Breach of Contract Damages

There are various remedies available to a business provider in the event of a breach of contract. Though the main remedy is damages, but in certain situations, equitable remedies are also available to him.

Under the provisions of the Contract Act all unliquidated damages are assessed by the court and are provided to compensate the innocent party for any losses incurred as a result of a breach of contract. However, where loss can not be proved, the innocent party will only be entitled to claim nominal damages as it was held in Surrey CC v Bredero Homes (1993). Unliquidated damages are not a means to punish the other party and are also not a way to recover any gain made by the defendant as a result of a breach. Loss can be of two main types: Expectation Loss and Reliance Loss.

Expectation Loss which is also known as loss of bargain is calculated by the court. This is the traditional basis upon which damages are assessed and is designed to put the claimant in the same position they would have been had the contract had been performed. The limitations of expectation are firstly remoteness of damage, where a claimant’s losses are too remote, damages can not be recovered. They must be “within the reasonable contemplation” of the parties. Second is the type of loss, pecuniary loss is the usual ground upon which damages are awarded for breach of contract. Thirdly mitigation, where the claimant is under a duty to mitigate their loss. Lastly causation where breach of contract which occurs must have caused and preceded the loss.

Reliance loss also known as wasted expenditure loss, arises where the seller has wasted expenditure in preparation of or partial performance of the contract.

The business provider can also claim restitution where he has conferred a benefit on the consumer in performing their contractual duties and wants to claim that benefit back. An example of this is where the claimant has paid in advance for goods which have not been delivered .C and P Haulage v Middleton (1983).

Liquidated damages

The remedy to claim liquidated damages is also available to the parties to contract. This refers to damages set by the parties themselves where they decide upon a fixed sum being payable in the event of a breach of contract. However, where is it not a genuine pre-estimate it will be regarded as a ‘penalty’ which will not be enforced by the court. Dunlop Pneumatic Tyres Ltd v New garage and Motor Co. (1915) lays down guidelines to distinguish between liquidated damages and penalties.

Apart from this, there are two types of equitable remedies such as Specific Performance, where the court orders the defendant to fulfil their contractual obligations. And Injunctions where the court orders the other party to do or not to do a certain act.

Under the Sale of Goods Act 1979 S. 49 the seller may maintain an action against buyer for the price of the goods, whereas u/s 50 (1) where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may maintain an action against him for damages for non-acceptance. Section 51 says that where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may maintain an action against the seller for damages for non-delivery whereas in case of breach he may file a suit for specific performance u/s 52 of the Act. It is also pertinent to mention here that u/s 53(1) where there is a breach of warranty by the seller, or where the buyer elects (or is compelled) to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods; but he may either set up against the seller the breach of warranty in diminution or extinction of the price, or maintain an action against the seller for damages for the breach of warranty.