Damages for Breach of Contract:
Compensatory Damages :
Compensatory damages are monetary damages that are awarded with the intent of compensating the non-breaching party for any losses suffered as a result of a contract breach. They are not designed to punish the breaching party, but merely make the party that was breached against “whole again,” as it is commonly phrased.
As an example, if a contract were signed in which Party A agreed to pay Party B $5,000 for consulting services, but Party A breached the contract by not then using the services and not paying, then Party B would be entitled to $5,000 in compensation. On the other hand, if Party B broke the contract and party A was forced to hire a different consultant for $6,000, Party A would be entitled to $1,000, that being the difference in the contract fee.
Liquidation Damages:
Liquidation damages are damages that are stated specifically in the contract. They can be put in a contract when damages are difficult to foresee, and an estimate is necessary for damages should there be a breach. Thus, such damages are agreed upon by both parties during the contract negotiation.
For instance, if Party A contracts Party B to build a new building that they need for use by a certain date, they could include a provision in the contract that Part B must pay $1,000 per day for every day longer it takes them to finish the building than the date stipulated in the contract.
Punitive Damages:
Punitive damages are damages designed to punish a breaching party and deter parties from committing breaches. Such damages are rarely awarded for contract breaches, however, although they may be awarded in some tort or fraud cases that overlap contract cases.
Nominal Damages:
Nominal damages are dispensed when the injured party did not suffer a monetary loss, but a judge wants to show that the injured party is in the right. Generally, nominal damages are very small in amount and are more symbolic in nature.
Ordinary or General Damages:
These are damages that stem from the ordinary, natural, and probable course of events in the breach of contract. For example, if Party A agreed to sell Party B grain at $20 per bag with the payment to be made at the time of deliver, but the market price rose to $25 per bag by the time of delivery and Party B as a result refused to sell for anything less than $25 per bag, Party A can then claim damages of $5 per bag.
Discharge of Contract:
When the rights and obligations arising out of a contract are extinguished, the contract is said to be discharged or terminated. A contract may be discharged by any of the following ways:
By performance – Actual or Attempted.1. Discharge by Performance
Performance of a contract is the most popular manner of discharge of a contract. The performance may be either Actual performance or attempted performance.
A. Actual performance:-When each party fulfils his obligations arising out of the contract within the time and in a manner prescribed, it is called the actual performance and the contract comes to an end.
B. Attempted performance or Tender:-When the promisor offers to perform his obligation, but is unable to do so because the promise does not accept the performance, it is called ” Attempted Performance” or “tender”. Thus tender is not actual performance but is only an offer to perform the obligation under the contract. A valid tender of performance is equivalent to performance.
2. Discharge by Mutual Consent or Agreement:
A contract is created by means of an agreement, it may also be discharged by another agreement between the same parties.-
A. Novation: “Novation occurs when a new contract is substituted for an existing contract, either between the same parties or between different parties, the consideration mutually being the discharge of the old contract.” If the parties are same, then small changes in the in the terms of contract is called “alteration” and not “Novation”. For being “Novation”, the changes must be of significant nature. Novation cannot be compulsory; it can only be with the mutual consent of all the parties.
B. Alteration:-It means that change of one or more of the material terms of a contract. A material alteration is one which alters the legal effect of the contract. E.g. change in the amount of money, change in the rate of interest etc.
3. Discharge by Subsequent or Supervening Impossibility or Illegality.
Impossibility at the time of contract If you contract for something impossible, the agreement is void abs-initio the promisor knows about the impossibility after using reasonable efforts, the promisor is bound to compensate the promisee for any loss he may suffer because of non performance of the promise, even if the agreement being void abs-initio Subsequent impossibility. Impossibility is found out after the contract is made, “A contract to do an act which, after making the contract, becomes impossible or unlawful, becomes void when the act becomes impossible or unlawful.”
Conditions for It…
The act should have become impossible.4. Discharge by lapse of time:
In some circumstances, the laps of time may also discharge a contacts, e.g. the period of limitation for simple contracts is three years the under limitation Act and therefore on default by a debtor, if the creditor does not file a suit of recovery against him within three years of default, the debt becomes time barred and the creditor will not get the help of the law. This in effect discharges the contract. Where times is of essence, if the contract is not performed on time, the contract comes to an end, and the party not at fault need not perform his obligation and may sue the other party for damages.
5. Discharge by operation of law:
A contract is discharged by operation of law in the following cases:- (A) Death: Sometimes a contract is of a person nature and involves personal skills, of promisor, of promisor, In such cases the contract is discharged on the death of the promisor. In such cases the contract is discharged on the death of the promisor.
6. Discharge by breach of contract: -
A contract is sometimes discharged, by its breach generally, Breach of contract means refused. Or future of any one party to perform his contractual obligation under the contract specifically a breach of contract occurs when a party to a contract does any of the other following things.
Fails or refuses to perform his obligation under the contract.Indemnity and guarantee control
The contract of indemnity and guarantee are special kinds of contracts. These contracts are therefore also required to fulfill all the essential of a valid contract.
Indemnity Contract: Indemnity contract is a type of contingent contract.
The term ‘Indemnity` Simply means ‘Making Somebody Safe` or ‘Paying Somebody back`. Section 124 of contract Act defines that ‘‘A contract by which one party. Promises to save the other from loss caused to him by the conduct of the promise himself by the conduct of any other person, is called a conduct of indemnity”.
The party who gives indemnity or who promises to compensate for or to make good the loss is called. Indemnifier and the party for whose protection or safety the indemnity is given or the party whose loss is made good is called ‘Indemnified’ or ‘indemnity holder’.
Important features of an indemnity contract –
Two party.Rights of Indemnified (Indemnity-Holder) –
Rights to claim for all damages/losses.Liabilities/Duties of Indemnifier –
Liabilities to pay all damages/losses.According to section 126 of the contract Act
‘‘A contract of guarantee is a contract to perform the promise, or discharge the liability, of a third person in case of his default.” The person who gives the guarantee is called the ‘Surety’ or ‘guarantor’ & the person in respect of whose default the guarantee is given is called the principal debtor or he is the party on whose behalf.
Guarantee is given and the person to whom the guarantee is given is called the ‘Creditor’.
Essential features of a Guarantee Contract –
Three parties