contract assignment final full

[Audio] 1 | P a g e Name: Misbah Ashraf Batch: 9 B.A LLB Registration: B.A.LLB/ 3- 20/ M005 Assignment: Law of Contract-II.

[Audio] 2 | P a g e Section 73 Compensation of loss and damages caused by breach of contract. When a contract has been broken, the party that suffers from such infringement is entitled to receive compensation for any loss or damage resulting from such infringement. Such compensation shall not be given for any remote and indirect loss or damage sustained as a result of the breach. Compensation for failure to discharge obligations similar to those created by the contract. If an obligation similar to what was created in the contract has not been discharged, any person who fails to discharge is entitled to receive the same compensation from the party in default as if that person had contracted to discharge it and had broken his contract. Compensation for loss or damage which naturally arose in the usual course of things from such breach Compensations to be recovered for loss or damage which the parties knew or which would have naturally arisen in the usual course, to be likely to result from the breach of it. EXPLANATION In estimating the loss or damage resulting from the breach of a contract, consideration must be given to the means that existed to remedy the inconvenience caused by the nonperformance of the contract. ILLUSTRATION 1. Mr. A contract to repair Mr. B's house in a certain way and receive the money in advance. Mr. A repairs the house, but not according to the contract. Mr. B is entitled to recover the cost of making the repairs conform to the contract from Mr. A. 2. Mr. X, the owner of a boat, contracts with Mr. Y to take a cargo of jute to Mirpur for sale at that place, starting on a given day. The boat does not start at the appointed.

[Audio] 3 | P a g e time because of some unavoidable cause, whereby the arrival of the cargo at Mirpur is delayed beyond the time it would have arrived if the boat had sailed under the contract. After that date, the price of jute falls and before the cargo arrives. The measure of the compensation payable to Mr. Y by Mr. X is the difference between the price Mr. Y could have obtained for the Mirpur cargo at the time it was delivered in due course and its market price at the time it actually arrived. 3. A, a builder, contracts to erect and finish a house by the first of January, in order that B may give possession of it at that time to C, to whom B has contracted to let it. A is informed of the contract between B and C. A builds the house so badly that, before the first of January, it falls down and has to be re-built by B, who, in consequence, loses the rent which he was to have received from C, and is obliged to make compensations to C for the breach of his contract. A must make compensation to B for the cost of rebuilding of the house, for the rent lost, and for the compensation made to C. (l) A, a builder, contracts to erect and finish a house by the first of January, in order that B may give possession of it at that time to C, to whom B has contracted to let it. A is informed of the contract between B and C. A builds the house so badly that, before the first of January, it falls down and has to be re-built by B, who, in consequence, loses the rent which he was to have received from C, and is obliged to make compensations to C for the breach of his contract. A must make compensation to B for the cost of rebuilding of the house, for the rent lost, and for the compensation made to C." 4. A contracts with B to make and deliver to B, by a fixed day, for a specified price, a certain piece of machinery. A does not deliver the piece of machinery, at the time specified, and, in consequence of this, B is obliged to procure another at a higher price than that which he was to have paid to A, and is prevented from performing a contract which B had made with a hired person at the time of his contract with A (but which had not been communicated to A), and is compelled to make compensation for breach of that contract. A must pay to B, by way of compensation, the difference between the contract price of the price of machinery and the sum paid by B for another, but not the sum paid by B to the third person by way of compensation. What are the different types of damages?.

[Audio] 4 | P a g e GENERAL AND SPECIAL DAMAGES: Difference between general and special damages are: GENERAL DAMAGES SPECIAL DAMAGES General damages refer to those damages which arose naturally during the normal course of the events. Special damages are those that do not, of course, arise from the breach of the defendant and can only be recovered if they were in the reasonable consideration of the parties at the time they made the contract. In relation to the pleadings, the complained of is presumed to be a natural and probable consequence with the result that the It refers to those losses that must be specifically pleaded and proven. In relation to proof, it refers to those losses, usually but not exclusively non-pecuniary, which in monetary terms are not capable of precise quantification. It refers to those losses that can be calculated financially. It represents the exact amount of pecuniary loss that the claimant proves to have suffered from the set of pleaded facts. NOMINAL DAMAGES: If the defendant is found liable for breach of contract, the plaintiff is entitled to nominal damages even if no actual damage is proven. Nominal damages are awarded if there is an infringement of a legal right and if it does not give the rise to any real damages, it gives the right to a verdict because of the infringement. In the following circumstances, nominal damages are awarded to the plaintiff:.

