Contract Dispute Lawyer

To establish a breach of contract under the Indian Contract Act, 1872, the claimant must prove four elements: first, that a valid and enforceable contract existed between the parties; second, that the claimant performed its own obligations under the contract or was excused from doing so; third, that the defendant failed to perform one or more of their contractual obligations; and fourth, that the claimant suffered loss or damage as a result of that failure. The quantum of damages is limited under Section 73 to losses that arose naturally from the breach or that were reasonably foreseeable at the time the contract was made.

Under Section 74 of the Indian Contract Act, 1872, both penalty clauses and pre-agreed liquidated damages clauses are treated alike: the court will award reasonable compensation not exceeding the sum named, whether or not actual loss has been proved. This is different from English law, which distinguishes between a genuine pre-estimate of loss (enforceable liquidated damages) and a penalty (unenforceable). In India, the courts have the jurisdiction to grant reasonable compensation, which may be the full stipulated sum if that appears to be a genuine estimate, or a lesser amount if the court considers the stipulated sum excessive relative to the actual loss.

Yes. If the contract contains a valid arbitration clause, the dispute must be referred to arbitration under the Arbitration and Conciliation Act, 1996 rather than to a civil court. The claimant issues a notice under Section 21 of the Act invoking arbitration and proposing arbitrators. If the parties cannot agree on arbitrators, the appointment is made by the High Court under Section 11. Civil courts are required to refer parties to arbitration if a valid clause exists and the defendant raises the objection at the first opportunity under Section 8. The arbitral tribunal has the same power as a court to grant interim measures under Section 17.

Specific performance is a court order compelling a party to perform their contractual obligation, rather than merely paying damages. It is governed by the Specific Relief Act, 1963, as amended in 2018. After the amendment, specific performance is a right rather than a discretionary remedy for most contracts. However, courts cannot grant specific performance of a contract for personal service, a contract whose performance depends on the continued personal qualification of a party, or a contract that by its nature is not capable of being performed specifically. In infrastructure and real estate contracts, specific performance is now commonly ordered.

Under Article 55 of the Schedule to the Limitation Act, 1963, the limitation period for a suit for compensation for breach of contract is three years from the date the breach occurred, or where the breach is a continuing one, from the date it first occurred. For a suit for specific performance of a contract, Article 54 prescribes a limitation of three years from the date fixed for performance, or if no date is fixed, from the date the plaintiff demands performance and the defendant refuses. It is critical to file within the limitation period because a time-barred suit is dismissed at the threshold without examination of the merits.

Yes. Under Section 12A of the Commercial Courts Act, 2015, a party contemplating a commercial suit that does not involve urgent interim relief must exhaust the remedy of pre-institution mediation through the authority designated by the central government before filing the suit. The mediation must be completed within three months (extendable by two months). If mediation fails, a settlement failure report is obtained, which is then attached to the plaint at the time of filing. This requirement does not apply where the party is seeking urgent interim relief such as an injunction or attachment before judgment.

If the debtor refuses to pay a liquidated sum due under a contract, you may issue a legal notice demanding payment within a stipulated period. If the demand is not met, a money recovery suit may be filed under Order 37 of the Code of Civil Procedure, 1908 (summary suit), which is a faster procedure available for claims on written contracts, bills of exchange, promissory notes, and the like. Under Order 37, the defendant is required to obtain leave to defend and must satisfy the court that they have a genuine triable defence; otherwise the court grants a decree for the amount claimed on the basis of the pleadings alone. Commercial suits are heard by the Commercial Court under the accelerated procedure of the Commercial Courts Act.

Several forms of interim relief are available. An ad interim or interim injunction under Order 39 of the Code of Civil Procedure restrains the other party from acting in a manner that would worsen the claimant's position during the pendency of the suit. An attachment before judgment under Order 38 Rule 5 restrains the defendant from removing or disposing of their assets if the court is satisfied that the defendant is about to do so to frustrate any eventual decree. In arbitration, Section 9 of the Arbitration and Conciliation Act, 1996 allows a party to apply to the court for the same forms of interim protection before or during arbitral proceedings.