What compensation can I claim for breach of contract under Sections 73 and 74?

Question

My supplier failed to deliver goods on time under our agreement and I suffered a financial loss. I want to know what damages I can claim. I have been reading conflicting things online and I would like to understand what Indian law actually says about this, which Act and Section applies, what the realistic timelines and costs are, and what I should be doing right now to protect my position. If the matter can be resolved without litigation I would prefer that route, but I want to know what my rights are before I agree to anything or sign any document.

MyVakeel Legal Desk · Accepted Answer

What compensation can I claim for breach of contract under Sections 73 and 74? is governed in India primarily by Indian Contract Act 1872, Section 73, Indian Contract Act 1872, Section 74 and Indian Contract Act 1872, Section 75. The short answer is set out below, followed by the practical steps most people in this situation need to take. Read it alongside the specific provisions named, because the exact relief available to you turns on the facts you can prove on paper.

Section 73 entitles the party suffering from a breach to receive compensation for loss or damage that naturally arose in the usual course of things from the breach, or that the parties knew was likely to result from it when they made the contract.

Section 73 expressly excludes compensation for remote or indirect loss caused by the breach, so speculative or unforeseeable losses cannot be claimed.

Where the contract names a specific sum as liquidated damages or a penalty for breach, Section 74 permits the court to award reasonable compensation not exceeding the amount named, without requiring the claimant to prove actual loss suffered.

The party who rightfully rescinds a contract is entitled under Section 75 to compensation for any damage sustained through non-fulfilment of the contract by the other party.

The claimant has a duty to take reasonable steps to mitigate the loss flowing from the breach, and cannot recover for losses that could have been reasonably avoided.

What to do next: 1) Quantify the actual loss suffered with invoices, correspondence and financial records; 2) Send a written notice to the defaulting party detailing the breach and the loss claimed; 3) Take reasonable steps to mitigate further loss, such as sourcing an alternate supplier; 4) File a civil suit for damages if the defaulting party does not settle within a reasonable time.

If the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — most remedies under Indian Contract Act 1872, Section 73 carry limitation periods, and a delay you cannot explain weakens an otherwise strong case. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in this practice area.