Chapter 9: Consequences for Breach of a Contract Flashcards

1
Q

What are two types of Damages under Contract Act?

A
  1. Ordinary Damages
  2. Special Damages.

[Chapter 9 LO 1]

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2
Q

What are “Ordinary Damages” and “Rules” for allowing?

A

Ordinary Damages:
Compensation for loss/damage arising naturally from breach a contract.

Rules for allowing Ordinary Damages:
1. Allowed even if not stated in the contract.
2. Actual loss is allowed as damages.

Examples:
1. Difference between market price and contract price.

[Chapter 9 LO 1]

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3
Q

What are “Special Damages” and “Rules” for allowing?

A

Special Damages:
Compensation for loss/damage which is likely to result from breach of contract, and parties knew at time of making contract.

Rules for allowing Special Damages:
1. Allowed only if communicated at time of contract.
2. Actual loss is allowed as damages.

Examples:
1. Loss on other contract due to breach of this contract

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4
Q

What is the Rule for allowing “Remote and Indirect loss”?

A

Rule:
Losses which are “remote and indirect” are not allowed.

Examples:
1. Loss of future projects

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5
Q

What is “Penalty” and what is the Rule for allowing?

A

Penalty:
Penalty is the amount specified by parties in the contract, to be paid on breach of contract.

Rules for allowing Special Damages:
1. Court allows reasonable damages or fixed amount whichever is lower.

Examples:
1. increase in interest from date of default.
2. paying double amount of loan on default.

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