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Measure of Damages for Breach of Contract in India

When it comes to business deals, contracts serve as the legal backbone of transactions. Contracts are made to ensure that all parties involved are aware of their rights and responsibilities. A breach of contract can lead to financial losses, and it`s important to know the measure of damages in India for such circumstances.

The measure of damages for breach of contract in India is based on the principle of compensation. The compensation is calculated to cover the losses incurred by the aggrieved party due to the breach of contract. The damages awarded in India are classified into two categories, namely – ordinary damages and special damages.

Ordinary Damages

Ordinary damages are the most common type of damages awarded in India. These damages are awarded to the aggrieved party to compensate for the direct losses suffered due to the breach of contract. The compensation is calculated based on the following factors:

1. Loss of profits – This compensation is awarded to the aggrieved party to cover the loss of profits that would have been earned if the contract was performed as agreed.

2. Loss of opportunity – If the breach of contract caused the aggrieved party to lose an opportunity to earn profits, they can claim compensation for such loss.

3. Costs incurred – If the aggrieved party incurred extra costs due to the breach of contract, they can claim compensation for such costs.

Special Damages

Special damages are awarded in cases where the losses suffered by the aggrieved party are not direct but consequential. These damages are awarded to the aggrieved party to cover the losses incurred due to the breach of contract. The compensation is calculated based on the following factors:

1. Consequential losses – This compensation is awarded to the aggrieved party to cover the losses incurred due to the breach of contract, which are not direct.

2. Exemplary damages – In cases where the breach of contract was done with malice or willful negligence, the court may award exemplary damages to punish the party at fault.

Conclusion

Contracts are an essential part of business transactions, and it`s essential to know the measure of damages for breach of contract in India. The compensation awarded is based on the principle of compensation and is calculated to cover the losses incurred by the aggrieved party. The damages awarded in India are classified into two categories, ordinary damages, and special damages. The aggrieved party can claim compensation for direct losses, consequential losses, loss of opportunity, and extra costs incurred due to the breach of contract. The court may also award exemplary damages in cases where the breach was done with malice or willful negligence.