CHAPTER - 07

REMEDIES OF BREACH OF CONTRACT

INTRODUCTION

• There are several remedies for breach of contract,

such as award of damages, specific performance,
rescission, and restitution. In courts of limited
jurisdiction, the main remedy is an award of
damages. Because specific performance and
rescission are equitable remedies that do not fall
within the jurisdiction of the magistrate courts,
they are not covered in this tutorial.
REMEDIES FOR BREACH OF CONTRACT

• There are several common remedies for breach of contracts. The appropriate remedy depends on the terms of the
contract, the nature of the breach, and the case’s specific circumstances.

1. COMPENSATORY DAMAGES

An award of compensatory damages is the most common of the legal remedies for breach of contract. The
calculation of compensatory damages is based on the actual losses you have sustained as a result of the breach of
contract. They typically fall into two categories: expectation damages and consequential damages.
  

2. SPECIFIC PERFORMANCE

Specific performance is a type of remedy for breach of contract in which a court orders the breaching party to
perform their end of the bargain. Monetary damages are typically favored over specific performance as a remedy
for breach of contract. However, specific performance may be available when monetary damages won’t adequately
compensate you. For example, they may apply to a contract for something that is unique and can’t be easily
replaced.

3. INJUNCTION

Injunctions serve a similar purpose as specific performance. The difference is that with specific performance, the
court orders a party to do something. With an injunction, the court often orders a party not to do something.
  

• 4. RESCISSION

Rescission allows a non-breaching party to cancel the contract as a remedy for a breach. Rather than seeking
monetary damages, the non-breaching party can simply refuse to complete their end of the bargain. Rescission puts
the parties back in the position they would have been in had they never entered into the contract.

However, to justify rescission, the breach must be material. That means that it has to go to the heart of the
contractual agreement.

5. LIQUIDATED DAMAGES

Liquidated damages are a specific amount the parties agree to in the contract as compensation for a breach.

Contracts often use liquidated damages provisions where it might be difficult to calculate the correct amount of
compensatory damages.
  

6. NOMINAL DAMAGES

A court may award nominal damages as a legal remedy for breach of contract when the plaintiff cannot support
their claim for compensatory damages. With nominal damages, the court recognizes that a breach of contract
occurred, but no harm can be calculated.

While receiving nominal damages may feel like a pyrrhic victory, the plaintiff does get the benefit of the ruling in
their favor. This may be simply a moral victory, or it may pave the way for the plaintiff to pursue another type of
legal action. If the contract has an attorney fee provision, an award of nominal damages may also enable the
plaintiff to seek their attorney fees from the defendant.
  

• ORDINARY OR GENERAL DAMAGES

• When a contract has been broken, the injured party can recover from the guilty party ordinary damages. Ordinary damages are
damages which fairly and reasonably be considered as arising naturally and directly in the usual course of things from the
breach of contract itself. Damages, that are the direct or the proximate consequences of the breach of contract, can be described
as ordinary damages. The amount of damages is measured by the difference between the contract price and the market price on
the date of breach.

• SPECIAL DAMAGES
• Special damages are those resulting from a breach of contract under some special circumstances and the existence of special
circumstances must be known to the party who has broken the contract. knowledge of special circumstances must be on the date
of the contract, subsequent knowledge of special circumstances will not create any special liability.
  

• EXEMPLARY DAMAGES
• Exemplary damages, better known as punitive damages, refer to extra damages awarded beyond that actually
incurred by the plaintiff. Punitive damages are considered punishment or damages intended to dissuade and are
typically awarded at the court's discretion when the defendant's behavior is found to be especially harmful.
Punitive damages are normally not awarded in the context of a breach of contract claim.

• NOMINAL DAMAGES
• A trivial sum of money awarded to a plaintiff whose legal right has been technically violated but who has not
established that they are entitled to compensatory damages because there was no accompanying loss or harm.
Unlike compensatory damages which are intended to compensate for injury, nominal damages are awarded to
commemorate the plaintiff’s vindication in court. One dollar is the amount awarded for nominal damages in the
vast majority of cases; however, some jurisdictions hold that nominal damages can vary based on the context of
the case.
  DUTY TO MITIGATE DAMAGE SUFFERED

 Mitigation of damages is a contract law concept demanding a victim in a contract conflict to minimize the
damages resulting from a breach of the contract. The victim is legally bound to behave to mitigate both the
consequences of the breach and their losses. This is true even if the victim who suffers personal injury through
no fault of their own must take reasonable steps to avoid further loss and minimize the loss consequences of the
injury.

 If a victim does not mitigate damages, the court may refuse to award any excessive damages that the victim
could have reasonably dodged. The court will consider the victim’s actions following the breach of contract to
determine if they took measures that a reasonable individual in similar circumstances would have taken to
minimize their losses. Nonetheless, mitigation of damages does not demand the victim take drastic measures or
make significant sacrifices to sidestep or minimize loss.