Breach of contract

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Breach of contract

  1. 1. Performance & Breach of Contract01/03/12 Course facilitator – Ms. Shilpi 11
  2. 2. 3.16 Performance of Contracts3.17.1 Meaning of PerformancePerformance of contract means fulfilling of the terms of the contract bythe respective parties to the contract. The Act lays down "The parties toa contract must either perform, or offer to perform, their respectivepromises, unless performance is dispensed with or excused under theprovisions of this Act, or of any other law". 67 It means that theperformance may be either actual - by fulfilling all obligations by theparties under the contract or attempted where an offer to perform onesobligations has been made by the promise, but the performance is notcomplete unless the offer of performance is accepted by the promise.Such offer to perform ones obligation under a contract is called tender.The second part of the definition lays down that the parties are excusedfrom performance under the provisions of this Act or any other law. Forexample, an insolvent is excused from performing his part of thecontract by law.01/03/12 22
  3. 3. Promises bind the legal representatives of .thepromisors in case of death of such promisors beforeperformance, unless a contrary intention appearsfrom the contract. The liability of the legalrepresentative is limited to the extent of the value ofthe property inherited from the deceased.IllustrationsA promises to deliver goods to B on a certain day on01/03/12 33
  4. 4. 3.16.2 Who can demand performanceIt is only the promisee who can demand performance of the promise. The general rule is that "a person cannot acquire rights under a contract to which he is not a party. "683.16.3 Who should perform the promise?a. In case of personal contract by the promisor personally.b. In case of non-personal contract: i. By the promisor personally.ii. By a third person on behalf of the promisor.iii. In the event of the death of promisor - by his legal representatives.c) In case of Joint promisor - by the promisors jointly or third person on behalf of the promisors or their legal representatives.01/03/12 44
  5. 5. Breach of ContractMeaning of Breach of ContractA breach of contract occurs if any party refuses or fails to perform hispart of the contract or by his act makes it impossible to perform hisobligation under the contract. In case of breach, the aggrieved party (i.e.,the party not at fault) is relieved from performing his obligation and getsa right to proceed against the party at fault. As stated earlier [paragraph3.18.2(f)] a breach of contract may either be anticipatory or actual.01/03/12 Course facilitator – Ms. Shilpi 55
  6. 6. Remedies of Breach of ContractA remedy is the courses of action which are available to an aggrievedparty for the enforcement of a right under a contract. The variousremedies available are:Rescission of Contract": Rescission means a right not to performobligations.In case of breach of a contract, the promisee may put an end to thecontract. In such a case, the aggrieved party is discharged from all theobligations under the contract and is entitled to claim compensation forthe damage which he has sustained because of the non-performance ofthe contract.01/03/12 Damages: Damages are monetaryShilpiSuit for Course facilitator – Ms. compensation allowed for loss 66
  7. 7. I. Ordinary or general or compensatory damages: (i.e., damages arising naturally from the breach).II. ii. Special damages: (i.e., damages in contemplation of the parties at the time of contract).III. iii. Exemplary, Punitive or Vindictive damages: (i.e., damages which are in the nature of punishment).IV. iv. Nominal damages: (i.e., awarded only for the namesake).V. Liquidated damages: Means a sum fixed up in advance, which is a fair and genuine pre-estimate of the probable loss that is likely to result from the breach. _c) Suit for Specific Performance: Means demanding the courts direction to the defaulting party Ms.carry out the promise according01/03/12 Course facilitator – to Shilpi 77
  8. 8. d) Suit for Injunction: Means demanding courts stay order Injunction means an order of the court which prohibits a person to do a particular act. For example: W agreed to sing at Ls theatre only during the contract period. During the contract period, W made contract with Z to sing at another theatre and refused to perform the contract with L. It was held that W could be restrained by injunction from singing for Z.e) Suit for Quantum meruit: Quantum-meruit means as much as is earned. In this suit, claim is made to compensate for the work already done. For. example: C an owner of a magazine engaged P to write a book to be published by instalments in his magazine. After a few instaulments were published, the publication of the magazine was stopped. It was held that P could claim payment for the part already published.01/03/12 Course facilitator – Ms. Shilpi 88

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