Damages are a monetary compensation allowed to the injured party by the Court for the loss or injury suffered by him by the breach of a contract. The object of awarding damages for the breach of contract is to put the injured party in the same position, so far as money can do it, as if he had not been injured, i.e. in the position in which he would have been had there been performance and not breach. This is called the doctrine of restitution.
The rules relating to damages may be considered as under:
1. Damages arising naturally – Ordinary damages
When a contract has been broken, the injured party can recover from the other party such damages as naturally and directly arose in the usual course of things from the breach. This means that the damages must be the proximate consequence of the breach of contract. These damages are known as ordinary damages.
Example: A contracts to sell and deliver 5 tonnes of Farm Wheat to B at Rs.1000 per tonne, the price to be paid at the time of delivery. The price of wheat rises to Rs.1200 per tonne and A refuses to sell the wheat. B can claim damages at the rate of Rs.200 per tonne.
2. Damages in contemplation of the parties – Special damages
Special damages can be claimed only under the special circumstances which would result in a special loss in case of breach of a contract. Such damages, known as special damages, cannot be claimed as a matter of right.… Read the rest