What are the remedies available for breach of contract?

Answer By law4u team

In Indian law, when a breach of contract occurs, the non-breaching party has several legal remedies available to seek redress. These remedies are governed primarily by the Indian Contract Act, 1872, and now interpreted alongside current judicial trends and updated procedural laws like the Bharatiya Nyaya Sanhita (BNS), 2023 and Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 where relevant for civil procedure and enforcement. Below are the main remedies for breach of contract in India: 1. Damages (Compensation) The most common remedy is monetary compensation for loss caused by the breach. Types of damages include: Compensatory (Ordinary) Damages: For direct loss suffered due to breach (Section 73, Indian Contract Act). Consequential (Special) Damages: For indirect losses, only if foreseeable at the time of contract. Liquidated Damages: Pre-agreed sum in the contract itself, awarded unless it’s found to be a penalty. Nominal Damages: Small amount when legal right is breached but no real loss occurs. Exemplary (Punitive) Damages: Rare in contract law; granted only in special circumstances (e.g. breach of trust, fraud). > Example: If a supplier fails to deliver goods on time and the buyer loses a client, the buyer may claim compensation for that loss—if it was foreseeable. 2. Specific Performance Under the Specific Relief Act, 1963, the court may order the breaching party to perform their exact contractual obligations. Granted when damages are not adequate relief (e.g., sale of unique property, rare goods). The remedy is discretionary, not automatic. Courts examine readiness and willingness of the aggrieved party to perform their part. > Example: In a property sale, if the seller refuses to transfer the land after accepting payment, the buyer may seek specific performance. 3. Injunction An injunction is a court order directing a party to do or not to do something. Types: Prohibitory Injunction: Stops a party from doing something (e.g., disclosing trade secrets). Mandatory Injunction: Compels a party to perform a specific act. Granted under the Specific Relief Act where necessary to prevent irreparable harm and when damages are not sufficient remedy. 4. Rescission of Contract The aggrieved party may seek to rescind (cancel) the contract entirely, relieving both parties of their obligations. Available where the contract is voidable (e.g. entered under misrepresentation, fraud, coercion). Also allowed when one party refuses to perform or is incapable of performing their obligations. After rescission, the court may also order restitution, i.e., return of benefits already transferred. 5. Restitution Restitution means restoring the injured party to the position they were in before the contract. Applied when a contract is void or voidable, or when it’s rescinded. Covered under Section 65 of the Indian Contract Act. > Example: If an advance payment was made under a void contract, the payer can demand a refund. 6. Quantum Meruit This remedy allows a person to claim payment for the part of the work already done, when the contract is terminated or breached midway. Based on the principle: “as much as earned” or “as much as deserved”. Useful in partially performed contracts or where the other party has benefited despite the breach. > Example: A contractor partially completes construction before the client wrongfully terminates the contract. The contractor can claim payment for the completed work. 7. Suit for Injunction + Damages (Combined Remedies) In appropriate cases, multiple remedies can be pursued together: Injunction + damages Rescission + restitution Specific performance + damages for delay Courts may allow composite reliefs depending on the facts and equity involved. Procedural Remedies (BNSS 2023 Update) While contract enforcement is a civil matter, the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) affects procedure: Civil suits must be filed in proper jurisdiction. Interim reliefs like temporary injunctions can be sought. Use of evidence rules under the Bharatiya Sakshya Adhiniyam, 2023 (BSA) is applicable in proving breach and damages. Limitation Period As per the Limitation Act, 1963: A suit for breach of contract must be filed within 3 years from the date of breach. Summary The main remedies for breach of contract in Indian law are: 1. Damages 2. Specific performance 3. Injunction 4. Rescission 5. Restitution 6. Quantum meruit 7. Composite remedies All these are subject to judicial discretion, facts of the case, and procedural compliance under current laws.

Answer By Ayantika Mondal

Dear Client, Under the Indian Contract Act of 1872 which of the remedies put forth for breach of contract is to make good the loss of the party which brought the suit or to enforce the agreement, includes damages, specific performance, injunction, rescission, quantum meruit, and restitution. These remedies are made available by civil courts and which one is chosen depends on the type of breach (e.g. actual or anticipatory) and the character of the contract with the aim to restore the non breaching party to what they would have been had the contract been performed. Types of Remedies Explained These remedies are nationwide including in Madhya Pradesh and also apply to business contracts as is the case with your SaaS development work (e.g. AdsFlo vendor agreements). Damages (Section 73): Monetary redress for damages caused by the breach. Compensatory damages: Cover loss of funds from non delivery. Consequential damages: For out of pocket damages like lost profits. Nominal damages: Small token sum if no great loss happened. Liquidated damages: Pre agreed fixed amount in the contract for loss. Exemplary (punitive) damages: Rarely do we see that which is of great transgression punished. Remote and indirect losses will not be covered unless they could be foreseen at the time of contract. Specific Performance (Specific Relief Act, 1963): Court order which forces the breaching party to perform their obligations, this is used when damages are insufficient (for example unique products or property). Not applicable to personal service agreements. Injunction (Section 42): Court rule which bars the breaching party from performing certain acts like that of a non-compete violation in which to stop present damage. May be temporary or permanent. Rescission (Section 27): Cancellation of the contract, return of all parties to what they were before the contract took place; also the hurt party may claim for damages. Per Section 65 benefits received must be returned. Quantum Meruit (Section 70): Payment of what is earned for work performed or services that are put forth if the contract is void or not fully in place, based on what is fair (for instance if a developer puts in partial build of software before the breach). Restitution (Section 65): Return of the remedies provided by the voided contract to avoid injustice. To that end file a civil suit in the proper forum (for instance in the district court in Bhopal for small claims). Time is of the essence as per the Limitation Act of 1963 which sets a 3 year window from the date of breach. In the case of complex issues like software contracts it is advised to consult a lawyer to determine the best remedy and what evidence is required. I hope this answer helps you resolve your queries. If you have any doubts regarding this please contact our law firm. Thank you!