AIR 1983 ALLAHABAD 234

Allahabad High Court

Hon'ble Judge(s): T. S. Misra, D. N. Jha , JJ

(A) Contract Act (9 of 1872) , S.73— Breach of contract - Does not eo instanti incur any pecuniary obligation. When there is a breach of contract, the party who commits the breach does not eo instant i.e. at that instant incur any pecuniary obligation, nor does the party complaining of the breach become entitled to a debt due from the other party. The only right which the party aggrieved by the breach of the contract has is the right to sue for damages. No pecuniary liability thus arises till the court has determined that the party complaining of the breach is entitled to damages. The Court in the first place must decide that the defendant is liable and then it should proceed to assess what that liability is. But, till that determination, there is no liability at all upon the defendant AIR 1974 SC 1245, Rel. on.(Para 9 17) A claim for compensation under the law of contracts is not a claim for such sum which is instantly due and payable. In the field of contracts, the amount @page-All235 named by parties as payable in case of breach, of a contract, whether that amount be in the nature of liquidated damages or a stipulation by way of penalty, is not a sum immediately due in the nature of a debt, it is, on the other hand, the uppermost limit of the reasonable compensation awarded ....