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Question

Solve :
X contracts with Y to pay Rs. 1,000 if he fails to pay Y Rs. 500 on a given day. X fails to pay Rs. 500 on that day. Can Y recover Rs. 1,000 ?

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Solution

Solution : Section to which the given problem relates: Section 74.
Decision and Reason : Y is entitled to recover from X such compensation not exceeding Rs. 1,000 as the court considers reasonable because in case of stipulation for penalty, the aggrieved party is entitled to receive only reasonable compensation not exceeding the sum specified in the contract.

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