Let’s break down the relevant sections from the Indian Contract Act, 1872 and the Specific Relief Act, 1963 to understand the consequences of a breach of contract.
Indian Contract Act, 1872:
- Section 73 – Compensation for Loss or Damage caused by a Breach of Contract:
- Explanation: This section says that if someone breaks a contract and causes loss or damage to the other person, the harmed party has the right to get compensation for that loss or damage.
- Application: In our case, if one party breaches the contract by not delivering the tractor parts as promised, the other party can ask for compensation for the loss they suffered due to this breach.
- Section 74 – Compensation for Breach of Contract where Penalty Specified:
- Explanation: If a contract mentions a specific amount of money to be paid in case of a breach (like a penalty), the harmed party can ask for that amount or a reasonable amount, whichever is less.
- Application: If the contract in this case says that a particular sum should be paid if there’s a breach, the party facing the breach can claim that amount or a fair amount that makes up for the loss, whichever is less.
Specific Relief Act, 1963:
- Section 73 – Compensation for Loss or Damage where Contract is Enforceable:
- Explanation: If there’s a breach of contract, and it’s a contract that could have been enforced (like a valid contract), the person facing the breach can claim compensation for the loss or damage they suffered.
- Application: In this case, if the contract is valid, and there’s a breach (for example, not delivering the tractor parts), the party affected by the breach can ask for compensation to make up for the loss they experienced.
In simple words, if someone doesn’t keep their promise in a contract and it causes harm to the other person, the person facing the harm can ask for money to make up for that harm. If the contract mentions a specific amount for such situations, they can ask for that amount or a fair amount that covers the harm they experienced. This is what these sections of the law are all about—making sure people are treated fairly when agreements are not honored.