What is a Contract?
Generally, a contract is an agreement made between two or more persons. for a contract to have a legal effect under the Contract Act 2872, the following factors must be present:
- A Proposal must be made by the promisor;
- The proposal must be accepted by the promisee. A proposal when accepted becomes a promise;
- A lawful consideration must be paid for the promise made, which, in turn forms an agreement;
- Every agreement enforceable by law is a Contract.
Note: Every Contract must be made with the free consent of the parties with legal capacity for lawful consideration and for lawful object.
What is a Breach of Contract in Bangladesh?
When a party to a contract fails or refuses to perform ( also includes an indication of intention for non-performance) his/her obligations owed under the contract is known as the Breach of Contract.
What are the remedies for Breach of Contract?
In case where the terms of the contract have been breached by any of the parties in the contract, the following remedies would be available to the aggrieved party under both law and equity:
- Compensatory Damage: When a contract is breached, the party who suffers from such breach is entitled to receive compensation from the wrongdoer. In awarding the compensation, the Court is likely to conduct 3 tier test as stipulated below:
- Has there been a breach of contract? the answer should be Yes.
- Has loss or injury occurred as a result of that breach? the answer should be Yes.
- Is the loss or injury too remote? the answer is No.
- Final Stage: Court awards damage calculating the amount of damage.
Note: If the answer to the 1st and 2nd stage was negative or if the loss or injury was too remote then the aggrieved party will not receive any award for damages.
- Liquidated Damage & penalty: It is an amount of compensation that been specified in the contract by the parties by way of penalty in the event of any breach and the party complaining the breach is entitled to have the stipulated amount as the court considers reasonable (whether or not actual damage or loss have been proved to have been caused thereby).
- Compensation for recession of contract: When a person rightfully rescinds a contract, he is entitled to compensation for damage that he has suffered due to non-performance of obligations under the contract by the other party.</br>
- Suit for Quantum Meruit: The term Quantum Meuit is a latin word meaning "as much as earned". The aggrieved party to a contract being breached by the other party.
- Suit for Injunction: An Aggrieved party may sue for injunction at the court whereby the wrongdoer is restrained from doing or continuing to do the wrongful act. Injunction is of two types: (a) temporary injunction and (b) perpetual injunction and it is a preventive relief granted at the discretion of the court.
- Suit for Specific Performance: In case where damage is not an adequate remedy, the court may order the party in breach of contract carry out his obligations as stated under the contract.
Services provided by FM Associates
Our legal team at FM Associates have years of experience in dealing with matters relating to the breach of contracts. We have previously assisted our clients by way of out of court settlement or litigation to obtain the maximum award for a contract that has been breached. We, with complete efficiency can advise our clients the steps that need to be taken in order to minimize the damage caused by the breach and also help them obtain the best possible remedy in case of damage that has already been suffered.