Indian Contract Act,1872
Act No : 9
Section : Compensation for loss or damage caused by breach of contract
73.Compensation for loss or damage caused by breach of contract.-When a contract has been broken, the party who suffers by such breachis entitled to receive, from the party who has broken the contract,compensation for any loss or damage caused to him thereby, whichnaturally arose in the usual course of things from such breach, orwhich the parties knew, when they made the contract, to be likely toresult from the breach of it. Such compensation is not to be given for any remote and indirectloss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling thosecreated by contract.-When an obligation resembling those created bycontract has been incurred and has not been discharged, any personinjured by the failure to discharge it is entitled to receive the samecompensation from the party in default, as if such person hadcontracted to discharge it and had broken his contract. Explanation.-In estimating the loss or damage arising from abreach of contract, the means which existed of remedying the incon-venience caused-by the non-performance of the contract must be takeninto account. Illustrations (a)A contracts to sell and deliver 50 maunds of saltpetre to B,at a certain price to be paid on delivery. A breaks his promise. Bis entitled to receive from A, by way of compensation, the sum, ifany, by which the contract price falls short of the price for which Bmight have obtained 50 maunds of saltpetre of like quality at the timewhen the saltpetre ought to have been delivered. (b)A hires B's ship to go to Bombay, and there take on board, onthe first of January, a cargo which A is to provide and to bring it toCalcutta, the freight to be paid when earned. B's ship does not go toBombay, but A has opportunities of procuring suitable conveyance forthe cargo upon terms as advantageous as those on which he hadchartered the ship. A avails himself of those opportunities, but isput to trouble and expense in doing so. A is entitled to receivecompensation from B in respect of such trouble and expense. (c)A contracts to buy of B, at a stated price, 50 maunds of rice,no time being fixed for delivery. A afterwards informs B that he willnot accept the46rice if tendered to him. B is entitled to receive from A, by way ofcompensation, the amount, if any, by which the contract price exceedsthat which B can obtain for the rice at the time when A informs B thathe will not accept it. (d) A contracts to buy B's ship for 60,000 rupees, but breakshis promise. A must pay to B, by way of compensation, the excess, ifany, of the contract price over the price which B can obtain for theship at the time of the breach of promise. (e) A, the owner of a boat, contracts with B to take a cargo ofjute to Mirzapur, for sale at that place, starting on a specified day.The boat, owing to some avoidable cause, does not start at the timeappointed, whereby the arrival of the cargo at Mirzapur is delayedbeyond the time when it would have arrived if the boat had sailedaccording to the contract. After that date, and before the arrival ofthe cargo, the price of jute falls. The measure of the compensationpayable to B by A is the difference between the price which B couldhave obtained for the cargo at Mirzapur at the time when it would havearrived if forwarded in due course, and its market price at the timewhen it actually arrived. (f) A contracts to repair B's house in a certain manner, andreceives payment in advance. A repairs the house, but not accordingto contract. B is entitled to recover from A the cost of making therepairs conform to the contract. (g) A contracts to let his ship to B for a year, from the firstof January, for a certain price. Freights rise, and, on the first ofJanuary, the hire obtainable for the ship is higher than the contractprice. A breaks his promise. He must pay to B, by way ofcompensation, a sum equal to the difference between the contract priceand the price for which B could hire a similar ship for a year on andfrom the first of January. (h) A contracts to supply B with a certain quantity of iron at afixed price, being a higher price than that for which A could procureand deliver the iron. B wrongfully refuses to receive the iron. Bmust pay to A, by way of compensation, the difference between thecontract price of the iron and the sum for which A could have obtainedand delivered it. (i) A delivers to B, a common carrier, a machine, to beconveyed, without delay, to A's mill informing B that his mill isstopped for want of the machine. B unreasonably delays the deliveryof the machine, and A, in consequence, loses a profitable contractwith the Government. A is entitled to receive from B, by way ofcompensation, the average amount of profit