Remedies for Breach of Contract under the Laws of Bangladesh with Special Reference to the Contract Act, 1872.

 Remedies for Breach of Contract under the Laws of Bangladesh with Special Reference to the Contract Act, 1872

Introduction

The laws relating to contracts in Bangladesh are dealt with under the Contract Act, 1872, and the remedies available in case of a breach. A contract is breached when one of the parties to the contract does not fulfill his or her promises according to the agreement. There are different remedies provided under the Contract Act, 1872 in the event of breach of contract. Such remedies are intended to make the party who is complaining that the contract was breached whole and put that party in the position it would have been in had the contract been performed.

Kinds of Damages for Breach of Contract

Relief (Monetary Remedy)

Compensatory Damages

The most typical remedy for breach of contract is compensatory damages. These are designed to make good the damage sustained by the non-breaching party as a result of that breach. Section 73 states that damages ought to be the loss directly resulting from failure of the contract as well as the loss consequent and financially moving directly or indirectly to result from the failure.

General and Special Damages:

• General damages shield against foreseeable harm which is a direct consequence of breach.
• Special damages arise only when special circumstances, that the parties both knew would happen, would result from the breach.

Specific Performance

The injured party may, in some cases, apply to the court to be ordered or compelled to perform specifically. This cure compels the breaching party to fulfill the agreement as it was negotiated. The other remedies are laid down in Section 12 of the Specific Relief Act, 1877 for immovable property.

If the court finds that the terms of the contract are uncertain, indeterminate or cannot be carried into effect, or that it would be inequitable to enforce specific performance, it may deny the remedy.

Injunction

An injunction is a command by the court for the defendant to perform (or not perform) an act. This relief is typically awarded only when damages would be an insufficient relief, as when specific performance is not available. For instance, an injunction could be employed to prevent a party from selling a one-of-a-kind piece of property that is the subject of a contract.

Rescission of Contract

Cancellation or rescission indicates that the contract has been cancelled or annulled and the contract should be treated as if it had never existed. The plaintiff is entitled to rescission if the breach is material and strikes a damaging blow at the very heart and essence of the contract. By section 64 and 65 of the Contract Act, 1872, rescission can be allowed in case the contract is voidable or where both the parties have agreed to cancel.

Quantum Meruit (As Much As He Deserves)

This remedy arises when part performance has been rendered on a contract, and the contracting parties have not pre-determined the compensation for such part performance. According to Section 70, Contract Act, 1872, where there is a part performance the other party is entitled to claim a reasonable amount in respect of that agreement according to the value of performance made.

Penalty and Liquidated Damages Clauses

Claws most contracts include terms how much to pay if you break the agreement. The latter are termed as “liquidated damages.” If liquidated damages are provided for in the contract, the aggrieved party may recover the amount specified in the agreement without proving that the loss is the actual amount. But under Section 74 of the Contract Act, 1872, the court can set it aside if it holds the liquidated damages to be ‘penal’ and the amount ‘unreasonable’.

Penalty clauses that impose an excessive or disproportionate sum as damages are generally not enforceable in Bangladesh.

Essential Provisions in the Contract Act, 1872 Dealing with Remedies

• Section 73: This section enacts the rule regarding payment of compensation in case of breach of contract. It emphasizes that the party who is injured should be compensated for a loss or injury that is a result of the breach.
• Section 74: It deals with Liquidated damages and Penalty and if it is found that the contractual amount fixed is reasonable, then the court will not mitigate the sum, unless it appears to the court as unreasonable.
• Section 65: In cases in which a contract is rescinded, a person may be awarded compensation for money paid or property transferred pursuant to the contract.

Conclusion

In Bangladesh, the Act of Contract, 1872 provides a multiplicity of legal remedies to the aggrieved party for the contract breached. These are remedies that are designed to place the party that has suffered the damage in an equitable position and to afford them justice for the injury they have sustained as a result of the breach. The Bangladesh courts award compensation or damages, but when the situation demands, they offer other kinds of remedies such as specific performance, rescission, and injunction. Knowledge of available remedies under The Contract Act, 1872 is necessary for businesses and individuals to protect their rights in the event of such a breach and also to make contracts resilient as expected.