Question

Principle: When there is breach of contract, the resulting damages will have to be paid by the party breaching the contract to the aggrieved party. However, the parties are free to agree as to damages payable in advance in case there is breach of contract.
Facts: Mr. Ramesh entered into a contract with Mr. Ramakrishna for selling his green Alto Car for $Rs.3$ lakhs. Mr. Ramakrishna was to pay $Rs.3$ lakhs on or before ${25}^{th}$ April $2005$ and take possession of the car. The party failing to honour the contract has to pay $Rs.40,000/-$ as damages to the other party. Mr. Ramakrishna has not performed his apart of the contract. Mr. Ramesh is claiming $Rs.40,000/-$.

• A. Mr. Ramesh can sell the car in the second hand market and if he suffers any loss, then only he can claim that amount from Mr. Ramakrishna
• B. Mr. Ramakrishna is liable to pay the agreed damages
• C. Mr. Ramesh has to prove that he has suffered $Rs.40,000/-$ as damages to get it
• D. None of the above

Answer 1

The correct option is B Mr. Ramakrishna is liable to pay the agreed damages

Ramakrishna is liable to pay $Rs.40,000/-$ as agreed in the contract.