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Section 73 Indian Contract Act 1872 (Compensation for loss …)

1. Short title. Extent. Commencement. Saving. 2. Interpretation-clause. 3. Communication, acceptance and revocation of proposals. 4. Communication when complete. 5. Revocation of proposals and acceptances 6. Revocation how made 7. Acceptance must be absolute. 8. Acceptance by performing conditions, or receiving consideration 9. Promises, express and implied. 10. What agreements are contracts. 11. Who are competent to contract. 12. What is a sound mind for the purposes of contracting. 13. “Consent” defined. 14. “Free consent” defined. 15. “Coercion” defined. 16. “Undue influence” defined. 17. “Fraud” defined. 18. “Misrepresentation” defined. 19. Voidability of agreements without free consent. 19A. Power to set aside contract induced by undue influence Agreement void where both parties are under mistake as to matter of fact 21. Effect of mistakes as to law. 22. Contract caused by mistake of one party as to matter of fact. 23. What considerations and objects are lawful, and what not 24. Agreement void, if considerations and objects unlawful in part 25. Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law. 26. Agreement in restraint of marriage, void. 27. Agreement in restraint of trade, void. Saving of agreement not to carry on business of which good-will is sold. 28. Agreements in restraint of legal proceeding void. Saving of contract to refer to arbitration dispute that may arise. Saving of contract to refer questions that have already arisen. Saving of a guarantee agreement of a bank or a financial institution. 29. Agreements void for uncertainty. 30. Agreements by way of wager, void. Exception in favour of certain prizes for horse-racing. Section 294A of the Indian Penal Code not affected. 31. “Contingent contract” defined 32. Enforcement of contracts contingent on an event happening 33. Enforcement of contracts contingent on an event not happening. 34. When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person. 35. When contracts become void which are contingent on happening of specified event within fixed time. When contracts may be enforced, which are contingent on specified event not happening within fixed time. 36. Agreement contingent on impossible events void. 37. Obligation of parties to contracts. 38. Effect of refusal to accept offer of performance. 39. Effect of refusal of party to perform promise wholly. 40. Person by whom promise is to be performed. 41. Effect of accepting performance from third person. 42. Devolution of joint liabilities. 43. Any one of joint promisors may be compelled to perform. Each promisor may compel contribution. Sharing of loss by default in contribution. 44. Effect of release of one joint promisor. 45. Devolution of joint rights. 46. Time for performance of promise, when no application is to be made and no time is specified. 47. Time and place for performance of promise, where time is specified and no application to be made. 48. Application for performance on certain day to be at proper time and place. 49. Place for performance of promise, where no application to be made and no place fixed for performance. 50. Performance in manner or at time prescribed or sanctioned by promise. 51. Promisor not bound to perform, unless reciprocal promisee ready and willing to perform. 52. Order of performance of reciprocal promises. 53. Liability of party preventing event on which the contract is to take effect. 54. Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises. 55. Effect of failure to perform at fixed time, in contract in which time is essential. Effect of such failure when time is not essential. Effect of acceptance of performance at time other than that agreed upon. 56. Agreement to do impossible act. Contract to do an act afterwards becoming impossible or unlawful. Compensation for loss through non-performance of act known to be impossible or unlawful. 57. Reciprocal promise to do things legal, and also other things illegal. 58. Alternative promise, one branch being illegal. 59. Application of payment where debt to be discharged is indicated. 60. Application of payment where debt to be discharged is not indicated. 61. Application of payment where neither party appropriates. 62. Effect of novation, rescission, and alteration of contract. 63. Promise may dispense with or remit performance of promise. 64. Consequences of rescission of voidable contract. 65. Obligation of person who has received advantage under void agreement, or contract that becomes void. 66. Mode of communicating or revoking rescission of voidable contract. 67. Effect of neglect of promisee to afford promisor reasonable facilities for performance. 68. Claim for necessaries supplied to person incapable of contracting, or on his account. 69. Reimbursement of person paying money due by another, in payment of which he is interested. 70. Obligation of person enjoying benefit of non-gratuitous act. 71. Responsibility of finder of goods. 72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion. 73. Compensation for loss or damage caused by breach of contract. Compensation for failure to discharge obligation resembling those created by contract. 74. Compensation for breach of contract where penalty stipulated for. 75. Party rightfully rescinding contract, entitled to compensation. Section 76-123 (Repealed) 124. “Contract of indemnity” defined. 125. Rights of indemnity-holder when sued. 126. “Contract of guarantee”, “surety”, “principal debtor” and “creditor”. 127. Consideration for guarantee. 128. Surety‟s liability. 129. “Continuing guarantee”. 130. Revocation of continuing guarantee. 131. Revocation of continuing guarantee by surety‟s death. 132. Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other‟s default.
See also  Section 10 Indian Contract Act 1872 (What agreements are contracts)
