Definition
Detailed Explanation
Damages are the primary remedy at law for breach of contract and tortious wrongs. In contract law, the fundamental principle is restitutio in integrum - restoring the injured party to the position they would have been in had the contract been performed. The Indian Contract Act, 1872, under Sections 73-75, governs the award of damages for breach of contract.
Damages are classified into several categories: (1) Compensatory or actual damages for direct loss; (2) Consequential or special damages for indirect losses that were foreseeable; (3) Nominal damages when breach occurred but no actual loss is proved; (4) Liquidated damages pre-agreed in the contract; (5) Exemplary or punitive damages to deter wrongful conduct (primarily in tort); and (6) Aggravated damages for injury to feelings or dignity.
Section 73 provides that damages are to be assessed based on loss arising naturally from the breach or which the parties knew at the time of contract would result from breach. The principle of mitigation requires the injured party to take reasonable steps to minimize loss.
Essential Elements
- 1 A breach of contract or legal duty must be established
- 2 The plaintiff must have suffered actual loss or injury
- 3 The loss must be caused by the defendant's breach (causation)
- 4 The loss must not be too remote (foreseeability)
- 5 The plaintiff must have mitigated their damages
- 6 Damages must be capable of assessment with reasonable certainty
Leading Cases
ONGC Ltd. v. Saw Pipes Ltd.
2003(2003) 5 SCC 705
Relevance: Landmark judgment on liquidated damages under Section 74, holding they need not be proved if genuine pre-estimate
Murlidhar Chiranjilal v. Harishchandra Dwarkadas
1962AIR 1962 SC 366
Relevance: Explained principles of assessment of damages for breach of contract
Fateh Chand v. Balkishan Das
1963AIR 1963 SC 1405
Relevance: Held that court has power to award reasonable compensation not exceeding liquidated amount
Kailash Nath Associates v. DDA
2015(2015) 4 SCC 136
Relevance: Discussed Section 74 and when liquidated damages clause can be reduced by court
Usage Example
"The court awarded damages of Rs. 10 lakhs to the plaintiff for the loss suffered due to the defendant's failure to deliver goods as per the contract."
Synonyms
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