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Rescission of Contract
In case of Actual Breach: Cancellation of the contract by
the aggrieved party by giving notice to the other party.
In case of Anticipatory Breach: The Aggrieved Party has
two options
Treat the anticipatory breach as an immediate breach and may
elect to rescind the contract (and sue for damages) immediately
(Hochster v. De La Tour); or
Treat the contract as still operative and subsisting and wait for the
time of performance, and then hold the other party responsible for
all the consequences of non-performance or breach of contract.
If the aggrieved chooses the second option, the other party would
be able to perform the contract by the due date and also take
advantage of the intervening circumstances. (Avery v. Bowden ).
Rescission Continue...
Refusal of Rescission: The Court may refuse to
rescind the contract in any of the following cases:
1. Where the party entitled to rescission has expressly or
impliedly ratified the contract;
2. Where the parties cannot be substantially restored to
their original positions because of a change of
circumstances after the making of the contract;
3. Where third parties have, during the subsistence of the
contract, acquired rights in good faith and for value; and
4. Where only a part of the contract is sought to be
rescinded, and such part is not separable from the rest
of the contract.
Damages
Damages may be defined as the monetary compensation payable
by the defaulting party to the aggrieved party for the loss suffered
by him/her.
The primary aim of damages (Doctrine of Restitution)to
compensate the aggrieved party for the loss or injury suffered by
it, and to place him in the same positionas far as money can do
itwhich he/she would have occupied had the breach of contract
not occurred.
The foundation of the modern law of damages with respect to a
breach of contract is the judgment in the UK case of Hadley v.
Baxendale. The principles of damages developed in this case has
been incorporated in the provisions of Section 83 of the Contract
Act.
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Quantum Meruit
Literal Meaning: as much as earned or as much as merited.
It is an amount to be paid in proportion to the work done.
When a person has done some work under the contract, or
some event happens which makes the further performance
of the contract impossible, then the party who has
performed the work can claim remuneration for the work
he/she has done.
The claim for quantum meruit arises only when the
original contract is terminated or discharged, and the claim
for quantum meruit can be brought only by the party who
is not in default.
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Non-availability of Specific
Performance
When specific performance will not be
granted: Section 86(2) of the Contract Act.
1. Where the compensation in terms of money is
an adequate relief for the breach of contract.
2. Where the contract is of personal nature, i.e.
depends upon the personal qualification, skill or
knowledge of the parties.
3. Where the performance of contract cannot be
supervised by the court.
4. Where the situation is such that the contract
cannot be performed as agreed.
5. Where the party who has breached the contract
him/herself demands for the performance of the11
Injunction
Section 87 of the Contract Act.
Where a party is in breach of a negative term of a
contract, i.e. Where he/she is doing or about to do
something which he/she promised not to do, the Court
(in the case of Nepal, an Appellate Court) may, by
issuing an order, restrain him/her from doing what
he/she promised not to do. Such an order of the court is
known as an injunction.
Damages in case of the failure of the party to comply
with the order so issued, if the aggrieved party suffers
an additional loss.
It is at the discretion of the court whether or not to issue
an injunction.
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