Importance & Significance of Damages as a Remedy for Breach of Contract

Abstract

Where a party performing a contract does not do so to the standard required by the contract or within the time frame set, that party is said to have committed breach of contract. A contract, being a fountainhead of a correlative set of rights and obligations for the parties would be of no value, if there were no remedies to enforce the rights arising thereunder. The party committing breach of contract is known as the ‘guilty party’ and the other party is known as the ‘injured’ or ‘aggrieved’ party. The latin maxim ‘ubi jus, ibi remedium’ denotes ‘where there is a right, there is a remedy’. The word ‘damages’ means monetary compensation for loss suffered. Whenever a breach of contract takes place, the remedy of damages is the one that comes to mind immediately as the consequence of breach. A breach of contract may put the aggrieved party to some disadvantage or inconvenience or may cause a loss to him. The court would desire the guilty party to accept responsibility for any such loss of the aggrieved party and compensate him adequately. The quantum of damages is determined by the magnitude of loss caused by the breach. Damages are meant to compensate the injured party for any consequences of the breach of contract. The underlying principle is to put the injured party financially as near as possible, into the position he would have been in had the promise been fulfilled.

Keywords: Damages, Compensation, Section 73, Section 74, Contract Act, Breach of Contract