Breach of Contract and Its remedies

Breach of Contract and Its remedies

by sangslegal.com

What is a breach of contract  and what are the available remedies for the inflicted party in a breach of contract situation?

Contracts hold importance only when they are adhered to. If a contracted party fails to fulfill their contractual obligation, the contract loses its significance. Hence, it is mandatory for all the involved parties to fulfill the agreed-upon terms to maintain the contract's integrity. Should any party fail to perform their duties, they may be held accountable for a breach of contract.

What remedies does the inflicted party have in the event of a contract breach?

If one of the contracted parties doesn't fulfill its obligations, they would be defaulting, thus breaching the contract. In this case, the inflicted party has certain remedies available under Section 73 of the Indian Contract Act.

1. Right to file a lawsuit: The inflicted party's first course of action can be to file suit against the defaulting party, seeking compensation or damages.
2. Right to claim compensation: The inflicted party, given the contract breach, is entitled to seek compensation.

3. 3. Right to Enforce Penalties:
   Upon signing a contract, the involved parties can reach an agreement to enforce penalties on anyone who breaches the contract. The party burdened by the contract breach can demand the agreed-upon penalty from the defaulting party.
   4. Right to Recover Interest:
   In the event of a contract breach, the affected party has the right to claim not only compensation but also any relevant interest from the party at fault.
   5. Right to Demand Specific Performance:
   The disturbed party can institute a lawsuit for the specific performance of the contract against the defaulting party. This type of suit is typically lodged when it is impractical to quantify financial loss, if compensation is insufficient, or if compensation cannot be received at all.
   6. Right to Procure Injunction:
   Any party involved in a contract has an entitlement to seek an injunction against the other party to carry out the agreed-upon performance stipulated in the contract. This usually happens when a contracting party is unwilling to fulfill their part of the agreement.

4. Section 73 of the Indian Contract Act 1872 further stipulates that when a contract is breached, the injured party has the right to seek compensation from the violating party. The remedy sought should cover any loss or damage naturally ensuing from the breach, which was either reasonably foreseeable during contract execution or anticipated due to the violation of the agreement.