BREACH OF CONTRACT : According to section 39 of Indian Contract Act 1872, a breach of contract is said to be done when a party of contract

t fails to fulfil his promise or discharge his liabilities agreed upon at the time of entering in to the contract EXPLANATION: When two parties enter into a contract , rights are created ion the favour of on e and liabilities in the favour of other. Since a contract has a legal binding , it is the liability of the parties to fulfil the promise made. In case any of t he parties fail to do the same, breach of contract is said to be made. For example: A and B enter into a contract wherein A promises to sell B a sc ooter of his at a particular date. As such they enter into a contract to transac t this business. On that particular date, however, A refuses to sell his scooter . This is called a breach of contract. INCLUSIONS IN THE DEFINITION OF BREACH: Refusal by a party to abide to the promises Performance of contract becoming impossible A party forgetting to fulfil the said promise A party not allowing the other to perform the same.

TYPES OF BREACH: (a) ACTUAL BREACH Actual breach occurs where one party refuses to perform his side of the bargain or performs incompletely. Actual brech is said to be done in two ways In case of time-barred contracts

In case of such contracts , a specific time limit is specified for the performan ce of such contract. A performance made after the expiry of such a time limit do es not conform to the fulfilment of such contract. In case of non-time-barred contracts

In case of such contract , no time lines have been specified and a breach would happen on refusal to perform or non performance of such contracts. (b) ANTICIPATORY BREACH Anticipatory breach occurs where one party announces, in advance of the due date for performance, that he intends not to perform his side of the bargain. It may also be the case where a party, explicitly or by other implied means com municate its incapability to perform . For example: A proposes to marry B, B inturn accepts the offer. Meanwhile A ha ppens to marry C . in such a case A has done a breach of contract as he had pro pped to marry B before. But this would be called an anticipatory breach as A is now rendered incapable o f getting into a contract of marriage with B . ( according to the Indian Marriag

e Act 1955, a person , while entering into the contract of marriage should not h ave his/ her spouse living) OTHER TYPES OF BREACH: A breach of contract, no matter what form it may take, always entitles the innocent party to claim for damages , but the rule established by a long line of authorities is that the right of a party to treat a contract as discharged arises only in three situations. The breaches which give the innocent party the option of terminating the contract are: (A) RENUNCIATION Renunciation occurs where a party refuses to perform his obligations under the contract. It may be either express or implied. Hochster v De La Tour is a case law example of express renunciation. Renunciation is implied where the reasonable inference from the defendants conduct is that he no longer intends to perform his side of the contract. For example: Omnium DEnterprises v Sutherland. (B) BREACH OF CONDITION The second repudiatory breach occurs where the party in default has committed a breach of condition. Thus, for example, in Poussard v Spiers the employer had a right to terminate the sopranos employment when she failed to arrive for performances. (C) FUNDAMENTAL BREACH The third repudiatory breach is where the party in breach has committed a serious (or fundamental) breach of an innominate term or totally fails to perfor m the contract. A repudiatory breach does not automatically bring the contract to an end. The aggrieved party has two options: He may treat the contract as discharged and bring an action for damages for breach of contract immediately. He may elect to treat the contract as still valid, complete his side of the bargain and then sue for payment by the other side. DAMAGES AND REMEDIES (sec 73) : Remedies are the solutions for the aggrieved parties to get the original contrac t fulfilled or get damages for non compliance of contract by any such party.foll owing could be the remedies. Right to compensation Right to fulfilment of original promise Right to quantum-meruit compensation Right to obtain an order to compel the performance of such a contract Damages is the basic remedy available for a breach of contract. It is a common law remedy that can be claimed as of right by the innocent party. The object of damages is usually to put the injured party into the same financia l position he would have been in had the contract been properly performed. Sometimes damages are not an adequate remedy and this is where the equitable remedies (such as specific performance and injunction) may be awarded. The major remedy available at common law for breach of contract is an award

of damages. This is a monetary sum fixed by the court to compensate the injured party. In order to recover substantial damages the innocent party must show that he has suffered actual loss; if there is no actual loss he will only be entitled to nominal damages in recognition of the fact that he has a valid cause of action. TYPES OF DAMAGES: CONSEQUENTIAL DAMAGES: Consequential damages are those damages wherein the damages occur as a conseque nce of non- performance of the contract.as such it is the right of the aggrieved party to claim such damages from the defaulter party for any such loss incurred . VINDICTIVE LOSSES/ DAMAGES: Vindictive losses are those losses wherein the breach of contract by a party cau ses to affect the reputation of the party suffered. In such a case it is the responsibility of the aggrieved party to not only make good the monetary losses of such a party but also make an effort to nullify the effect of such a default on the reputation of the innocent party For example: Bafna & Bafna v/s Bank of India Despite having sufficient balance in the firms account, the bank mistakenly disho noured the cheque. As such the firm not only had lost many important deals but a lso suffered a dent on its reputation due to such a dishonour. The bank had to make good the monetary loss and also had to give a notice in the leading newspapers to inform the mistaken dishonour of such a cheque. LIQUIDATATED DAMAGES: When both the parties have determined the probable loss at the time of entering the contract, such a loss is called a liquidated loss. Also the estimated loss is made good by the party of default at the time of entering the contract. Also if a contract includes a provision that, on a breach of contract, damages of a certain amount or calculable at a certain rate will be payable, the courts will normally accept the relevant figure as a measure of damages. Such clauses are called clauses for liquidated damages . The courts will uphold a liquidated dama ges clause even if that means that the injured party receives less (or more as the case may be) than his actual loss arising on the breach. This is because t he clause setting out the damages constitutes one of the agreed contractual ter ms. For example: A and B are traders of apples. A tells B weather conditions , the apples might not reach at the hey were at the time of dispatch. As such the probable estimated and made good by A by the way of providing a that due to unfavourable same condition in which t loss on the part of B is monetary compensation.

For the contractial clause of liquidated damages, the aggrieved party can claim for revision of the amount of damages where: 1. The prescribed sum is extravagant in comparison with the maximum loss that could follow from a breach. 2. The contract provides for payment of a certain sum but a larger sum is stipulated to be payable on a breach.

3. The same sum is fixed as being payable for several breaches which would be likely to cause varying amounts of damage All of the above cases would be regarded as penalties, even though the clause might be described in the contract as a liquidated damages clause. NOMINAL DAMAGES: When the proportion of monetary loss incurred by the aggrieved party is very les s as compared to the consideration of the contract, nominal loss is said to be m ade.

RULES REGARDING CLAIM OF DAMAGES (sec 73): NORMAL LOSS : the loss incurred by the aggrieved party must have incurred in th e normal course of contract. In such a case the abnormal losses would not be con sidered. EFFORTS TO MITIGATE THE LOSS: both the parties must have made an sffort to miti gate a loss on the contract. If knowing an upcoming amount of loss , and no acts are undertaken to ensure that the loss could be avoided or atleast mitigated, t he aggreoved party would not have any right to claim for such damages. KNOWLEDGE OF SUCH A LOSS: both the parties must have a perfect knowledge of th e probability of such a loss. That is the probability of non-compliance must be explicitly stated and no misrepresentation or misstatement should be done while entering into the contract.

CASE:

Featherson v/s Wilkinson

Featherson contracted with Wilkinson to provide a ship on a certain day to r eceive a cargo of coal to be carried to Africa. F fails to provide the ship in time and as such W had to rent the ship from someone else at a price higher tha n the price at which the contrct was made. REMEDY: Wilkinson in this case can recover from featherson the amount of money equal to the increase in freight and coal, i.e. the amount of loss incurred by t he aggrieved party due to the default by the second party.