Can I sue the other party for my loss incurred due to Breach of Contract?

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Recently I entered into a contract with another person for the purpose of supplying some goods. From my part, I paid Rs. 10000 as advance according to the terms of contract. But now he is making unnecessary delay without supplying the goods. In spite of repeated demands, he supplied half the goods which were of low quality. As a consequence, I lost some of my customers and suffered heavy loss. Can I take action against him for breach of contract?

When a contract is made between parties they binds themselves together in a legal obligation to serve the interest on both parties. Thus to safeguard their interest make their own terms and conditions and when they are accepted they binds themselves under the contract. When one party steps back leading to loss of the other party which lead to breach of contract. But as per Section 39 of the Indian Contract Act if any party intimidates by words or by conduct that the party declines to continue with the contract is called as repudiation which cannot be said as breach of contract. Breach of contract is when a legal cause of action in which a binding agreement for exchange is not honoured by one or more parties to contract by non-performance with other party’s performance.

Breach of contract can be actual or anticipatory in nature.  In the areas of sale, bailment, and carriage there has developed a doctrine of Fundamental breach in law of contract. Breach of contract does not discharge the contract and defaulting party has to be liable for payment of compensation for breach. Innocent party has full right to waive the defective performance and accept the damages rather than end the contract. In your case you can sue the person for the loss that you incurred due to his breach of contract.

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Fundamental breach is categorised under the following:

  • nature of contractual liability;
  • gravity of circumstances of breach
  • remedy oriented approach
  • ability of performance
  • willingness to perform
  • lack of reliance on other party’s future performance;
  • offer to cure
  • possible cure

Section 73 of Indian Contract Act 1872 states that party who suffers from breach has to receive compensation for any loss caused to him because of the party who has broken the contract. Under this section general principle to assess damages is compensatory. In the case of Union of India Vs. Jolly Steel Industries (Pvt) Ltd Supreme Court held damages for non-delivery of goods are fixed on the basis of price that is prevailing on the date when delivery has to be made.

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by Sushma Javare.