Section 73 of ICA : Section 73: Compensation For Loss Or Damage Caused By Breach Of Contract

Explanation using Example

Imagine a situation where a homeowner, Mr. Sharma, contracts with a painter, Mr. Kumar, to paint his house for ₹50,000, with the work to be completed by the 1st of May. The contract stipulates that the painting must be done with a specific brand of paint and finish by the agreed date, as Mr. Sharma is hosting a wedding at his home shortly after.

Mr. Kumar fails to complete the job by the 1st of May. As a result, Mr. Sharma has to hire another painter who charges ₹70,000 due to the urgency of the job. The new painter completes the work in time for the wedding.

Under Section 73 of the Indian Contract Act, 1872, Mr. Sharma is entitled to seek compensation from Mr. Kumar for the breach of contract. The compensation would be the additional cost incurred, which is ₹20,000 (the difference between the original contract price and the amount paid to the new painter), since this loss naturally arose in the usual course of things from the breach.

However, Mr. Sharma cannot claim compensation for any subjective loss, such as the stress caused by the breach, as it is considered too remote and indirect.