133. Discharge of surety by variance in terms of contract. 134. Discharge of surety by release or discharge of principal debtor. 135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor 136. Surety not discharged when agreement made with third person to give time to principal debtor. 137. Creditor‟s forbearance to sue does not discharge surety. 138. Release of one co-surety does not discharge others. 139. Discharge of surety of creditor‟s act or omission impairing surety‟s eventual remedy. 140. Rights of surety on payment or performance. 141. Surety‟s right to benefit of creditor‟s securities. 142. Guarantee obtained by misrepresentation invalid. 143. Guarantee obtained by concealment invalid. 144. Guarantee on contract that creditor shall not act on it until co-surety joins. 145. Implied promise to indemnify surety. 146. Co-sureties liable to contribute equally. 147. Liability of co-sureties bound in different sums. 148. “Bailment”, “bailor” and “bailee” defined. 149. Delivery to bailee how made. 150. Bailor‟s duty to disclose faults in goods bailed. 151. Care to be taken by bailee. 152. Bailee when not liable for loss, etc., of thing bailed. 153. Termination of bailment by bailee‟s act inconsistent with conditions. 154. Liability of bailee making unauthorized use of goods bailed. 155. Effect of mixture, with bailor‟s consent, of his goods with bailee‟s. 156. Effect of mixture, without bailor‟s consent, when the good can be separated. 157. Effect of mixture, without bailor‟s consent, when the goods cannot be separated. 158. Repayment, by bailor, of necessary expenses. 159. Restoration of goods lent gratuitously. 160. Return of goods bailed, on expiration of time or accomplishment of purpose. 161. Bailee‟s responsibility when goods are not duly returned. 162. Termination of gratuitous bailment by death. 163. Bailor entitled to increase or profit from goods bailed. 164. Bailor‟s responsibility to bailee. 165. Bailment by several joint owners. 166. Bailee not responsible on re-delivery to bailor without title. 167. Right of third person claiming goods bailed. 168. Right of finder of goods. May sue for specific reward offered. 169. When finder of thing commonly on sale may sell it. 170. Bailee‟s particular lien. 171. General lien of bankers, factors, wharfingers, attorneys and policy-brokers. 172. “Pledge”, “Pawnor” and “Pawnee” defined. 173. Pawnee‟s right of retainer. 174. Pawnee not to retain for debt or promise other than that for which goods pledged. Presumption in case of subsequent advances. 175. Pawnee’s right as to extraordinary expenses incurred. 176. Pawnee’s right where pawnor makes default. 177. Defaulting pawnor’s right to redeem. 178. Pledge by mercantile agent. 178A. Pledge by person in possession under voidable contract. 179. Pledge where pawnor has only a limited interest. 180. Suit by bailor or bailee against wrong-doer. 181. Apportionment of relief or compensation obtained by such suits. 182. “Agent” and “principal” defined. 183. Who may employ agent. 184. Who may be an agent. 185. Consideration not necessary. 186. Agent‟s authority may be expressed or implied. 187. Definitions of express and implied authority. 188. Extent of agent‟s authority. 189. Agent‟s authority in an emergency. 190. When agent cannot delegate. 191. “Sub-agent” defined. 192. Representation of principal by sub-agent properly appointed. Agent‟s responsibility for sub-agent. Sub-agent‟s responsibility. 193. Agent‟s responsibility for sub-agent appointed without authority. 194. Relation between principal and person duly appointed by agent to act in business of agency. 195. Agent‟s duty in naming such person. 196. Right of person as to acts done for him without his authority. Effect of ratification. 197. Ratification may be expressed or implied. 198. Knowledge requisite for valid ratification. 199. Effect of ratifying unauthorized act forming part of a transaction. 200. Ratification of unauthorized act cannot injure third person. 201. Termination of agency. 202. Termination of agency, where agent has an interest in subject-matter. 203. When principal may revoke agent‟s authority. 204. Revocation where authority has been partly exercised. 205. Compensation for revocation by principal, or renunciation by agent. 206. Notice of revocation or renunciation. 207. Revocation and renunciation may be expressed or implied. 208. When termination of agent‟s authority takes effect as to agent, and as to third persons. 209. Agent‟s duty on termination of agency by principal‟s death or insanity. 210. Termination of sub-agent‟s authority. 211. Agent‟s duty in conducting principal‟s business. 212. Skill and diligence required from agent. 213. Agent‟s accounts. 214. Agent‟s duty to communicate with principal. 215. Right of principal when agent deals, on his own account, in business of agency without principal‟s consent. 216. Principal‟s right to benefit gained by agent dealing on his own account in business of agency. 217. Agent‟s right of retainer out of sums received on principal‟s account. 218. Agent‟s duty to pay sums received for principal. 219. When agent‟s remuneration becomes due. 220. Agent not entitled to remuneration for business misconducted. 221. Agent’s lien on principal’s property. 222. Agent to be indemnified against consequences of lawful acts. 223. Agent to be indemnified against consequences of acts done in good faith. 224. Non-liability of employer of agent to do a criminal act. 225. Compensation to agent for injury caused by principal’s neglect. 226. Enforcement and consequences of agent‟s contracts. 227. Principal how far bound, when agent exceeds authority. 228. Principal not bound when excess of agent‟s authority is not separable. 229. Consequences of notice given to agent. 230. Agent cannot personally enforce, nor be bound by, contracts on behalf of principal. Presumption of contract to contrary. 231. Rights of parties to a contract made by agent not disclosed. 232. Performance of contract with agent supposed to be principal. 233. Right of person dealing with agent personally liable. 234. Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable. 235. Liability of pretended agent.
See also  Section 21 Indian Stamp Act 1899
236. Person falsely contracting as agent, not entitled to performance. 237. Liability of principal inducing belief that agent‟s unauthorized acts were authorized. 238. Effect, on agreement, of misrepresentation or fraud by agent. Section 239-266 (Repealed) SCHEDULE (Repealed)

