Corporate and Business law

1. Subject: Corporate and Business Law
Class: BBA (5th ) & BS (A&F) (3rd )
Course Code:
Credit Hrs: 3
Lecture-1 (E)
Breach of Contracts and its Remedies
Dr Imtiaz Ahmed Khan
Chairperson, Department of Law

2. Learning Objectives
• To learn ultimate remedies for breach of contracts

3. Breach of Contracts
– Whenever there is breach of a contract, the
injured party becomes entitled to one or more of
the remedies against the guilty party

4. Breach of Contracts (Cont..)
– Recission of the Contract
– Suit for damages
– Suit upon quantum meruit
– Suit for Specific Performance
– Suit for an injunction

5. Breach of Contracts (Cont..)
–Recission of the Contract
• A contracts to sell 1000 kg of tea for Rs.
100,000 to B on 15.12.2021. A does not supply
tea on the appointed date
• B may file suit for rescission and claim damages

6. Breach of Contracts (Cont..)
–Suit for damages
• Damages are a monetary compensation
allowed to the injured party for the loss or
injury suffered by him as a result of breach of
contract

7. Suit for damages (Cont..)
–Example
• A contracts to sell 1000 kg of tea for Rs.
100,000 to B on 15.12.2021. A does not supply
tea on the appointed date
• B may file a suit for damages

8. Suit for damages (Cont..)
– Kind of damages
• Ordinary or General Compensatory damages (i.e.
damages arising naturally from the breach)
• Special damages (damages in contemplation of the
parties at the time of contract)
• Exemplary, Punitive or Vindictive damages
• Nominal damages

9. Suit for damages (Cont..)
– Ordinary or General Compensatory damages
• A contracts to pay a sum of money to B on a
specified day. A does not pay the money on that
day. B, in consequences is unable to pay his debts
and is totally ruined. A not liable to make good to B
anything except the principal sum and interest as
well as cost of suit.

10. Suit for damages (Cont..)
– Special damages
• A having contracted with B to supply B 1,000 tons of iron
at Rs. 5,000 a ton, to be delivered at a stated time,
contracts with C for the purchase of 1,000 tons of iron at
Rs. 4,500 per ton, telling C that he does so for the purpose
of performing his contract with B. C fails to perform his
contract with A, and A could not procure other iron, and
B, in consequences rescinds the contract. C must pay to R,
Rs. 500,000 being profit which A would have made by the
performance of his contract with B

11. Suit for damages (Cont..)
–Exemplary or Vindictive Damages
• Dishonour of a cheque by a banker when there
are sufficient funds to the credit of the customer
• In this case actual amount of damages will differ
according to the status of party

12. Suit for damages (Cont..)
–Nominal Damages
• Where in a contract of sale of goods, if the
contract price and the market price is almost the
same at the date of breach of contract, then the
aggrieved party is entitled only to nominal
damages

13. Suit for damages (Cont..)
–Suit upon Quantum Meruit
• It literally means ‘as much as earned’ or ‘in
proportion to the work done’
• Where after part performance of the contract by
one party, there is a breach of contract, or the
contract is discovered void or becomes void

14. Suit for damages (Cont..)
– Examples of Suit upon Quantum Meruit
– Where work has been done in pursuance of a contract, which
has been discharged by the default of the defendant
• A, engages B, a contractor, to build a three stories house.
After a part is constructed, A prevents B from working any
more. B, the contractor, is entitled to get reasonable
compensation for work done under the doctrine in
addition to the damages for breach of contract

15. Examples of Suit upon QM (Cont..)
– Where work has been done in pursuance of a contract,
which is ‘discovered void’ or ‘becomes void’ provided the
contract is divisible
• A contracts with B to repair his house at a piece rate.
After a part of the repairs were carried out, the house
is destroyed by lightning. Although the contract
becomes void and stands discharged because of
destruction of the house. A can claim payment for the
work done on ‘quantum meruit’.

16. Examples of Suit upon QM (Cont..)
• However, if under the contract a lump sum is to be
paid for the repair job, as a whole, then A cannot
claim quantum meruit because no money is due
till the whole job is done

17. Examples of Suit upon QM (Cont..)
– A party who is guilty of breach of contract may also
sue on a quantum meruit provided
• The contract must be divisible, and
• The other party must have enjoyed the benefit of
the part which ahs been performed, although he
had an option of declining it

18. Examples of Suit upon QM (Cont..)
• Where a common carrier fails to take a complete
consignment to the agreed destination, he may
recover pro-rata freight
• He will, of course, be liable for breach of contract

19. Suit for Specific Performance
• The actual carrying out of the contract as agreed
• Where monetary compensation is not an adequate
relief because the injured party will not be able to
get an exact substitute in the market

20. Suit for Specific Performance (Cont..)
• Examples
–Land, buildings, rare articles, unique goods
having some special value to the party suing
because of family association

21. Suit for Specific Performance (Cont..)
• Cases where specific performance is not
granted
–Where monetary compensation is an adequate
relief
–Examples:
»Where the contract is sale of goods easily
available in the market

22. Cases where specific performance is
not granted (Cont..)
–Where the court cannot supervise the actual
execution of the contract
–Examples:
»Building construction contract
»In most cases damages afford an adequate
remedy

23. Cases where specific performance is
not granted (Cont..)
–Where the contract is for personal services
–Examples:
»A contract to marry
»To paint a picture

24. Cases where specific performance is
not granted (Cont..)
–In such contracts injunction may be granted in
place of specific performance

25. Suit for Injunction
– Injunction is an order of a court restraining a person
from doing a particular act
– It is a preventive relief
– It is granted in cases of anticipatory breach of
contract where damages would not be an adequate
relief

26. Suit for Injunction (Cont..)
–Examples
• A, agreed to sing at B’s theatre for three months from 1st
April and to sing for no one else during that period.
Subsequently, she contracted to sing at C’s theatre and
refused to sing at B’s theatre. On a suit by B, the court
refused to order specific performance of her positive
engagement to sing at the plaintiff’s theatre, but granted
an injunction restraining A from singing elsewhere and
awarded damages to B to compensate him for the loss
caused by A’s refusal

27. Suit for Injunction (Cont..)
–Examples
• G agreed to take the whole of his supply of
electricity from a certain company. The agreement
was held to import a negative promise that he
would take none from elsewhere. He was,
therefore, restrained by an injunction from buying
electricity from any other company.

28. Thank You