Question 5 OR (a)
Rules for claiming damages for breach of contract
9 marks
- Time to write
- About 18 minutes
- Topic
- Breach and remedies
- Notes
- Crux notes
Question
Question 5 OR (a) · 9 marks(OR)
- Giving suitable examples, discuss the rules for claiming damages for breach of contract.
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- suitable examplesExamples are asked for: one short example with each point.
Write it in this order
- Read; underline the asks; jot your points 1 min
- 1 Section 73 2 marks 2 min
- 2 Rules: natural and contemplated loss, remoteness, minimising loss 4 marks 9 min
- 3 Kinds of damages, with an example 2 marks 4 min
- 4 Conclusion 1 mark 1 min
- Check: every ask answered, key terms underlined 1 min
Easy marks
- Section 73 (step 1, 2 marks): state the rule and its section exactly. It earns its marks before you apply it to the facts.
Short on time? Keep step 1 short. Trim steps 2 and 3 evenly rather than skip one: each is capped at its own marks. End with step 4 in a line or two.
Try it first. About 18 minutes for 9 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Rule (s. 73). The party injured by a breach of contract can recover from the party in breach for two kinds of loss: loss that flows from the breach in the ordinary way, and loss that both parties, when they contracted, foresaw as a likely result of such a breach. Nothing is recovered for loss that is remote or indirect.
1The contract itself names the sum: it goes down on paper beside the money bag.
Liquidated damagesLiquidated damages are a sum the parties themselves name in the contract as payable on breach
2The flour never came, the stall stood closed—the usual, natural loss of a broken promise.
Ordinary (general) damagesFor loss arising naturally in the usual course of things from the breach.
3The judge allows the wedding orders too—but only because they were told of them at signing.
Special damagesFor loss arising from special circumstances communicated to the other party at the time of the contract
4A breach proved, no loss shown: the court presses a single token coin into his palm.
Nominal damagesA token sum where a breach is proved but no real loss is suffered.
- Natural loss. The ordinary, to-be-expected consequences of the breach are always recoverable (s. 73).
- Contemplated loss. A loss that arises only because of some special circumstance is recoverable only if the party in breach was told of that circumstance when the contract was made. (This is the rule of Hadley v. Baxendale. A courier who delivers a laptop two days late answers for the ordinary cost of the delay, but not for a valuable order the sender lost because of it, if the sender never told the courier that the order depended on prompt delivery.)
- No remote or indirect loss. Loss too far removed from the breach is not compensated. (Our illustration: a contractor finishes a shop's renovation a month late: the owner recovers the month's rent he lost, but not the cost of a family holiday he cancelled to supervise the delayed work, which is too remote.)
- Duty to minimise loss. The party who suffers from the breach must take reasonable steps to keep the loss down.
- Compensation, not punishment. Damages are meant to make good the loss, not to punish the party in breach; as far as money can, they leave the injured party where performance would have left him.
Pre-fixed sum (s. 74). Where the contract names a sum payable on breach, or contains any other penalty term, the injured party recovers reasonable compensation, whether or not he proves actual loss, but never more than the sum named. Example: if a lease fixes ₹1,00,000 as payable if the tenant leaves before the agreed term, and the landlord's loss from the early exit is shown to be ₹40,000, the court awards reasonable compensation, which here is the ₹40,000 actually lost, not the full ₹1,00,000.
Kinds of damages, by what they compensate:
- for no real loss at all, where a right has been infringed: nominal damages;
- for the loss that flows naturally from the breach: ordinary (general) damages, including loss from deterioration while performance was delayed;
- for loss from special circumstances known when contracting: special damages;
- by way of punishment, in exceptional cases only: vindictive or exemplary damages;
- for a breach where the parties agreed the sum in advance: pre-fixed (liquidated) damages under s. 74.
Conclusion. The injured party recovers the natural and the contemplated loss caused by the breach, less what he could reasonably have avoided, and nothing for remote loss.
Where the 9 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Section 73 | 2 |
| 2 | Rules: natural and contemplated loss, remoteness, minimising loss | 4 |
| 3 | Kinds of damages, with an example | 2 |
| 4 | Conclusion | 1 |
| Total | 9 |
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