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Damages under Indian Contract Act, 1872

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Main Article: Indian Contract Act, 1872

Damages are a monetary compensation allowed to the injured party for the loss suffered by him in a breach of contract. There are four kinds of damages under the Indian Contract Act of 1872.

Ordinary or General Damages

Ordinary damages are restrained to the "direct or proximate consequences" of the breach of a contract. The remote and indirect losses, which are not natural and possible consequence of the breach of contract cannot be taken into account.

Related Case Laws

  • Hadley vs. Baxendale (1854)

Special Damages

Special Damages can be claimed only if special circumstances which would result in a special loss in case of breach of contract are brought to the notice of the party. These damages arise on account of the special or unnatural circumstances affecting the plaintiff. The special circumstances which are mentioned above are the circumstances at the time when the contract is entered into. Subsequent knowledge of special circumstances will not create any special liability.

Exemplary or Punitive Damages

These damages are awarded with a view to punish the guilty party for the breach. The exemplary damages have no place in the law of contract since the object of the damages are to compensate the loss suffered by the injured party in case of a breach. However, Exemplary or Punitive damages are awarded to the following exemptions.

  1. Breach of a contract to marry
  2. Dishonour of a cheque by a banker when there are sufficient funds to the credit of the customer.

Nominal Damages

These damages are awarded when there are no significant loss suffered by the plaintiff. It is awarded for namesake to establish the right of the injured party.

Related Acts

See Also