[Audio] 5 | P a g e  The defendant committed a technical breach and the plaintiff himself did not intend to execute the contract;  The complainant fails to prove the loss he may have suffered as a result of the contract breach;  He has suffered actual damage, not because of the defendant's wrongful act, but because of the complainants' own conduct or from an outside event;  The complainant may seek to establish the infringement of his legal rights without being concerned about the actual loss. Where there is no basis for determining the amount. The view that nominal damage does not connote a trifling amount is erroneous; nominal damage means a small sum of money. Nominal damages have been defined as a sum of money that can be spoken of, but which does not exist in terms of quantity. Where the loss is small and quantifiable, the damages awarded, although small, are not nominal damages. If the market rate on the date of the breach is not proven, the plaintiff shall be entitled to nominal damages. However, the fact that the buyer does not sustain any actual loss as a result of the seller's failure to deliver the goods is no reason to award the buyer nominal damage. SUBSTANTIAL DAMAGES: In cases where an offense is proven, many authorities may claim substantial damages even if it is not only difficult but also impossible to calculate the damages with certainty or accuracy. In all these cases, however, the extent of the breach has been established. There was a complete failure to perform the contract on one side. However, where the breach is partial and the extent of the failure is determined, only nominal damage is awarded. The plaintiff who cannot show that after the breach he would have had the contract performed, he is in a worse financial position, usually, recovering only nominal damages for breach of contract. Where a defendant refuses to accept goods sold or manufactured for him, the plaintiff sells them to a third party on the same terms as the defendant agreed and makes a similar profit, the plaintiff shall be entitled to nominal damages if the demand exceeds.

[Audio] 6 | P a g e the supply of similar goods; but if the supply exceeds the demand, the plaintiff shall be entitled to recover his loss of profit on the defendant's contract. AGGRAVATED AND EXEMPLARY DAMAGES: In certain circumstances, by taking into account the motives or behavior of the defendant, the court may award more than the normal measure of damages. Such damage may be: AGGRAVATED DAMAGES EXEMPLARY DAMAGES Aggravated damages that compensate a victim for mental distress or injured sensations in circumstances where the injury was caused or increased by the manner in which the defendant committed the wrong or the defendant's behavior following the wrong. Exemplary damages are intended to give the punishment to the defendant an example they are punitive and not intended to compensate the defendant for loss, but rather to punish the defendant. It is compensatory in nature. It is punitive in nature. Where the motives, conduct or manner of inflicting the injury on the defendant may have aggravated the damage to the plaintiff by injuring his proper feelings of dignity and pride, the damages awarded to compensate the plaintiff would be aggravated. These are awarded in tort, but not in a contract because the motives and conduct of the defendant are not to be taken into account when assessing damages and it is not to be awarded in respect of feelings of disappointment or injury; they are too remote. Thus, if an employee is wrongly dismissed from his job, the damages payable to him will not include compensation for the manner in which he is dismissed, for his injured feelings, or for the loss that he may suffer from the fact that the dismissal of himself makes it more difficult for him to obtain fresh employment. LIQUIDATED AND UNLIQUIDATED DAMAGES:.

[Audio] 7 | P a g e Damages are said to be liquidated once agreed and fixed by the parties. It is the sum agreed by the parties by contract as payable on the default of one of them, Section 73 applies to such damages. In all other cases, the court quantifies or assesses the damage or loss; such damages are unliquidated. The parties may only fix an amount as liquidated damages for specific types of a breach, then the party suffering from another type breach may sue for unliquidated damages resulting from such breach. Where, under the terms of the contract, the purchaser was entitled to claim damages at the agreed rate if the goods were not delivered before the fixed date and if they were not delivered within seven days of the fixed date, the purchaser was entitled to cancel the contract and pay guarantee amount to the bank, but the goods were delivered within the extended period. It was held that the buyer was only entitled to claim damages at the agreed rate and that the banking guarantee confiscation clause could not be invoked as the contract was not cancelled. What does loss or damage mean? THE WORD LOSS OR DAMAGE MEANS:  Harm to persons through physical injury, disabilities, loss of enjoyment, loss of comfort, inconvenience or disappointment, injured feelings, vexation, mental distress, loss of reputation.  Harm to property, viz. damage or destruction of property; and  Injury to an economic position which is the amount by which the plaintiff is worse off than he would have been performed, and would include loss of profits, expenses incurred, costs, damages paid to third parties, etc. CONSEQUENTIAL DAMAGE AND INCIDENTAL LOSS: Consequential damage or loss usually refers to pecuniary loss resulting from physical damage, such as loss of profit sustained due to fire damage in a factory. When used in the exemption clause in a contract, consequential damages refer to damages that can only be recovered under the second head in Hadley v Baxendale, i.e. the second branch of the section, and may also include recovery of profit and losses under the first branch..

