damages

Damages are the usual remedy for breach of contract and for torts. In contract, s.73 of the Indian Contract Act, 1872 gives compensation for loss that arose naturally in the usual course of things from the breach, or that the parties knew, when they contracted, to be likely to result from it (the rule in Hadley v. Baxendale). Remote and indirect loss is not recoverable, and the plaintiff must take reasonable steps to mitigate.

Where the contract names a sum or a penalty, s.74 allows only reasonable compensation up to that sum; Indian law does not keep the English distinction between liquidated damages and penalty. Kinds of damages include nominal, compensatory, aggravated and exemplary. “Damage” (the loss) and “damages” (the money) are different words.

Example

The buyer could recover damages under s.73 for the price difference, but not for the loss of an unusual resale contract the seller never knew about.

In Indian law

• Sections 73 and 74, Indian Contract Act, 1872
• Hadley v. Baxendale (Court of Exchequer, England, 1854): the two limbs of remoteness

See also

exemplary damages · damnum sine injuria

Read more in the study notes

• Excessive delegation, conditional legislation and sub-delegation (Administrative Law)
• Audi alteram partem: the right to a fair hearing (Administrative Law)
• Judicial control: public and private law remedies, writ procedure and ouster clauses (Administrative Law)
• Government contracts and state liability: the administrative-law angle (Administrative Law)
• Lok Adalats and Permanent Lok Adalats (Alternative Dispute Resolution Systems)
• Arbitral award and setting aside under section 34 (Alternative Dispute Resolution Systems)