Types of Damages, and the Remedies for Breach

In one line

MU's topic word is "Types", so this chapter names each kind of damages and each remedy, and says when a student should reach for which.

In the words a student can write in an exam: the remedies for breach of contract are damages under sections 73 and 74 of the Indian Contract Act 1872, compensation on rightful rescission under section 75, specific performance and injunction under the Specific Relief Act 1963, and a claim on a quantum meruit. Damages themselves are classified as ordinary or general, special, nominal, exemplary or vindictive, and liquidated, and the classification decides what has to be pleaded and proved in each case.

Why the classification is worth learning

Naming a kind of damages is not a labelling exercise. Each label carries a different requirement.

Ordinary damages need no special notice. Special damages need knowledge at the time of contracting. Nominal damages need a breach but no loss. Exemplary damages are almost never given in contract at all. Liquidated damages need a clause and are capped by it.

So a student who can classify the loss in a problem question has already decided what must be proved, and that is most of the answer.

The types of damages

(a) Ordinary or general damages

The loss that naturally arose in the usual course of things from the breach, under the first limb of section 73. It is presumed to have been in the parties' contemplation from the nature of the transaction and needs no special notice.

The usual measure in a sale is the difference between the contract price and the market price at the time and place of the breach.

(b) Special damages

Loss that is not ordinary, recoverable under the second limb of section 73 only where the parties knew, when they made the contract, that it was likely to result from a breach.

They must be pleaded and proved, and the knowledge must be brought home to the defendant at the time of contracting. See [Remoteness of Damage, and the Duty to Mitigate].

(c) Nominal damages

A small sum awarded where a breach is proved but no loss has been suffered. They vindicate the right without compensating anything, since there is nothing to compensate.

Do not confuse nominal damages with the position under section 74. On Kailash Nath Associates a section 74 claim where no loss at all was caused yields nothing, because that section compensates for loss or damage caused by the breach.

(d) Exemplary or vindictive damages

Damages awarded to punish rather than to compensate. Because the object of section 73 is compensation, they are not generally awarded in contract in India.