REMEDIES FOR BREACH OF CONTRACT

1. Assistant Professor,
BON SECOURS COLLEGE FOR WOMEN,
THANJAVUR
Dr.N.R.SARAVANAN
MBA, MBA, MA (Yoga), PGDHRM, M.Phil, Ph.D,
BUSINESS LAW
UNIT - II

2. PERFORMANCE OF CONTRACT
Performance of a contract takes place when the
parties to the contract fulfil their obligations
arising under the contract within the time and
in the manner presented.
• By whom the contract must be performed ?
(a) By promisor himself
(b) By agent
(c) By legalrepresentative
(d) By Joint promisors
(e) By Third Party

3. WHO CAN DEMAND PERFORMANCE ?
(a) Promisee: It is only the promisee himself. In case of his
death, the legal representative, who can demand
performance.
Ex: X promises Y to pay Rs.1000 to Z. It is only Y who can
demand performance and not Z.
(b) Joint Promisees: In case of joint promisees, any of the
joint promisees can demand performance. When all
promisees die, the legal representatives of all the deceased
persons can demand performance.
Ex: X promises Y and Z jointly to repay loan of Rs.1,000 on a
specified day. Y’s representative jointly with Z can demand.

4. CONTINUED…
• Performance from X on specified day. If Y and Z die
before that specified day, the representatives of Y and Z
jointly can demand the performance from X on specified
day.
• (c) Third Party: A third party can also demand the
performance of the contract in some exceptional cases
like beneficiary in case of trust, the person for whose
benefit the provision is made in family arrangements.

5. CONTINUED…….
• (d) Legal representative: In case of death of the
promisee, his legal representative can demand
performance unless a contrary intention appears
from the contract or the contract is of a personal
nature.
• Ex: X promises to marry Y on the specified day. Y
dies before the specified day. The legal
representatives of Y cannot demand performance
of the promise from X because the contract is of
personal nature.

6. WHO MUST PERFORM
• (a) Promisor: If it appears from the nature of the case that it
was the intention of the parties to any contract that any
promise contained in it should be performed by the promisor
himself, such promise must be performed by the promisor.
• Ex: X promises to marry Y. X must perform this
promise personally.
• Ex: X promises to paint a picture for Y. X must
perform the promise personally,

7. CONTINUED………
• (b) Promisor’s Agent: If it was not the intention of the
parties that the promise should be performed by the
promisor himself, such contracts can be performed by the
promisor himself or any competent person employed by
him.
Ex: A promises to pay B a sum of money. A may perform
this either by personally paying the money to B, or by
causing it to be paid to B by another, and if A dies before
the time appointed for payment, his representatives must
perform the promise, or employ some proper person to
do so.

8. CONTINUED……
(c) Legal Representatives: In case of death
of promisor, his legal representative can
perform the contract unless a contrary
intention appears or the contract is of
personal nature.
Ex: X promises to marry Y. X dies. X’s legal
representatives cannot perfom this
promise.
(d)Third Party
(e)Joint Promisors

9. DISCHARGE OF CONTRACT
Discharge of contract means Termination of the contractual
relationship between the parties. A contract is said to be
discharged when it ceases to operate, i.e. when the rights and
obligations created by it come to an end.
The various modes of discharge of contract are as follows:
1. Discharge by performance
2. Discharge by agreement or consent
3. Discharge by impossibility
4. Discharge by lapse of time
5. Discharge by operation of law
6. Discharge by breach of contract.

10. DISCHARGE OF CONTRACT
► 1. Discharge by performance :
It takes place when the parties to a contract fulfill their
obligations arising under the contract within the time and
the mannerprescribed.
► 2. Discharge by agreementor consent :
The contract rests on the agreement of the parties. The
parties may get discharged from the obligations of
performance of contract by agreement or mutual consent.

11. DISCHARGE OF CONTRACT
Discharge by agreement or consent : The discharge by consent may be
express or
(a) Novation : When a new contract is substituted for an existing one,
either between the same parties or between the one of the parties and the
third party.
(b) Rescission: When all or some of the terms of contract are cancelled.
(c) Alteration : When one or more terms of the contract is/are altered by
the mutual consent of the parties to a contract.
(d) Remission: Acceptance of a lesser fulfillment of the promise made
(e) Waiver: Intentional relinquishment or giving up of a right by a party
entitled thereto under a contract.
(f) Merger: When an inferior right accruing to a party under a contract
merges in to a superior right accruing to the same party under a new
contract.

