Unit IV — Remedies for Breach & Quasi Contracts

“The damages… should be such as may fairly and reasonably be considered as arising naturally… or such as may reasonably be supposed to have been in the contemplation of both parties.” — Hadley v. Baxendale (1854)

Remedies for Breach

On a breach the aggrieved party may: (1) rescind the contract (Ss.39/75), (2) sue for damages (S.73 — the principal remedy), (3) seek specific performance (Specific Relief Act), (4) obtain an injunction, or (5) claim on a quantum meruit for work already done.

Damages — Section 73

flowchart TD
    A["Damages — S.73"]:::root
    A --> B["General (ordinary)<br/>loss naturally arising —<br/>first limb"]:::leaf
    A --> C["Special<br/>loss from special<br/>circumstances KNOWN to<br/>both — second limb"]:::leaf
    A --> D["Nominal — token, for a<br/>right infringed without loss"]:::leaf
    A --> E["Remote & indirect loss<br/>NOT recoverable"]:::no
    A --> F["Duty to MITIGATE<br/>the loss"]:::leaf

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Section 73 is the master section: compensation is recoverable for loss naturally arising in the usual course (general damages) or which the parties knew, when contracting, to be likely to result (special damages); remote and indirect loss is excluded. The injured party must mitigate his loss. Kinds: ordinary, special, nominal (token, for a right infringed without real loss), and exemplary (rare in contract — e.g. wrongful dishonour of a trader’s cheque, breach of promise to marry).

Liquidated Damages vs Penalty — Section 74

Where the contract names a sum payable on breach, English law agonises over whether it is a genuine pre-estimate (liquidated damages, recoverable) or a “penalty” (not). Indian law cut the knot: under Section 74, the court awards reasonable compensation not exceeding the named sum, whatever the contract calls it — the named figure is merely a cap (Fateh Chand v. Balkishan Das; ONGC v. Saw Pipes).

Remoteness & Quasi Contracts

Remoteness (S.73 + Hadley v. Baxendale): the two limbs of S.73 map exactly onto Hadley — recoverable loss is that which is reasonably foreseeable at the time of contracting (refined in Victoria Laundry v. Newman, 1949); Madras Railway v. Govinda Rau denied special loss where the special purpose was not communicated. Quasi contracts (Ss.68–72) rest on unjust enrichment — obligations the law imposes though there is no actual agreement: necessaries supplied (S.68), payment by an interested person (S.69), benefit of a non-gratuitous act (S.70), finder of goods (S.71), and money paid by mistake or coercion (S.72).

✏️ Sample Solved Problem (IRAC Method)

Problem: A delivers, by mistake, a packet of goods at B’s house; B uses/consumes them and then refuses to pay. Can A recover their value?

I — Issue

Whether a person who enjoys the benefit of another’s non-gratuitous act or goods, delivered by mistake, must pay for them though there was no contract.

R — Rule

Section 70 (quasi-contract): where a person lawfully does something for another, or delivers anything to him, not intending to do so gratuitously, and the other enjoys the benefit, the latter is bound to compensate the former or restore the thing.
The doctrine rests on unjust enrichment — no one should be enriched at another’s expense.

A — Analysis

The decoy is the absence of any contract between A and B — B never agreed to buy the goods, so a claim “on the contract” would fail. But Section 70 does not need a contract: A delivered the goods lawfully and not as a gift, and B, instead of refusing or returning them, chose to use/consume them. Having knowingly taken the benefit of goods he knew were not a gift, B cannot keep them for nothing — that would be unjust enrichment. (Had B simply left the goods untouched, no liability would arise, since acceptance of the benefit is essential to S.70.)

C — Conclusion

A can recover the value of the goods from B under Section 70: B, having enjoyed the benefit of A’s non-gratuitous delivery, must compensate A — a quasi-contractual obligation founded on unjust enrichment.

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