Breach of Contract Claims

When one party fails to fulfill their obligations under a contract, it results in a breach of contract. In India, the Indian Contract Act, 1872, governs the enforcement and implications of such breaches. Breach of contract can be categorized into two types: actual breach and anticipatory breach. An actual breach occurs when a party refuses to perform their duty when the performance is due. Anticipatory breach happens when a party indicates in advance that they will not be performing their contractual duties.

The remedies for breach of contract under Indian law include:

  • Compensation for Loss or Damage Caused by Breach: The default remedy involves compensating the non-breaching party for any loss or damage caused directly and naturally in the ordinary course of events.
  • Liquidated Damages and Penalty: The contract itself may specify a sum to be paid in case of breach, known as liquidated damages, or a penalty. The court has the power to enforce the payment of liquidated damages or reduce the penalty to a reasonable amount.

Specific Performance

Specific performance is a remedy that compels a party to perform their obligations under the contract. This remedy is exceptional and granted under the Specific Relief Act, 1963, when mere compensation is not adequate to address the harm caused by the breach. Specific performance may be ordered when:

  • The act to be performed is such that compensation in money for its non-performance would not afford adequate relief.
  • The contract involves a transfer or sale of property, and the property has a unique value or interest to the party seeking the remedy.

It’s important to note that specific performance is not granted in cases where performing the contract involves personal qualifications or is dependent on the personal volition of the parties.

Interpretation of Contract Terms

The interpretation of contract terms involves determining the meaning and implications of the language used in a contract. Indian courts adopt a principle of interpretation that seeks to ascertain the intention of the parties at the time of contract formation. The process involves:

  • Literal Interpretation: If the terms are clear and unambiguous, they are interpreted in their literal sense.
  • Contextual Interpretation: The courts consider the context and the purpose of the contract to resolve any ambiguities.
  • Precedents and Principles: Indian courts also rely on established precedents and principles of contractual interpretation, such as the contra proferentem rule, which dictates that any ambiguity in the contract terms is construed against the party who drafted the contract.