Remedies For Breach Of Contract Under Specific Relief Act And Code Of Civil Procedure

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Introduction

Contracts are the primary form of most commercial and personal agreements: they involve legally binding contracts. Breach of contract is, therefore, a position that should come with the most robust legal framework out of all. In India, the breach of contract remedies is mainly governed by the Specific Relief Act of 1963 and the Code of Civil Procedure, 1908 . These legal frameworks provide a complete mechanism to remedy breach of contract so that aggrieved parties can look for proper justice redress. This article discusses the different remedies given under these two crucial pieces of legislation, including a detailed analysis of the provisions and applications of such remedies.

Specific Performance of Contracts

Specific performance is an equitable remedy by which a court orders the party in breach of contract to perform its part under contractual conditions. The court grants this remedy when monetary compensation will not be enough. This remedy of specific performance is given under sections 10 to 14 of the Specific Relief Act, mandating the various conditions and considerations under which such a remedy is afforded. In general, specific performance is given when

  1. Inadequate Compensation:There is no basis on which the actual damage that may arise from non-performance of the contract could be ascertained, so monetary compensation would be inadequate.
  2. The uniqueness of the subject matter:The subject matter of the contract is unique, such as real property or rare goods, and it cannot be easily replaced or valued in terms of money.
  3. Mutuality:The agreement is mutual and just, in which the parties have accepted their respective duties under reasonable terms.



However, the court will not give the relief of specific performance in the following cases:

  • Contracts are not specifically enforceable as, for instance, contracts of personal skill or continuous duty.
  • The contract is unconscionable, inequitable, or fraudulently or unduly procured


Injunctions


Injunctions are orders of the court that either restrain the party from doing a particular act or compel the party to act in a specific manner . The grant of injunction has been discussed under Sections 36 to 42 of the Specific Relief Act. There are two kinds of injunctions:

  • Temporary injunctions:These are injunctions that are granted during the pendency of a suit to preserve the status quo and prevent any irreparable harm. Order XIX of the CPC governs them, and, as such, they are essential to see that the subject matter of the dispute is maintained until the final judgment.
  • Permanent Injunctions:Issued after a final determination of the rights of the parties. A permanent injunction is issued when the court decides the rights of a plaintiff have been violated and that monetary compensation is not a remedy to the damage presented.

Rescission of Contracts


Rescission connotes the annulling of the contract and restoring the parties to the original position as though no contract has occurred. The Specific Relief Act, Sections 27 to 30, provides rescission where the contract is voidable or becomes void due to impossibility or illegality. Rescission can be claimed in the following circumstances:

  • There is a fundamental breach of contract that goes to the root of the agreement.
  • The party is a victim of fraud, misrepresentation, mistake, undue influence, or coercion in signing the contract.
  • It may become impossible for the parties to the contract to perform as a result of some occurrence of unforeseen circumstances beyond their control.

Rectification of Contracts

Rectification deals with the adjustment of mistakes or errors in the written contract to reflect the parties' true intention. The right to obtain rectification of a contract is provided in Sections 31 and 32 of the Specific Relief Act in cases where mutual mistake or fraud is alleged. The contract will work to ensure that the true intention of the parties is actually expressed at the moment of the agreement.

Declaratory Relief

Section 34 under the Specific Relief Act provides for the right of parties to obtain a decree from the courts about their rights or status about the contract. It will end the uncertainty of the parties' legal position but without giving any consequential relief. Relief through a decree of declaration is helpful where the determination as to the existence or otherwise of a legal right or obligation is sought to avoid a prospective dispute.

Code of Civil Procedure, 1908

The Code of Civil Procedure, 1908, outlines the procedural framework for civil litigation in India. It complements the Specific Relief Act by providing mechanisms for the enforcement of contractual remedies. Key provisions include:

Civil Suits for Damages


Civil suits for damages may be filed by parties under the CPC. Damages mean monetary compensation awarded to the aggrieved party in consideration of the loss incurred because of the breach of contract. There are different kinds of damages:

  • Compensatory Damages:These are the prime motives behind covering the actual loss undergone. The main aim is to set the aggrieved party in a position where they would have been if the contract was performed.
  • Nominal Damages:The damages awarded in the amount that signals a breach have occurred, but in such an occurrence, there is no substantial loss. These are damages that recognize a wrong done in law but do not recognize a wrong done in fact.
  • Exemplary Damages:These are damages over what is appropriate to compensate the plaintiff. They are given to punish the defendant for outrageous conduct and to warn others.
  • Liquidated Damages:An agreed sum, determined within the contract. These are recoverable where it is not unreasonable to suppose that the parties pre-arranged in actual advance of the breach, the sum recoverable in the case of infringement, provided that such sum is a bona fide pre-estimate of the loss and not a penalty.

Attachment and Sale of Property

The power of attachment and sale of the judgment debtor's property to satisfy a decree for payment of money is provided under Order XXI of the CPC. In this way, the successful party will not be left without collecting damages or compensation awarded to them. The court is empowered to attach movable and immovable property of the judgment debtor and, if necessary, sell the property to realize the amount due under the decree.

Execution of Decrees

The CPC further provides for its own implementation by way of specific rules on the execution of decrees, aimed at securing efficient compliance with the court orders. Such would include appointment of receivers, attaching orders, etc., by mode of execution of decrees for specific performance or orders of injunctions as contemplated under the Specific Relief Act. The steps in the execution process are:-

Application for Execution- Regarding the same matter decree-holder has to apply for execution in the appropriate court.

Notice to Judgment Debtor: The court sends the judgment debtor a notice to comply with the decree.

The Court may, among other methods of execution, order attachment and sale of property, garnishee proceedings, arrest and detention of the judgment debtor, and appointment of a receiver.

Interim Reliefs

Chapter VIII of the IL of CPC makes provision for issue of interim injunction , while the convenient and relevant order is that which is termed as the "Order XXXIX of the CPC" in this connection. This is important to do in order to keep the matter stable and not cause any permanent damage while the suit is on-going. Interim relief is the protection of the subject-matter of the dispute or maintenance of the rights of the parties during the duration of the proceedings till the time final adjudication of the case. Interim measures are taken by the court and while granting interim relief, the court looks into several factors such as:-

Prima Facie Case: the likelihood of winning the final hearing is strong

An Irreparable Harm: Have the party requesting the immediate relief showed that, in the absence of the immediate re lief, injury will occur that cannot be cured through monetary damages.

Balance of Convenience:Whether the balance of convenience lies in favor of granting the interim relief.

Conclusion

In India, breaches of contract are adequately addressed using The Specific Relief Act, 1963 and the Code of Civil Procedure, 1908 that work in tandem. The former being specific relief act have particular remedies like specific performance, injunctions, rescission, rectification, declaratory relief etc; these remedies ensures that the aggrieved person obtains appropriate redress depending on the nature of the breach. Conversely, CPC includes all inputted remedies’ procedure such as civil suits for damages; attachment and sale of property; execution of decrees; interim reliefs etc. All-encompassing legal structure is thereby put in place for enabling contracting parties to access efficient and fair compensation in case of breach hence upholding contractual obligations sanctity and commercial justice.

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