If a person breaks the terms and conditions of a contract, it is known as a breach of contract. Fortunately, if a person breached a contract with you any time after the formation of a contract, then you have the right to take the compensation from that person as justice. The contract law gives the idea about the breach of contract and its remedies. There are main 5 remedies available for breach of contract which can be used by you to take the justice. So let’s discuss the remedies for breach of contract with example.
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5 Types of remedies for breach of contract
Here is the list of 5 remedies for breach of contract given under the Indian contract act:-
Recession of Contract
The recession of the contract means the cancellation of the contract. When either of the party of the contract has been failed to fulfil the obligations of the contract, then the other party has the right to cancel the contract and he can refuse to perform his obligation which was mentioned in the contract. According to section 75, the party who rescinds has the right to receive damages or compensation for that.
For example, A promises B to buy his goods on 3rd January at the price of 3000, but B failed to deliver the goods on the specified date. Now, A has the right to cancel the contract because B has not fulfilled his obligation.
Suit for Damages
It is mentioned in section 73 of the contract act that if a party experiences a loss by breach of another party, they have the right to take compensation for the damages from the breached party. The party has the right to sue for damages.
For example, A makes a contract with B to sell his goods at the price of 1000. But at the time of selling, A fails to sell them at the cost of 1000. Here B has the right to sue him for the loss.
There are different types of damages given in contract law, which are,
- Compensatory Damages
Compensatory damage means the money awarded to the plaintiff to compensate the damages that occur due to the breach of contract. It is awarded in the civil courts.
For the compensatory damages, the plaintiff must show the court that the losses are occurred due to the negligence or breach of the defendant. He has the right to quantify the amount of loss in front of the Judge.
- Incidental Damages
The damages relating to the indirect result of the breach of contract are called incidental damages.
- Consequential Damages
These types of damages include personal injury, property damage or lost profits etc. due to the breach of contract.
- Nominal Damages
The court may pass the decree for the nominal damages as a remedy to the plaintiff. The nominal damages are given when the court recognized that the breach of contract has occurred but there is no harm to the plaintiff.
In this situation, the court passes the judgement in the favor of the plaintiff. The court may insist the defendant pay the attorney fee and other expenses that occurred to the plaintiff to fight the suit.
For example, A promises B to buy his bike on Saturday. But he fails to meet him on Saturday and B sells his bike to C. Here, A has breached the contract but B did not take any loss.
- Liquidated Damages
It is a specific amount that is decided by the party during the making of the contract to compensate for the breach of contract. If any of the parties breach the contract, the other party has the right to use this money as compensation for the breach. But sometimes, if the breach is way more than the liquidated money, the parties can settle the damage with other remedies for the breach of contract.
- Punitive Damages
The purpose of these damages is to punish the defendant for his act of recklessness or negligence. These damages are not compensatory but just awarded to punish the wrongdoer.
The compensation will depend upon the nature of the damages.
Suit upon quantum meruit
The Quantum Meruit means is as much as he has deserved. this is one of the best remedies for breach of contract. This occurs when one party is prevented by finishing his full work as mentioned in the contract, then the party has the right to claim the charges of the work which was done by him till now.
Quantum meruit example, Ravi promises Mohit to buy his 1000 goods in instalments up to 24th January. But, on 21st January, Ravi refuses to take the last instalment and at that time, Mohit has sent him 900 goods. Now, Mohit can claim the money for 900 goods that were sent by him to Ravi.
Suit for Injunction
It is a decree of the court where the court restricts the party to do any specific work for a certain period of time which is not mentioned in the contract. In this decree, the court may stop the party to do anything wrong which was not mentioned in the contract made between both parties.
Example: A producer makes a contract with a film star that he has to work for one year only with him or he cannot work with another producer for one year. But after 6 months, the film star started working with another producer, it will be considered a breach of contract and now, the 1st producer has the remedy to take the decree of injunction from the court to stop the film star to do work with another producer.
Suit for Specific Performance
According to specific performance, the party who has breached the contract has to fulfil the conditions which are mentioned in the contract. It is the discretionary power of the court to insist the breached party perform the duties given under the contract.
For example, A promises B to sell his property. But on the date specified in the contract, he refuses to sell the property. Now, the B can take the decree of specific performance from the court against A to sell his property to B.
Read the article on Types of Breach of Contract under Indian contract act
Conclusion
A breach of contract is a situation that can occur in any contract. So the law gives the remedies against breach of contract to fulfil the damages occurred either of the party. Once the opposite party breaches the contract, the other party is legally entitled to take the damages from the breached party. Also, the party can take the help of the court to ask breached party to compensate the damages, if the contract is legal.