Question

Assertion :A breach of contract gives rise to a right of the injured party to recover the damages. Reason: The purpose of payment of damages is to restore the position of both the parties in the same status in which they would have been, had they not entered into the contract.

• A. Both Assertion and Reason are correct and Reason is the correct explanation for Assertion.
• B. Both Assertion and Reason are correct but Reason is not the correct explanation for Assertion.
• C. Assertion is correct but Reason is incorrect.
• D. Assertion is incorrect but Reason is correct.

Answer 1

The correct option is A Both Assertion and Reason are correct and Reason is the correct explanation for Assertion.

Section 73 of the Indian Contract Act, 1872 states that in case of breach of a contract the party suffering from the breach is entitled to receive appropriate compensation from the party breaching it for the loss caused which naturally arose from the usual course of things. Explanation to this provision states that the main aim of this provision is to impose a duty to mitigate the person to the position he or she was before entering into the contract. It is not in the nature of penalty. So, the courts have a duty to decide the existing cost of remedying the inconvenience while deciding the amount of loss.