Unit 5 - Breach of Contract & its remedies

• Breach of contract


  Failure of a party to perform his or her obligations under a contract
• Actual breach of contract

  Breach of contract committed at the time when the performance of the contract is due or during the performance of the contract
• Anticipatory breach of contract

  Breach of contract that occurs when a party repudiates the contract before the time fixed for performance
• Remedies for breach of contract

  • Suit for damages
  • Rescission
  • Quantum meruit
  • Suit for specific performance
  • Suit for injunction
• Ordinary damages


  Damages that naturally arise in the usual course of things from the breach, measured by the difference between the contract price and the market price at the date of the breach
• Special damages


  Damages arising from the special circumstances of the case, which can be claimed only if those circumstances were brought to the notice of the other party at the time of making the contract
• Exemplary damages


  Damages awarded to punish the defendant, such as in cases of breach of promise to marry or wrongful dishonor by a bank of its customer's cheque
• Nominal damages


  Damages awarded where the plaintiff has a right to establish the breach of contract, but has not suffered any real damage
• Liquidated damages


  A fixed sum agreed upon in the contract as the amount payable in case of breach, representing a genuine pre-estimate of the probable loss
• Penalty


  A sum named in the contract which is disproportionate to the actual loss and is intended to punish the party in breach
• Rescission of contract


  When a contract is broken by one party, the other party may rescind the contract, becoming free from all obligations and entitled to compensation for any damages suffered
• Quantum meruit


  The amount of money earned or the value of the work done, which a party may claim in certain cases where the contract is not fully performed
• Suit for specific performance

  The court may, in its discretion, order the party in breach to perform the contract according to its terms, where damages are not an adequate remedy
• Suit for injunction


  The court may restrain a party from doing what he has promised not to do under the contract