Important remedies those are available to an aggrieved party on the breach of a contract are:
1. Rescission of the Contract
2. Claim for Specific Performance of the Contract
3. Claim for Injunction
4. Claim for Quantum Merit, and
5. Claim for Damages.
1. Rescission of the Contract:
When there is breach of contract by one party, the other party may rescind the contract and thus, is absolved from all his obligations under the contract.
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X promises Y to supply him a scooter on 27th, and Y promises to pay its price on receipt of the scooter. X does not supply the scooter on 27th, Y is absolved from paying its price.
Rules for Rescission:
In this connection, there are two rules, viz,-
(i) Sec. 65:
When a party treats a contract as rescinded, he makes himself liable to restore any benefits; he has received under the contract to the party from whom such benefits were received.
(ii) Sec. 75:
But if a person rightfully rescinds a contract, he is entitled to compensation for any damage which he has sustained through the non-performance by the other party.
Powers of the Court:
The court may grant rescission of the contract:-
(i) Where the contract is voidable by the plaintiff, or
(ii) When the contract is unlawful for some unforeseen reasons’ and the defendant is more to blame than the plaintiff.
The court may refuse to grant rescission of the contract:-
(i) When the plaintiff has expressly or impliedly ratified the contract, or
(ii) When owing to the circumstances, parties cannot be restored to their original position, or
(iii) Where the third parties acquire rights in good faith, or
(iv) Where only a part of the contract is rescinded and that is not separable from the rest of the contract.
2. Claim for Specific Performance of the Contract:
In certain cases, when the damages are not adequate remedy, the court may direct the party in breach for specific performance of the contract and the promise is carried out as per terms of the contract.
The Court may grant specific performance in the following cases:-
(i) When the act agreed to be done is such that compensation in money for its nonperformance is not an adequate relief;
(ii) When it is probable that compensation in money cannot be got for the nonperformance of the act agreed to be done;
(iii) When there exists no standard for ascertaining the actual damage caused by the nonperformance of the act agreed to be done.
Specific performance is not granted in the following case, when :-
(i) Damages are an adequate remedy;
(ii) The contract is not certain;
(iii) The contract is inequitable to either party;
(iv) The contract is of revocable nature;
(v) The contract is made by the trustee in breach of trust;
(vi) The contract is of personal nature, i.e., contract to marry;
(vii) The contract made by a company ultra vires of its Memorandum of Association; and
(viii) The court cannot supervise its carrying out.
3. Claim for Injunction:
An injunction may be defined as an order passed by a competent court restraining a person from doing some act. It is a mode of securing the specific performance of the negative terms of a contract.
Here, the negative term of contract means doing something, which a party has promised not to do. Therefore, where a party is in breach of a negative term of a contract, the court may grant an order, restraining him to do what he had promised not to do. Such an order of the court is known as ‘injunction’. The restoration of injunction can be ordered by the court:-
If the contract is voidable,
If the contract becomes void, or
On discovering the contract as void.
A negative term of contract may be:-
(i) When a promisor undertakes not to do something, or
(ii) Which is negative in substance, but not in form.
4. Claim for Quantum Merit:
The phrase quantum merit means payment in proportion to the amount of work done. When a person has started the work and before he could complete it, if the other party discharges the contract or does something which makes it impossible for the other party to accomplish the contract, he can claim for the work under the contract, value of the work can be recovered from the cases where further performance is not possible.
The claim on quantum merit must be brought by the party who is not in default. Following are the cases in which the claim may arise:-
(i) Sec. 65 of the act states that, a contract which is subsequently discovered to be void has been performed and accepted then the person who has performed the contract is entitled to claim the amount for the work done and the party who receives, and accepts the benefit under the contract, must make compensation to other party.
(ii) Where a party to the contract does some act or delivers something to another party with the intention of receiving the payment for the same, in such a case, the other party is bound to make the payment, if he accepts such services or goods or enjoys their benefit (Sec. 70)
(iii) Where the contract is divisible and a party performs part of the contract and refuses to perform the remaining part, in such a case, the party in default may sue the other party who has enjoyed the benefit of performance and can claim the compensation.
5. Claim for Damages:
Damages are a monetary compensation awarded by the court to the injured party, for the loss or injury suffered by him. When one party breaches the contract, the other party can claim damages under the contract.
The object of awarding the damages is to put the injured party into the position, in which he would have been, had there been performance and not breach of the contract.
Sec. 73 of the Indian Contract Act, 1872 deals with “compensation for loss or damages caused to a party by breach of contract.”
Damages may be of the following four types:-
(i) Ordinary Damages
(ii) Special Damages
(iii) Vindictive or Exemplary Damages
(iv) Nominal Damages