover the amount for the work done and the party, who receives and accepts the benefit under such contract, must make compensation to the other party.
(b) Where something is done or delivered without intention to do gratuitously: Where a person does some act or delivers something to another person with the intention of receiving payments for the same (i.e. non-gratuitous act), in such a case, the other person is bound to make payment if he accepts such services or goods, or enjoys their benefit.
(c) Where the contract is divisible: The compensation for the work done may be recovered on the basis of quantum meruit, where the contract is divisible and a party performs part of the contract and refuses to perform the remaining part. In such a case, the party in default may sue the other party who has enjoyed the benefits of the part performance.
- Suit for specific performance of the contract
In certain cases of breach of a contract, damages may not be an adequate remedy. Then the court may direct the party in breach to carry out his promise according to the terms of the contract. This is an order of the court requiring performance of a positive contractual obligation. But in general, courts do not wish to compel a party to do that which he has already refused to do. Part II of the Specific Relief Act, 1963 lays down detailed rules on the specific performance of contracts.
Specific performance is not available in the following circumstances:
- Damages provide an adequate remedy.
- Where the order could cause undue hardship.
- Where the contract is of such a nature that constant supervision by the court would be required.
- Where the party seeking the order has acted unfairly.
Cases where specific performance may be ordered:
- Where there exists no standard for ascertaining the actual damage caused to the aggrieved party by the non-performance.
- Where monetary compensation will not be adequate relief.
- Where the act to be done is in the performance of trust.
- In general the court will only grant specific performance where it would be just and equitable to do so.
- Suit for injunction
An injunction is an order of the court requiring a person to perform a negative obligation. But for performance of the positive terms of the contract, the aggrieved party may seek other remedies.