12. DISCHARGE OF CONTRACT
3. Discharge by impossibility :
Impossibility of performance may be-
(1) Initial impossibility or (2) Supervening impossibility.
(1) Initial impossibility : An agreement to do an impossible act in itself is void.
(2) Supervening impossibility : Impossibility which arises subsequent to the
formation of contract (which could be performed at the time when the contract
was entered in to) is called supervening impossibility. The cases covered by of
supervening impossibility include:
(a) Destruction of the subject mater
(b) Non-Existence or non-occurrence of a particular state of things
(c) Death or incapacity for personal service
(d) Change of law, & (e) Outbreak of war The contract is discharged in these
cases.

13. DISCHARGE OF CONTRACT
The following cases are not covered by supervening
impossibility :
 Difficulty of performance
 Commercial impossibility
 Failure of a third person on whose work the promisor
relied
 Strikes, lock outs and civil disturbances
 Failure of one of the objects
The contract is not- discharged in these cases.

14. 4. Discharge by lapse of time :
If the contract is not performed within the period of
limitation and if no action is taken by the promisee in a law
court, the contract is discharged.
5. Discharge by operation of law :
This includes discharge by,
 Death
 Merger
 Insolvency
 Unauthorized alteration of the terms of a written
agreement, and
 Rights and liabilities becoming vested in the same person
DISCHARGE OF CONTRACT

15. 6. Discharge by Breach of contract:
If a party breaks his obligation which the contract
imposes, there takes place breach of contract.
Breach of contract may be,
(a) Actual or (b) Anticipatory breach.
(1) Actual breach of contract may occur, at the time
when the performance is due, or during the
performance of the contract.
(2) Anticipatory breach of contract occurs when a
party repudiates his liability or obligation under
the contract before the time for performance
arrives.
DISCHARGE OF CONTRACT

16. In case of breach of contract, the injured party has one or more of the
followingremedies:
RESCISSION : When there is breach of a contract by a party , the
injured party may sue to treat the contract as rescinded. He is also
absolvedofalltheobligationsunderthecontract.
DAMAGES : Damages are monetary compensation awarded to the
injuredpartybyCourtforthelossorinjury sufferedbyhim.
Thefoundationformodernlawofdamages,bothinIndiaandEngland,is
to befoundinthecaseofHadleyvs.Baxandile.
REMEDIES FOR BREACH OF CONTRACT

17. X’s mill was stopped by the breakdown of a shaft. He
delivered the shaft to Y, a common carrier, to be taken
to a manufacturer to copy it and make a new one. X
did not make known to Y that delay would result in
loss of profits. By some neglect on the part of Y the
delivery of the shaft was delayed in transit beyond a
reasonable time (so that the mill was idle for a longer
period than otherwise would have been the case had
there been no breach of the contract of carriage).
Held, Y was not liable for loss of profits during the period
of delay as the circumstances communicated to Y did
not show that a delay in the delivery of the shaft
would entail loss of profits to the mill.
HADLEY VS. BAXANDILE (1854)

18. DAMAGES MAYBEOFFOUR TYPES
► (1) Ordinary Damages : These are damages which actually arise
intheusualcourseofthingsfromthebreach ofa contract.
► (2) Special Damages : Damages which may reasonably be
supposedtohavebeeninthecontemplationofboththe partiesatthetime
whentheymadethecontractasthe probableresultofthebreachofit,are
knownasspecial damagesandmayberecovered.

19. DAMAGES MAYBEOFFOUR TYPES:
3.Vindictive or Exemplary Damages :
These damages are allowed in case of the breach of a
contract to marryordishonorof achequebya banker
wrongfully.
4.Nominal Damages : Where the injured party has not
sufferedanylossbyreasonofthebreachofa contract,the
Courtmayawardaverynominalsum asdamages.

20. 3. QUANTUM MERUIT
A right to sue on a quantum meruit (as much as earned)
arises where a contract, partly performed by one party,
has become discharged by the breach of the contract by
theotherparty.
This right is founded on the implied promise by the other
party arising from the acceptance of a benefit by that
party.
[Asmuchasearned]

21. LIQUIDATEDDAMAGESAND PENALTY.
‘Liquidateddamages’ representasum,fixedor ascertainedby
the parties in the contract, which is a fair and genuine pre
estimateoftheprobable loss thatmightensue as a resultof
breach.A ‘penalty’isasumnamedinthecontractatthe time
of it’s formation, which is disproportionate to the damage
likelytoaccrueasaresultofbreach theCourtsinIndiaallow
only‘reasonable compensation’.

