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CONTRACT-I
Semester-II: 2017
Where the plaintiffs, the owners of a flour mill, sent a broken iron shaft to an
office of the defendants, who were common carriers, to be conveyed by
them, and the defendants clerk, who attended at the office, was told that the
mill was stopped, that the shaft must be delivered immediately, and that a
special entry, if necessary, must be made to hasten its delivery; and the
delivery of the broken shaft to the consignee, to whom it had been sent by
the plaintiffs as a pattern, by which to make a new shaft, was delayed for an
unreasonable time; in consequence of which, the plaintiffs did not receive the
new shaft for some days after the time they ought to have received it, and
they were consequently unable to work their mill from want of the new shaft,
and thereby incurred a loss of profits.
Karsandas Thacker v. Saran Engineering
Co. Ltd., AIR 1965 SC 1981
.
Maula Bux v. Union of India, AIR 1970 SC
1955
.
Shri Hanuman Cotton Mills v. Tata Air
Craft Ltd., 1969 (3) SCC 522
Parties to a contract may specify in advance, the damages to be assessed in the
event of breach. If the parties name an amount, damages cannot be awarded
under any other law.
The amount specified may be a genuine pre-estimate of loss, or penalty.
If the amount agreed is a genuine pre-estimate of loss, compensation depending
on loss not exceeding that amount will be awarded.
If the amount is by way of penalty, reasonable compensation not exceeding the
amount named, will be awarded.
The object of awarding compensation is only compensatory and not punitive.
Forfeiture of deposits is covered u/s 74.
Forfeiture of earnest money where amount is reasonable, does not fall u/s 74.
Forfeiture of earnest money where the amount is unreasonable, falls u/s 74,
because it is a penalty thereunder.
All cases of forfeiture of security deposits fall u/s 74.
The law of forfeiture of earnest money is different from that of security money
because in the former case, there is a question of adjustment of the deposited
amount towards the price of movable or immovable property, while this factor is
absent in the latter case.
Ghaziabad Development Authority v. Union
of India, AIR 2000 SC 2003
.
Oil & Natural Gas Corporation Ltd. v. Saw
Pipes Ltd. (2003) 4 SCALE 92
.
S. 75. Party rightfully rescinding
contract, entitled to compensation
A person who rightfully rescinds a contract is entitled to
compensation for any damage, which he has sustained
through the non-fulfilment of the contract.
Illustration
A, a singer, contracts with B, the manager of a theatre, to sing
at his theatre for two nights in every week during the next
two months, and B engages to pay her 100 rupees for each
nights performance. On the sixth night, A wilfully absents
herself from the theatre, and B, in consequence, rescinds the
contracts. B is entitled to claim compensation for the
damage which he has sustained through the non-fulfilment of
the contract.
Trojan & Co. v. Nagappa Chettiar AIR
1953 SC 235
Measure of damages, where a person is induced by fraud,
is the difference between the price paid by him and the
real price (market price) on the date of purchase.
S. 75 is applicable to contracts rescinded u/s 39, 53, 55, 64,
65.