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Muhammad Talal   14 April 2020

Contract Act

A contracts to let his ship to B for a year, from the first of January, for a certain price. Freights rise, and, on the first of January, the hire obtainable for the ship is higher than the contract price. A breaks his promise. He must pay to B, by way of compensation, a sum equal to the difference between the contract price and the price for which B could hire a similar ship for a year on and form the first January. Decide the situation between the contractual parties under Law of contract.


 3 Replies

Archit Uniyal   15 April 2020


According to the Indian Contract Act, 1872 Section 2(h), A contract is an agreement enforceable by law.

As A and B entered into a contract as there was an agreement between the two, both were liable to discharge their contractual obligations i.e., A had to provide B with the ship and B had to pay the amount of the ship as consideration. As A refused to discharge his part of the contract he has committed breach of contract. Section 73 of the Indian Contract Act talks about compensation for loss or damage caused by breach of contract. When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

The court will also look into the following:

Causation: Whether the loss is even a consequence of the breach? The rule tests whether the loss is directly and proximately caused by the breach. (Murlidhar Chiranjilal vs Dwarkadas)

Remoteness: Asks the question: Even though the loss is a consequence of the breach is there a reason to not hold the defendant liable? (Hadley vs Baxendale)


I hope this solves your query.



1 Like

Muhammad Talal   15 April 2020

Thank u very much

Raj Kumar Makkad (Adv P & H High Court Chandigarh)     17 April 2020

You have repeated this query fourth times. Though there is no limiit to post the same query on this site but a gentelman has to impose self discipline. Confine to your earlier post on the same subject.

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