Damages and Penalty as Held under Section 73 and 74 of the Indian Contract Act, 1872
10 Pages Posted: 15 Dec 2010
Date Written: December 13, 2010
This article is aimed at making an analysis of the two most important and common words used in contracts as to DAMAGES and PENALTY. These two words have been used under the Indian Contract Act, 1872 viz. Sec. 73 and 74, but they have not been defines under the same as to what does they mean or include.
A mere study of these sections could give anyone an idea as to in what is the meaning of damages and penalty in the context in which it has been used in the said sections. But the fact as to what is the exact meaning and what all it would included in the said section and how these words have to be interpreted and construed is a matter of understanding and interpretation in different cases where in the mean and the sense may differ.
In this article an effort has been made to analysis in depth all the perceptive and all the ways in which these would can be construed so that it doesn’t let the meaning of the section change.
In the event of analysis the different meaning, definition and interpretations of different scholar have been view with main focus being on the Act and judicial interpretation.
The fact is that both damages and penalty are a form of economic gain which are payable by the defaulter to the innocent party that has suffered a loss due to the breach. This has been observed by:
i. Understanding as to what damages mean and ought to mean under Section 73.
ii. Understanding as to what penalties mean and ought to mean under Section 74.
iii. Analysing as to what is the difference between the two.
iv. Critically examining as to the reason why penalty and damages are confused to mean the same and what is that point of difference between the two word and there usage.
Keywords: Damages and penelity under Indian Contract act
Suggested Citation: Suggested Citation