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. Before I spend money on it, I want to know whether Indian Contract Act 1872, Section 73 gives me a remedy here and what proof I would need. Any Section numbers I can quote when I write to them would be useful.

MyVakeel Legal Desk · Accepted Answer

Indian Contract Act 1872, Section 73, Indian Contract Act 1872, Section 74 and Indian Contract Act 1872, Section 75 is what decides this question in India. Read it alongside the provisions named, because the 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.

In practice, in this order: 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.

Timing matters here: Indian Contract Act 1872, Section 73 works on limitation periods, so a breach of contract damages claim that is right on the merits can still fail if it is brought late. 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 corporate law.