which would have been madeby the working of the Mill during the time that delivery of it wasdelayed, but not the loss sustained through the loss of the Governmentcontract. (j) A,-having contracted with B to supply B with 1,000 tons ofiron at 100 rupees a ton, to be delivered at a stated time, contractswith C for the purchase of 1,000 tons of iron at 180 rupees a ton,telling C that he does so for the purpose of performing his contractwith B. C fails to perform his contract with A, who cannot procureother iron, and B, in consequence, rescinds the contract. C must payto A 20,000 rupees, being the profit which A would have made by theperformance of his contract with B. (k) A contracts with B to make and deliver to B, by a fixed day,for a specified price, a certain piece of machinery. A does notdeliver the piece of machinery at the time specified, and inconsequence of this, B is obliged to procure another at a higher pricethan that which he was to have paid to A, and is prevented fromperforming a contract which B had made with a third person at the timeof his contract with A (but which had not been then communicated toA), and is compelled to make compensation for breach of that contract.A must pay to B, by way of compensation, the difference between thecontract price47of the piece of machinery and the sum paid by B for another, but notthe sum paid by B to the third person by way of compensation. (l)A, a builder, contracts to erect and finish a house by thefirst of January, in order that B may give possession of it at thattime to C, to whom B has contracted to let it. A is informed of thecontract between B and C. A builds the house so badly that, before thefirst of January, it falls down and has to be re-built by B, who, inconsequence, loses the rent which he was to have received from C, andis obliged to make compensation to C for the breach of his contract.A must make compensation to B for the cost of rebuilding the house,for the rent lost, and for the compensation made to C. (m)A sells certain merchandise to B, warranting it to be of aparticular quality, and B, in reliance upon this warranty, sells it toC with a similar warranty. The goods prove to be not according to thewarranty, and B becomes liable to pay C a sum of money by way ofcompensation. B is entitled to be reimbursed this sum by A. (n)A contracts to pay a sum of money to B on a day specified. Adoes not pay the money on that day; B, in consequence of not receivingthe money on that day, is unable to pay his debts, and is totallyruined. A is not liable to make good to B anything except theprincipal sum he contracted to pay, together with interest up to 'theday of payment. (o)A contracts to deliver 50 maunds of saltpetre to B on thefirst of January, at a certain price. B afterwards, before the firstof January, contracts to sell the saltpetre to C at a price higherthan the market price of the first of January. A breaks his promise.In estimating the compensation payable by A to B, the market price ofthe first of January, and not the profit which would have arisen to Bfrom the sale to C, is to be taken into account. (p)A contracts to sell and deliver 500 bales of cotton to B on afixed day. A knows nothing of B's mode of conducting his business. Abreaks his promise, and B, having no cotton, is obliged to close hismill. A is not responsible to B for the loss caused to B by theclosing of the mill. (q)A contracts to sell and deliver to B, on the first of January,certain cloth which B intends to manufacture into caps of a particularkind, for which there is no demand, except at that season. The clothis not delivered till after the appointed time, and too late to beused that year in making caps. B is entitled to receive from A, byway of compensation, the difference between the contract price of thecloth and its market price at the time of delivery, but not theprofits which he expected to obtain by making caps, nor the expenseswhich he has been put to in making preparation for the manufacture. (r)A, a ship-owner, Contracts with B to convey him from Calcuttato Sydney in A's ship, sailing on the first of January, and B pays toA, by way of deposit, one-half of his passage-money. The ship doesnot sail on the first of January, and B, after being in consequencedetained in Calcutta for some time and thereby put to some expense,proceeds to Sydney in another vessel, and, in consequence, arrivingtoo late in Sydney, loses a sum of money. A is liable to repay to Bhis deposit with interest, and the expense to which he is put by hisdetention in Calcutta, and the excess, if any, of the passage-moneypaid for the second ship over that agreed upon for the first, but notthe sum of money which B lost by arriving in Sydney too late.
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