Contract Law: Remedies for Breach and Indemnity Contracts, Exercises of Business and Labour Law

Download Contract Law: Remedies for Breach and Indemnity Contracts and more Exercises Business and Labour Law in PDF only on Docsity! Business and Labour Laws - MGT 611 VU © Copyright Virtual University of Pakistan 95 Lesson 18 REMEDIES FOR BREACH OF CONTRACT We have already underlined those following remedies that are available to an aggrieved party in case of breach of contract: Remedies for breach of contract Suit for damages: Sec. 73 Suit for compensation-- Party rightfully rescinding contract entitled to compensation: Sec. 75 Suit for specific performance Suit for Injunction We have already discussed the first two remedies, rest of the remedies available for breach of contract are discussed here under. Suit for specific performance In certain cases where damages are not preferable option as these may not provide adequate remedy, the court may direct the party in default to fulfill the contract. The aggrieved party has the right to file a suit for specific performance. Instances where suit for specific performance can be filed before the Court: Where monetary compensation may not provide adequate relief to the aggrieved party, Determination of actual damage is difficult Contracts depending on the personal skills and expertise of the contracting party When one of the contracting party is minor. Suit for granting injunction: Injunction is an order of restraining a person from an act. Illustration:--Mr. Umar, an international player of hockey enters into a contract with M/S ABC hockey club to play for one year with the stipulation that during this period he will not play for any other club. However, Mr. Umar entered into a contract with M/S XYZ club. M/S ABC hockey club has the right to file a suit for injunction and court can issue the order restraining Mr. Umar to play for M/S XYZ hockey club. Contract of Indemnity Contract of Indemnity has been defined in section 124 of the Contract Act which is reproduced below: A contract, by which one party promises to save the other from loss caused to him by the conduct of the Promisor himself, or by the conduct of any other person, is called a “contract of indemnity”. Illustration 1: Mr. Yasir purchased demand draft of Rs 50,000 from a bank. The draft was lost in transit. Mr. Yasir requested the concerned branch to issue a duplicate demand draft. He had to furnish an indemnity bond that in case of any claim on the bank, Mr. Yasir (indemnifier) shall be liable to make good the loss suffered by the bank (Indemnity holder/ Indemnified) Illustration 2: docsity.com Business and Labour Laws - MGT 611 VU © Copyright Virtual University of Pakistan 96 A contracts to indemnify B against the consequences of any legal proceedings which C may take against B in respect of a certain sum of Rs.200,000/= Comments Indemnity: --- It includes promises to save the promisee harmless from loss caused by events or accidents which do not or may not depend on the conduct of any person, or by liability arising from something done by the promisee at the request of the promisor; in the latter case a promise of indemnity may be inferred as a fact from the nature of the transaction. Where a person invested with a statutory or common law duty of a ministerial character is called upon to exercise that duty on the request, direction or demand of another and without any default on his own part acts in a manner which is apparently legal but is, in fact, illegal and a breach of the duty, and thereby incurs liability to third parties, there is implied by law a contract by the person making the request to keep indemnified the person having the duty against any liability which may result from such exercise of the supposed duty. Bankers had innocently presented to a corporation a transfer of its own stock for registration, and transferees for value from them were registered as owners. The transfer to the bank turned out to be a forgery, and the true owner, in an action against the corporation, enforced restitution. Commencement and Extent of Indemnifier’s Liability: ---The text of the Act leaves these matters undefined. In a case law the court has without citing the Contract Act at all has supposed that an indemnifier could not be called on till the indemnified had incurred actual loss, and this was at one time said to be settled rule of HTUlawUTH but, according to the equitable principles which now prevail, to indemnify does not merely mean to reimburse in respect of moneys paid, but (in accordance with its derivation) to save from loss in respect of the liability against which the indemnity has been given, if it be held that payment is a condition precedent to recovery, the contract may be of little value to the person to be indemnified, who may be unable to meet the claim in the first instance. Accordingly the existence of a clear enforceable claim---as under a judgment recovered---suffices to call the indemnified or those who stand in his place. All Contracts of Insurance are contracts of indemnity except life insurance In such contracts an insurance company (insurer) undertakes to indemnify the respective party (assured), of the losses suffered by the assured in the manner and to the extent agreed in the contract. Parties in a contract of Indemnity: there are following parties in a contract of indemnity: Indemnifier (Promisor) Indemnity holder/Indemnified (Promisee) Rights of Indemnity Holder When Sued: 1. Indemnity holder can recover all damages incurred /Paid by him. 2. Indemnity holder can recover costs incurred. 3. Indemnity holder can recover sums paid under compromise, if any. Rights of indemnity-holder when sued are contained in section 125 of the Contract Act which is reproduced below: The promisee in a contract of indemnity acting within the scope of his authority, is entitled to recover from the promisor:-- (1) All damages which he, may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies; docsity.com