[Audio] 8 | P a g e Another term incidental loss refers to the loss incurred by the complainant after he became aware of the breach and made to avoid the loss, i.e. the cost of buying or hitting a replacement or returning defective goods. HOW TO MEASURE THE DAMAGE CAUSED? The measure of damage or measure of damages is concerned with the legal principles governing recoverability; the principle of the remoteness of damage confines the recoverability of damages. Questions of quantum of damages are only concerned with the amount of damages to be awarded and are, therefore, different from the measure of damages; the latter involves consideration of the law. WHAT DOES THE REMOTENESS OF DAMAGES MEAN? The term remoteness of damages refers to the legal test used to determine which type of loss caused by contract breach can be compensated by awarding damages. It has been distinguished from the term measure of damages or quantification which refers to the method of assessing the money compensation for a particular consequence or loss which has been held to be not too remote. HOW TO TEST THE REMOTENESS? In deciding whether the claimed damages are too remote, the test is whether the damage is such that it must have been considered by the parties as a possible result of the breach. If it is, then it cannot be considered too remote. The damage shall be assessed on the basis of the natural and probable consequences of the breach. Actual knowledge must be demonstrated that mere impudence and carelessness is not knowledge. The defendant is only liable for reasonably foreseeable losses- those who would have reason to foresee the likelihood of future infringement if a normally prudent person in his place had this information when contracting. The remoteness of damage is a matter of fact, and the only guidance that the law can give is to lay down general principles..

[Audio] 9 | P a g e CASE LAW: The principle governing the remoteness of damages was elaborated in the landmark case of Hadley v. Baxendale. The rules stated in this case were that a party injured by a breach of contract could recover only those damages which were either to be considered "reasonably as arising naturally, i.e., according to the usual course of things" from the breach, or could reasonably have been considered by both parties at the time they entered into the contract as the likely result of the breach. This is the basis for understanding special damages. In this case, the Court acknowledged that the defendant's failure to send the crankshaft for repair was the only cause for the plaintiffs' mill to stop, resulting in loss of profits. An uncommonly known fact is that Section 73 is based on a case law, i.e. Hadley v. Baxendale ( 1854) 9 Ex. 354 The well-known rule in this case was stated by the Court as follows: EXPLAINATION: "Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be either such as may reasonably and fairly be considered as arising naturally, i.e. according to usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it." Section 73 deals with remote and indirect loss or damage It states that no compensation is payable for remote and indirect loss or damage arising out on account of breach of contract. The indirect loss cannot be said to arise on usual course of things. The aggrieved party can claim compensation for indirect loss or loss of profit, only where it is expressly made known to the other party or contemplated by.

[Audio] 10 | P a g e contract that breach of non-performance of the contract would result in some indirect loss or loss of profit to the party. The term remoteness of damage refers to the legal test used for deciding which type of loss caused by the breach of contract may be compensated by the award of damage. CASE LAW: In Madras Railway Company v. Govinda ( 1898) 21 Mad. 172, the Plaintiff, who was a tailor, delivered a sewing machine and some clothes to the defendant railway company, to be sent to a place where he expected to carry on his business in an upcoming festival. Due to mistakes made by the company's employees, the goods were delayed and were not delivered until some days after the festival was over. The plaintiff had not given any notice to the railway company that the goods were required to be delivered within a fixed time for any special purpose. On a suit by the plaintiff to recover a sum of his estimated profits, the Court held that the damages claimed were too remote. EXPLAINATION: Section 73 deals with breach of resembling contract It confers a statutory right upon a party to get compensation from a party who has incurred a statutory obligation to pay compensation in case default even though there may be no contract to pay compensation .The party in default is under obligation to pay compensation to the injured party as if there was a contract and has broken such contract. Section 73 deals with: mitigation of losses MITIGATION OF DAMAGES: It explains that the means which existed of remedying the inconvenience caused by the nonperformance of the contract must be considered while calculating the damage or loss for breach of the contract. In Murlidhar Chiranjilal v. Harish Chandra Dwarkadas ( 1962) 1 SCR 653, the Supreme Court of India has set out two principles on which damages are calculated in case of.

[Audio] 11 | P a g e breach of contract of sale of goods. The first is that the injured party has to be placed in as good a situation as if the contract has been per formed. He who has proved a breach of a bargain to supply what he has contracted to get, is to be placed so far as money can do it in as good a situation as if the contract has been performed. This is qualified by a second principle - the injured party is debarred from claiming any part of damages arising out of his neglect. The onus is on him to mitigate losses consequent to the breach of contract. The Supreme Court of India has decided that the principle of mitigation does not give any right to a party in breach of contract but it is a circumstance to be borne in mind in assessing damages. ( M. Lachia Setty & Sons Ltd v. Coffee Board Bangalore (AIR 1981 SC 162) It must be added that in the latter case, the Supreme Court has not taken into consideration its previous judgment and the explanation to section 73. However, Supreme Court judgments are binding unless set aside or modified by other Supreme Court Benches. In the circumstances, parties to the contract are required to mitigate their losses in case of breach. ...End….