The Indian Contract Act of 1872 governs contracts made in India. A contract is a legally binding agreement between two or more parties. When one party fails to comply with the terms of the contract, it results in a breach of contract. Breach of contract can cause financial loss or damages to the other party. It is essential to know the remedies available under the Indian Contract Act to protect yourself in case of a breach of contract.
The Indian Contract Act recognizes two types of breach of contract: a breach of condition and a breach of warranty. A breach of condition is a violation of an essential term of the contract, whereas a breach of warranty is the violation of a non-essential term of the contract.
The remedies available for breach of contract under the Indian Contract Act are:
1. Damages: Under Section 73, the party suffering due to the breach of contract can claim damages. The damages are calculated to compensate for the loss caused by the breach of contract to the aggrieved party. The damages can be liquidated or unliquidated. Liquidated damages are a predetermined amount of compensation agreed upon by both parties in advance in case of a breach of contract. Unliquidated damages are the actual loss suffered by the aggrieved party due to the breach of contract. The aggrieved party is entitled to claim the compensation only for the loss suffered due to the breach of contract.
2. Specific Performance: Under Section 10 of the Specific Relief Act, the aggrieved party can seek specific performance of the contract if damages are not an adequate remedy. Specific performance means enforcing the exact terms of the contract by court order. It is available in cases where the contract involves the sale or transfer of property. It is also available if the subject matter of the contract is unique and cannot be replaced.
3. Quantum Merit: Under Section 65 of the Indian Contract Act, if there is a breach of contract, the aggrieved party can claim compensation for the work already performed. The compensation is calculated on the reasonable value of the work done by the aggrieved party. It is available when the contract is not fulfilled due to the fault of the other party.
4. Injunction: An injunction is a court order restraining a party from doing something or compelling them to do something. Under Section 41 and 42 of the Specific Relief Act, the court can issue an injunction against the party that has breached the contract.
In conclusion, the Indian Contract Act provides various remedies for breach of contract. The aggrieved party can claim damages, seek specific performance, claim quantum merit, or seek an injunction against the party that has breached the contract. It is advisable to consult a legal expert to understand the right remedy available in each case. It is always better to have a well-drafted contract in place to avoid any disputes in the future.