Explain the various types of damages that an aggrieved party may claim on breach of contract.
Various types of damages that an aggrieved party may claim on breach of contract : On the basis of the provisions of Section 73 of Indian Contract Act, 1872 and the court judgement, the aggrieved party would be entitled to one of the following types of damages, depending upon the circumstances of the case :
A brief presentation of these various types of damages is given below :
Ordinary or general damages : When a contract has been broken, the injured parry 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 or vindictive damages: They are awarded with a view to punish the guilty or to set an example for others.Vindictive damages are awarded for :
- A breach of promise to marry, and
- Wrongful dishonor of a cheque by the banker.
Nominal damages: These are the damages which are very small in amount e.g. a compensation of Rs. 100. Such damages are awarded simply to establish the right of the party to claim damages for the breach of contract even though the party has suffered no loss.