Breach of Contract - Meaning, Types and Remedies for Breach of Contract, Indian Contract Act 1872 Notes

Breach of Contract - Meaning, Types and Remedies for Breach of Contract

Indian Contract Act 1872 Notes

Meaning of Breach of Contract

A breach of contract occurs when a party thereto without lawful excuse does not fulfill his contractual obligation or by his own act makes it impossible that he should perform his obligation under it. A breach to a contract occurs in two ways:

          Types of Breach of Contract

a) Actual Breach: When a party fails, or neglects or refuses or does not attempt to perform his obligation at the time fixed for performance, it results in actual breach of contract. For e.g. A promises to deliver 100 packs of ice-cream to B on his wedding day. A does not deliver the packs on that day. A has committed actual breach of the contract.

b) Anticipatory Breach: Anticipatory Breach is a breach before the time of the performance of the contract has arrived. This may take place either by the promisor doing an act which makes the performance of his promise impossible or by the promisor, in way showing his intention not to perform it.

Remedies for Breach of Contract

The five basic remedies for breach of contract are available:

1)      Money damages: When the contract is breached by a party, the common law remedy available for aggrieved party is monetary compensation which is called money damage. Money damage includes a sum of money that is given as compensation for financial losses caused by a breach of contract. The purpose of providing monetary compensation to the aggrieved party to put him into the same financial position he would have been in the contract had been properly performed.

2)      Restitution: Restitution is a remedy designed to restore the injured party to the position occupied prior to the formation of the contract.

3)      Rescission: Rescission is the name for the remedy that terminates the contractual duties of both parties. it seeks to place the parties back in their pre-contractual position.

4)      Injunction: The injunction is an order of the court requiring a person to refrain from doing some act which has been the subject matter of contract. The power to grant injunction is discretionary. This remedy is preventive in nature. This remedy is helpful in case of anticipatory breach of contract.

5)      Specific performance: Specific performance is an equitable remedy that compels one party to perform, his or her duties specified by the contract. In some case, the performance of contractual obligations for a party may be more valuable which cannot be compensated in money. In such circumstances, he can approach to the court for specific performance of the contract.

6)      Quantum meruit: The term “quantum merit” means, ‘as much as he deserves’ or ‘as much as earned’. A suit of quantum meruit is a claim for the value of the material used or supplied under a contract that has become void on account of breach by the other party. When a contract becomes void, any person who has received any advantages under such contract is bound to restore it, to the person from whom he received it.