Remedies for Breach of Contract

Remedies for Breach of Contract are defined as the legal measures that are available for the parties that fails to fulfil their obligation sunder a contract. These remedies aim to compensate the non-breaching party for losses incurred and to enforce the contractual promises that were made. But before beginning with the remedies for breach of contract let us first understand the meaning of contract and the meaning of breach of contract.

CLAT 2025: 10 Free Mock Tests | Legal Maxims | Landmark Judgements | PYQs

CUET BA LLB 2025:  Legal Studies ebook | 5 Free Mock Tests

MH CET LAW 2025: 10 Free Mock Tests | Legal Reasoning Practice Questions

Monthly Legal Current Affairs:  August’24 | July’24 | June’24

What is Contract

The meaning of Contract according to the Indian Contract Act is an agreement between two parties on acceptance of an offer from one party to the other. A contract is enforceable by law. The main ingredient of a contract is the mutual promise between two parties to perform an act as decided in the agreement. In a contract, the promises which are made by both parties in an agreement are bound for the parties to follow. Non-performance of which leads to breach of contract.

What is a Breach of contract

When both parties agree to the terms and conditions and promises made in a mutually agreed agreement the contract takes effect. The promises made in a contract are bound for the parties to follow as a valid contract is enforceable by law. When either party to the contract fails to perform or refuses to perform the promises made in a contract, the contract's breach occurs. The breach of contract is also applicable in a business contract. Where in a business either party breaches the contract the party is eligible to receive remedy as a breach of contract in business.

Types of Breach of Contract

A Breach of contract generally occurs when either party to the contract fails or refuses to perform or neglects the promises made in the contract. Breach of the contract is of two types depending on the parties' performance or non-performance of the contract. are Actual Breach of Contract and Anticipatory Breach of Contract

1. Actual Breach of Contract:

When there is a contract between two parties and as decided in the agreement by both parties, the parties are bound to perform their duties and obligations as made in the contract. And in circumstances when either party to the contract fails, refuses or neglects to obligations and promises made in the contract the Actual breach of contract takes place.

2. Anticipatory breach of contract:

Section 39 of the Indian Contract Act deals with Anticipatory breach of contract, which says that when either party to the contract refuses to perform their part of the obligations or promises as made in the contract anticipatory breach of contract takes place.

In an anticipatory breach of contract, there is a valid offer and acceptance but when the promises do not perform the promises due to refusal to perform, neglecting the promises, or disabling himself from performing before the date has arrived when the promises needed to be fulfilled it is said to be an anticipatory breach of contract.

Effects of anticipatory breach of contract:

In an anticipatory breach of contract when one party refuses to perform the promises made in a contract. In such a case the contract is brought to an end.

There are two alternatives for either party if the other party to the contract fails to perform their part of the contract. Firstly, The affected party can bring an end to the contract or bring an action against the non-performing party for breach of contract. Secondly, the other party to the contract also has the choice to not end the contract and wait for the date on which the contract was meant to be executed.

Remedies for breach of contract

In contractual obligations both the parties to the contract are expected to perform their part before the date when the contract was meant to be executed failing leads to breach of contract.

The following remedies are available to the affecting parties when the other party to the contract fails to perform their part:

• Damages to be paid as compensation to the party who sustained injury

• Decree of Quantum Meruit

• The provision of Specific performance and injunction

1. Damages to be paid as compensation to the party who sustained injury as a remedy for breach of contract

Section 73 of the Indian Contract Act 1872 lays down the provision of damages to be paid as compensation to the party who has sustained injury. This section deals with the right of the injured party or the party who has faced loss due to the non-performance of breach of contract.

The remedy of compensating the injured party's payment of damages is the most common remedy available to the injured party. In most cases of breach of contract, the compensation of damages paid is used. This provision gives a right to the injured party for compensation and makes it bound for the non-performing party to pay the damages as compensation for non-performance or refusal to perform the promises made in a contract.

Illustration - A and B are two parties to a contract. Both A and B mutually promised to perform the obligations and promises that were decided in the agreement. A failure refuses or neglects to perform the promises and obligations made in a contract. In such a case breach of contract takes place and A is liable to compensate B for the loss that B has incurred due to the breach of contract. A is liable to pay the damages that B has faced.

Entitlement of compensation for breach of contract

According to section 74 of the Indian Contract Act 1872 the party who has non-performed their part of the promise or obligations made in a contract is bound to pay the damages to the injured party for the loss that is incurred for non-performance of the contract. Whether or not the loss incurred by the injured party is a loss that occurred due to the non-performance of the contract by either party or not the non-performing party have to compensate the damages faced by the other party to a contract.

Illustration - A gets into a contract with B to pay Rs. 2000 to B. Now, if A fails to pay B Rs. 2000 on the day as promised during the contract. In this case, B is entitled to recover from A such compensation, not exceeding Rs. 2000 as the courts consider reasonable.

2. Decree of Quantum Meruit as a remedy for breach of contract

The quantum meruit is a legal term used in breach of contract. The meaning of the decree Quantum Meruit is ‘earned money’. The meaning of the term is that when a person to a contract when he does his part of the promise or obligations made in the contract but the person does not completely do the work but only completes half of it in this case he can ask for the amount of money as he had completed half of the promises or obligation made in a contract. The decree of Quantum Meruit acts as an exception in the breach of contract.

