Legal aspects of business Breach of Contract

this slides will get you knowledge about breach of contracts. their types of breach.

1. Breach of Contract
•When a party repudiates or fail to perform
the ‘Breach’ occurs

2. Types
•Actual: fails to perform on the date fixed
•On Due Date of Performance If any party to a contract
refuses or fails to perform his part of the contract at
the time fixed for performance, it is called an actual
breach of contract on due date of performance.
•Anticipatory: expressly repudiates to perform before
the actual date.
•Anticipatory breach of contract occurs when the party
declares his intention of not performing the contract
before the performance is due.

3. Remedies for the Breach
•Cancellation or rescission : Aggrieved can cancel
•Restitution: Return of the benefits received
•Suit for specific performance: money is not adequate
remedy ,damages can’t be ascertained.
•Suit for specific performance means demanding the court’s
direction to the defaulting party to carry out the promise
according to the terms of the contract. Example: X agreed to
sell an old painting to Y for Rs 50,000. Subsequently, X refused
to sell the painting. Here, Y may file a suit against X for the
specific performance of the contract.
•Suit for injunction:refrain from doing some act
•Quantum meruit : in proportion to work done. Quantum Meruit
means as much as is earned. Right to Quantum Meruit means
a right to claim the compensation for the work already done

4. Example: C an owner of a magazine engaged P to write a book
to be published by instalments in his magazine. After a few
instalments were published, the publication of the magazine was
stopped. It was held that P could claim payment for the part
already published [Planche vs. Calburn].
suit for damages
Damages are monetary compensation allowed for loss suffered
by the aggrieved party due to breach of a contract. The object of
awarding damages is not to punish the party at fault but to make
good the financial loss suffered by the aggrieved party due to the
breach of contract.

5. Suit for damages
•Ordinary damages are those which naturally arise in the
usual course of things from such breach. These damages
can be recovered if the following two conditions are
fulfilled: a. The aggrieved party must suffer by breach of
contract, and b. The damages must be proximate (i.e.
direct) consequence of the breach of contract and not the
indirect consequence.
•Measure of Ordinary Damages: In a contract for the sale
of goods, the measure of ordinary damages is the
difference between the contract price and the market price
of such goods on the date of breach

6. 2Special damages
Special damages are those which may reasonably be supposed to have been in
the contemplation of both parties as the probable result of the breach of a contract.
These damages can be recovered if the special circumstances which would result
in a special loss in case of breach of a contract are communicated to the promisor,
e.g. loss of profits on account of default by the other party to the contract can be
claimed only when an advance notice of such damages has been given before.
3Vindictive,punitive or exemplary damages:Exemplary damages are those which
are in the nature of punishment. The court may award these damages in case of
a.a breach of promise to marry, where damages shall be calculated on the basis of
mental injury sustained by the aggrieved party,
b.b. wrongful dishonour of a cheque by a banker. In case of wrongful dishonour of
a cheque, the rule is smaller the amount of the cheque, larger will be the amount
of damages awarded. A trader may recover such damages as wrongful dishonour
of cheque shall adversely affect his goodwill but a non-trader whose cheque is
wrongfully dishonoured will have to prove the loss of goodwill before claiming such
damages

7. 4 Nominal Damages:
Liquidated damages and penalty: When the parties to a contract at the time of
formation of contract, specify a sum which will become payable by the party
responsible for breach, such specified sum is called:
a.Liquidated Damages if the specified sum represents a fair and genuine pre-
estimate of the damages likely to result due to breach;
b.PENALTY :-Penalty if the specified sum is disproportionate to the damages
likely to result due to breach.