CONSEQUENCES OF BREACH OF CONTRACT
A contract is a legal bond formed between two parties to earn a profit. Parties believe that the contract should be carried out as per the conditions laid down in the agreement. If any party either fails to perform its part of the contract or breaches the contract and cause harm to the other party then the party can claim damages under Contracts law.
The most common type of breach of contract are:
Defective Performance: In this type of performance, one party partly fulfil its obligations but not up to the standard of the agreement.
Delayed Performance: In this type of performance, one party fails to perform its part of obligations within the decided time frame.
Complete Non-Performance: In this type of performance, the party completely fails to perform the contract.
In the case of Breach of Contract, the innocent party is entitled to the monetary damages for the losses it has beard due to the non-performance of the contract by the other party. If the situations become worsen then the innocent party can even terminate the contract. In certain cases, a party can also opt for the specific performance of the contract.
Section 74, 75, 76 of the Indian Contract Act talks about the compensation to be received by the aggrieved party in the case of default.
Types of damages:
In certain contracts, there is no provision for any liquidated compensation in the case of breach of contract. In such situations, the court decides the compensation to be given as the remedy to the innocent party. There are certain types of damages which the court ponder upon before issuing the amount of compensation. They are as follows:
Nominal Damages: Nominal damages are the small amount of money given to the plaintiff. when the party fails to prove that there has been some actual loss due to the breach of the contract then nominal damages are allotted to the party.
Substantial Damages: When the party proves that there has been actual loss due to the breach of contract but it’s not possible to calculate the amount then the court issues substantial damages.
Aggravated Damages: When the previous damages exceed due to the malafide conduct of the defendant, the court issues aggravated damages to provide adequate compensation to the plaintiff.
Exemplary Damages: Exemplary damages are granted when the court wants to set an example in front of the society that such malice practices will not be tolerated at any cost. Such damages are not to take any benefit out of the defendant.
General Damages: When the breach of contract gets proven then the party can claim for the general damages. Such damages arise from the general course of action.
Special Damages: The court issues special damages when the conditions arise out of the circumstances anticipated by the parties at the time of signing the contract.