A and B have entered into a contract and A has already performed a part of the promises or obligations made in the contract, is then prevented by B from performing the rest of his obligations under the contract, and A can recover from B reasonable remuneration for whatever he has already done.

The decree of Quantum Meruit acts as a remedy for breach of contract and it is an exception to the rule of breach of contract. The remedy as provided by the decree of Quantum Meruit is only available for the work being done.

Essentials of an action of Quantum Meruit

To avail the remedies of breach of contract certain elements should be taken into consideration. Firstly, either party to the contract should make a breach of contract and stop the other party from performing its obligations. Secondly, either party to the contract who has performed a part of it and is injured because of the non-performance of the other party is duly discharged from the obligation to perform as he has performed his part of the contract and can bring an action against the other party who has breached the contract for compensation.

Principles of the decree of Quantum Meruit

When under some technical circumstances a contract is held invalid the decree of Quantum Meruit is applied. In quantum Meruit a person can ask for compensation for the work done and the person for whom the work or services are to be provided has to pay reasonably for the work done or services provided.

In a case where the person who does the work renders the services under a contract, if no exact price was fixed between the parties then a reasonable amount is to be paid for the expense of the labour and the services rendered.

3. Specific performance and injunction

• The Specific Relief Act 1963 contains the provision of specific performance. The Provisions of Specific Relief Act 1963 was introduced in the ninth law commission of India.
• The provisions of Specific performance come into use when the damages provided for the breach of contract do not satisfy the party who has sustained damages then in such a case the aggrieved party can ask for specific performance under the Specific Relief Act 1963.
• Specific Performance of a contract means performing the contract as per the terms and conditions agreed to between the parties to it, rather than payment of damages or compensation for the non-performance of the contract.
• Specific performance under the Specific Relief Act 1963 means the promises and obligations that were decided in the contract are bound for the parties to follow rather than paying for the damages as compensation for the aggrieved party. As sometimes the loss incurred by the injured party cannot be fulfilled by only mere payment of damages or compensation.

Conditions under which the specific performance is enforceable

According to Section 10 of the Specific Relief Act 1963, there are some conditions under which the remedy of specific performance is enforceable in a breach of contract. Here are the conditions:

1.When there is no amount ascertained for actual damage sustained by the aggrieved party to a contract- Such a situation usually occurs when the aggrieved party or the party who has sustained loss fails to determine the actual monetary amount that has to be compensated for the loss or injury faced due to the breach of Contract.

2. When the compensation provided is not an adequate relief for the aggrieved party in a breach of contract- There are circumstances when the compensation or the relief that is provided does not satisfy the aggrieved party’s loss incurred. Here are the circumstances under which such compensation does not fulfil the loss faced by the party who has suffered the loss.

• In matters when the subject of the contract is of immovable property.

• In matters when the subject of the contract is moveable property.

• In cases where the goods or property in a contract are not an ordinary article of commerce

• In cases when the article on which the contract is based is of special value to the aggrieved party

• In matters when the goods on which the contract is based are not easily accessible in the market

In the case of Ram Karan v. Govind Lal

In this case, an agreement was made between the seller and the buyer on the sale of agricultural land. The buyer has paid the full amount of money that has been decided on the contract to the seller. However, when the time arrived for the execution of the sale deed the seller refused to sell the agricultural land as promised in the contract. On this, the buyer brought an action against the seller under the provisions of specific performance of the contract.

The court in this case held that paying money to the buyer by the seller would not be an adequate relief and the court ordered the seller to execute the sale deed as promised under the Specific Relief Act 1963.

Injunction as a remedy in breach of contract

An injunction is a relief to the aggrieved party on breach of contract under which the court orders the other party from doing something which it shouldn’t do according to the law.

The court has the discretionary power to grant injunctions whether the injunction is temporary or perpetual. The court in such matters acts according to the principles of justice, equity and good conscience.

Types of Injunction

1. Temporary Injunction

• The meaning of temporary injunctions is to stop a party from doing something for a specified period, or for some time until the court decides whether the acts must be done or not to be done. Such a power is given to the court by the Code of Civil Procedure 1908
• Temporary injunctions are provisional types of injunctions which means it is only for a short period. Temporary Injunctions are for a temporary period and do not conclude the matter.

One example of a temporary injunction is to preserve a sale of a property until the final hearing of the case.

2. Perpetual Injunction

The remedy of perpetual injunction is only granted when a decree is made in the court and hearing upon the defendant perpetually enjoying the right of a property or for the commission of an act which is contrary to the rights of the plaintiff.

3. Prohibitory Injunction

Section 38 deals with a prohibitory injunction, the prohibitory injunction prohibits or forbids from performing any act. The remedy of prohibitory injunction is used to prevent the breach of the right of the plaintiff. Prohibitory injunctions are issued to prevent a breach of the obligations of a plaintiff.

4. Mandatory injunction

Section 39 deals with mandatory injunctions according to which the compulsory injunction is issued by the courts to prevent a breach of the obligation of a plaintiff, a mandatory injunction is bound to be followed. The court uses its discretionary powers to compel and make it compulsory to perform certain acts.

Conclusion

When both parties agree to the terms and conditions and promises made in a mutually agreed agreement the contract takes effect. The promises made in a contract are bound for the parties to follow as a valid contract is enforceable by law. When either party to the contract fails to perform or refuses to perform the promises made in a contract, the contract's breach occurs. This article provides the remedies for the breach of contract.