Remedies against Breach of Contract

1. Introduction

Basic philosophy, which works behind a contract, is based on a Latin phrase, and this phrase states that agreement must be kept. Due to this admitted philosophy, it has been decided that valid contracts must be kept and must be performed. Therefore, breach of contract is not tolerated under law.

2. Remedies against Breach of Contract

Under laws of various states, it has been declared obligatory for both the parties to contract not only to keep contract, but also to perform it. Therefore, breach of contract is forbidden under these laws. However, aggrieved party has been given option to initiate legal proceedings against the breach of contract so as to avail remedy against such breach. Following remedies are available against breach of contract.

i. Specific Performance

When a party to contract refuses to fulfill his promise or obligation under contract, aggrieved party can invoke jurisdiction of court through specific performance so that the party in breach can be directed to fulfill his promise or obligation under the contract. In this way, remedy against breach of a contract can be availed through specific performance.

ii. Damages and Compensation

When a party to contract refuses to fulfill his promise or obligation under a contract, aggrieved party can seek compensation from the party in breach for any loss or damage, which has been done to the aggrieved party through breach of the contract. In this way, remedy against breach of a contract can be availed in the form of compensation. Here compensation means monetary compensation, and such compensation can be availed in the following three cases.

a. Compensation for loss or damage caused during usual course of thing from breach of contract

In case of breach of contract, aggrieved party can claim monetary compensation from the party in breach for any loss or damage, which naturally arises in usual course of things from such breach or which both the parties to contract knew at the time of making of contract that such loss or damage could happen due to breach of the contract.

b. Compensation for failure to discharge obligations resembling those created by contract

If an obligation, which resemble those obligations under contract, is incurred, but is not discharged, then aggrieved party to contract can claim monetary compensation against default of fulfilling such obligation.

c. Compensation for breach of contract where Financial Penalty has been decided against breach of contract

In case of breach of a contract, if financial penalty has already been decided against breach of contract, the aggrieved party can claim reasonable monetary compensation from the party in breach.

iii. Injunction

Another remedy against breach of a contract is injunction. As far as contract law is concerned, injunction legally means discretionary remedy through which a court forbids a party to contract for doing something which he promises not to do.

iv. Cancellation

If breach of contract is committed by a party to the contract, other party can revoke the contract. Other party can request court for cancellation of the contract, and a court can cancel a contract, when the contract is voidable at the option of this party.

Final Analysis

Finally it can be stated that a contract not only provides rights to its parties, but also creates some obligations for them. And every party is bound to fulfill him obligations. But if a party to contract fails to fulfill his obligations under contract, legal action can be initiated and remedy can also be availed against such party.

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