Chapter 4

 When one party breaks the contract by refusing to perform his promise, the breach of contract take place. The following remedies are available to the aggrieved party against the guilty party. 1.Suit for Rescission: Rescission means cancellation of contract. When one of the parties breaks the contract, the other party is released from his obligation under the contract.

 If the aggrieved party want to sue the guilty party for damages for breach of contract, he must sue for rescission of the contract. When the court grant rescission, the aggrieved party is free from his obligation and become entitled to compensation.  Example; A contracts to supply cement to B on 1 st June. B agrees to the price on the receipt of goods. A does not supply the cement on due date. B is discharged from the liability to pay and can claim for damages.

 The aggrieved party may sue for damages. Damages are monetary compensation allowed to the injured party for the loss suffered by him as a result of the breach of contract. In case of breach of contract the aggrieved party can claim the following damages.

 These are also called general damages. When a contract is broken, the aggrieved party can recover ordinary damages from the guilty party. Ordinary damages are usually assessed on the basis of actual loss.  Example: A contract to pay 100,000 to B on 10 June. A does not pay on that day. B as result is totally ruined. A is liable to pay B only the principal sum and interest on it.

 These damages arise under some special circumstances. These damages include indirect loss which may result due to breach of contract. The parties must be aware of the loss which may arise from the breach of contract. The notice to this effect must have been given to other party otherwise he is not responsible for special damages.  Example: A contract C to buy 1 ton of iron for 50,000. A also contracts to sell B, 1 ton for 60,000. A inform C about the purpose of this contract. C Fail to supply. As a result, A cannot supply to B. C is liable for the loss of profit which A would have earned from B.

 These damages are awarded to punish the guilty party for breach of contract. These are awarded in the following cases. 1. In case of breach of contract to marry, the amount of damages will depend upon the extent of injury to the feeling the party.

2. In case of dishonor of a cheque by a banker when there are sufficient fund to the credit of the customer.  Example: A make the payment to B by cheque. When B present the cheque to OS Bank, the cheque was bounced. A had sufficient money in the bank. Later A sued the bank for disgracing him in the public.

 When parties to a contract fix the amount of damages for the breach of contract at the time of formation of contract, such damages are called liquidated. If the actual loss is more than agreed amount, damages will be payable to the agreed amount.  Example: A contract to pay 20,000 as damages to B. If he fail to him 500,000 on given day. A fail to pay on that day. B can recover damages not exceeding 20,000.

 These are neither awarded to compensate the aggrieved party nor to punish the guilty. When the aggrieved party suffer no loss, the court may award nominal damages in recognition of his right.  Example: A promised to sell cement to B for 200 per bag. A does not supply. At the time of breach the market rate for cement is the same. B is entitled to nominal damages.

 The term quantum meruit means payment in proportion of the work done or responsible value of work done. Where a person has done some work under the contract and other party cancel the contract or an event happens, which makes the performance of the contract impossible; such party can claim remuneration for the work already done.  Example: B contract to built a 3 storey house for A. When one storey is complete, A stops B’s work. B can get compensation for the work done.

 Specific performance means the actual carrying out of the contract by a party. In some cases where the damages are not an adequate remedy the court may direct the guilty party to fulfill the contract. The aggrieved party can sue for specific performance in the following cases;  When compensation in money is not an adequate remedy( جبران كردن ).  Where it is difficult to calculate the actual damages.  Where compensation in money cannot be obtained.  Example: A agrees to sell his plot to C who agrees to buy to erect a mill. A commit breach. On the suit of C, A is directed by the court to perform the contract.

 Injunction is an order of a court restraining a person from doing something which he promised not to do. It is a mode of securing specific performance in the negative form.  Example: W agreed to sing at XYZ theatre and for no one else. Afterwards W contracted ABC to sing at another theatre and refused to sing for XYZ. Held, W could be restrained by injunction from singing for ABC.