What Is Breach Of Contract

Breach of contract might be either actual or anticipated. In the event of a breach of contract, the affected party can seek damages from the court by ordering the other party to perform as agreed. A breach of contract occurs when one of the parties fails to meet these responsibilities. Remedies for breach of contract include suing for damages, suing for specific performance, terminating the contract, preventing the other party from doing something, and suing for quantum meruit (compensation for labor done before the breach).

What is Breach of Contract

A breach of contract occurs when one of the two or more parties breaks the terms of a contract between them. This includes when a contractual commitment is not met on time—for example, when you are late with a rent payment—or when it is not met at all, such as when a renter vacates their flat owing six months’ rent.

The initial contract may provide a procedure for dealing with a violation of the contract.  If the consequences for a specific violation are not specified in the contract, the parties may resolve the matter among themselves, which could result in a new contract, adjudication, or another sort of resolution.

Legal Provisions:

• Section 73 of the Indian Contract Act, of 1872 states that when a contract is broken, the party who suffers as a result of the breach is entitled to compensation from the party who broke the contract for any loss or damage caused to him that naturally arose in the normal course of things from the breach, or that the parties knew, when they made the contract, would result from the breach
• No compensation will be provided for any distant or indirect loss or damage incurred as a result of the breach. It imposes a statutory right upon a party to get compensation from a person who has incurred a statutory responsibility to pay compensation in the event of default, even if there is no contract to pay compensation. It explains that the options available for resolving the discomfort produced by the contract’s non-performance must be considered when assessing the damage or loss for breach of contract.
• Section 74 of the above-mentioned Act states that the contracting parties may agree at the time of signing that in the event of a breach, the party in default must pay a set quantity of money to the other party, or they may agree that in the event of a breach by one party, any cash paid by him will be forfeited. If this amount is a genuine estimate of the damage that will result from the breach, it is referred to as ‘liquidated damages’.If it is not a genuine loss estimate, but rather an amount meant to assure contract performance, it may be referred to as a ‘penalty’.
• Section 75 of the above-mentioned Act states that a person who legitimately dwells in the contract is entitled to compensation for any damages incurred as a result of the contract’s non-fulfillment. A contracting party has the right to withdraw the contract under the conditions outlined in Sections 39, 53, 55, 64, and 65 of the Contract Act. The claim for compensation under Section 75 is maintainable where the right of repudiation of the contract has been invoked under any of the Contract Act’s Sections 39, 53, 54, and 55 as held in Mirza Javed Murtaza v. UP Financial Corpn, Kanpur, AIR 1983

Remedies for contract breaches

• Suit for damages: The party may seek compensation for any loss or damage resulting from the breach of contract. The most common remedy accessible to the harmed party is to seek damages. Damages can be regular, extraordinary, exemplary, nominal, delay-related, or pre-fixed.
• Suitable for specific performances: When compensation for the damage is insufficient to meet the loss caused by a breach of contract, we might seek judicial intervention to compel them to perform as agreed.
• Eliminate the Contract: When a contract is breached, the promisee has the right to stop performing and seek recompense from the promiser.
• Contract cancellation: The promise prevents the party from acting until the case is dismissed.
• Suit for quantum meruit: suing to recover the amount of money owed to the aggrieved party for work completed before the breach of contract.

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