When a party fails to fulfill their obligations under the contract.
Remedies enable the aggrieved party to seek reasonable damages or specific enforcement of the contract. Below is a list of remedies:
Rescission of Contract
The innocent party is able to terminate the contract and refrain from their own performance. Under Section 65 of the Indian Contract Act, they must refund any accrued benefits, and under Section 75, they are entitled to sue for compensation or damages.
Sue for Damages
Section 73 allows the party in interest to recover compensation for loss caused due to the breach. Damages may be:
- Liquidated Damages: Amount to be paid on breach as agreed.
- Unliquidated Damages: Amount decided by the court based on the loss.
Sue for Specific Performance
The court can order the party in default to do what they promised in the agreement, rather than to pay money damages. For example, if a party does not want to sell property, the court can compel the party to sell.
Injunction
An injunction is a judicial order that forbids a party from acting. It can either enjoin a party from doing an act (prohibitory injunction) or stop an unlawful act (mandatory injunction).
Quantum Meruit
If a party is unable to perform the contract because the other party has defaulted, they are entitled to claim quantum meruit, or restitution for services rendered, or an equitable amount for work done.
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