22. 4.SPECIFIC PERFORMANCE
4. Specific Performance : In certain cases the
Court may direct the party in terms of the
contracttoactuallycarry outthepromise,exactly
according to the terms of the contract.This is
called “specificperformanceofthecontract”.

23. 5.INJUNCTION
5.Injunction:Itisamodeofsecuring thespecific
performanceofthe negativetermsofacontract.

24. QUASI CONTRACTS
A Quasi Contract is not a contract
entered into intentionally by the parties.
It is an obligation created by Law on a
person in the absence of any agreement.

25. A quasi-contract rests on the ground of equity that a
person shall not be allowed to enrich himself unjustly at the
expense of another. The principle of unjust enrichment
requires:
 That the defendant has been ‘enriched’ by the receipt of a
‘benefit’
 That this enrichment is at the expense of the plaintiff, and
 That the retention of the enrichment is unjust.
Law of quasi-contracts is also known as the law of
restitution. Strictly speaking, a quasi-contract is not a
contract at all. A contract is intentionally entered into. A
quasi-contract, on the other hand, is created by law.

26. 1. SUPPLY OF NECESSARIES (Sec. 68)
If a person, incapable of entering into a
contract, or anyone whom he is legally bound to support,
is supplied by another with necessaries suited to his
condition in life, the person who has furnished such
supplies is entitled to be reimbursed from the property of
such incapable person.
Example: A supplies B, a lunatic, with necessaries
suitable to his condition in life. A is entitled to be
reimbursed from B’s property.
KINDS OF QUASI CONTRACTS

27. 2. PAYMENT OF INTERESTED PERSON (Sec. 69)
A person who is interested in the payment of money
which another is bound by law to pay, and who therefore
pays it, is entitled to be reimbursed by the other.
Example: P left his carriage on D’s premises. D’s landlord
seized the carriage as distress for rent. P paid the rent to
obtain the release of his carriage. Held, P could recover the
amount from D.
The essential requirements are as follows:
The payment made should be bonafide for the protection
of one’s interest.
The payment should not be voluntary one.
The payment must be such as the other party was bound
by law to pay.

28. 3. OBLIGATION TO PAY FOR NON-GRATUITOUS ACTS
(Sec. 70)
When a person lawfully does anything for another
person or delivers anything to him, not intending to do so
gratuitously, and such other person enjoys the benefit
thereof, the latter is bound to make compensation to the
former in respect of, or to restore, the thing so done or
delivered.
Example: a, a tradesman, leaves goods at B’s house by
mistake. B treats the goods as his own. He is bound to pay
for them to A.

29. 4. RESPONSIBILITY OF FINDER OF GOODS (sec. 71)
A person, who finds goods belonging to another and takes them
into his custody, is subject to the same responsibility as a bailee. He is
bound to take as much care of the goods as a man of ordinary
prudence would, under similar circumstances, take of his own goods of
the same bulk, quality and value. He must also take all necessary
measures to trace its owner. If he does not, he will be guilty of wrongful
conversion of the property. Till the owner is found out, the property in
goods will vest in the finder and he can retain the goods as his own
against the whole world (except the owner).

30. 5. MISTAKE OR COERCION (Sec. 72)
A person to whom money has been paid, or
anything delivered, by mistake or under coercion, must
repay or return it to the person who paid it by mistake or
under coercion. The word ‘coercion’ is used in Sec. 72 in
its general sense and not as defined in Sec. 15.
Example: A and B jointly owe Rs. 100 to C. A alone pays
the amount to C and B, not knowing this fact, pays Rs.
100 over again to C. C is bound to pay the amount to B.

31. QUANTUM MERUIT
‘Quantum meruit’ literally means ‘as much as
earned’ or as much as it merited’. When a person has done
some work under a contract, and the other party repudiates
the contract, or some event happens which makes the
further performance of the contract impossible, them the
party who has performed the work can claim remuneration
for the work he has already done. Likewise, where one
person has expressly or impliedly requested another to
render him a service without specifying any remuneration,
but the circumstances of the request imply that the service
is to be paid for, there is implied a promise to pay quantum
meruit, i.e. so much as the party rendering the service
deserves. The right to claim quantum meruit does not arise
out of contract as the right to damages does, it is a claim on
the quasi-contractual obligation which the law implies in
the circumstances.

32. The claim for quantum meruit arises in the following cases
When an agreement is discovered to be void (Sec. 65)
When something is done without any intention to do so
gratuitously (Sec. 70)
When there is an express or implied contract to render
services but there is no agreement as to remuneration
When the completion of the contract has been prevented
by the act of the other party to the contract
When a contract is divisible
When an indivisible contract is completely performed but
badly.