Section 73 Indian Contract Act 1872

Section 73 of the Indian Contract Act 1872 is about Compensation for loss or damage caused by breach of contract. It is under CHAPTER VI of the Act. CHAPTER VI is titled OF THE CONSEQUENCES OF BREACH OF CONTRACT.

Compensation for loss or damage caused by breach of contract

When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.

Compensation for failure to discharge obligation resembling those created by contract.When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.

Explanation.In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account.


(a) A contracts to sell and deliver 50 maunds of saltpetre to B, at a certain price to be paid on delivery. A breaks his promise. B is entitled to receive from A, by way of compensation, the sum, if any, by which the contract price falls short of the price for which B might have obtained 50 maunds of saltpetre of like quality at the time when the saltpetre ought to have been delivered.

(b) A hires Bs ship to go to Bombay, and there take on board, on the first of January, a cargo, which A is to provide, and to bring it to Calcutta, the freight to be paid when earned. Bs ship does not go to Bombay, but A has opportunities of procuring suitable conveyance for the cargo upon terms as advantageous as those on which he had chartered the ship. A avails himself of those opportunities, but is put to trouble and expense in doing so. A is entitled to receive compensation from B in respect of such trouble and expense.

(c) A contracts to buy of B, at a stated price, 50 maunds of rice, no time being fixed for delivery. A afterwards informs B that he will not accept the rice if tendered to him. B is entitled to receive from A, by way of compensation, the amount, if any, by which the contract price exceeds that which B can obtain for the rice at the time when A informs B that he will not accept it.

(d) A contracts to buy B’s ship for 60,000 rupees, but breaks his promise. A must pay to B, by way of compensation, the excess, if any, of the contract price over the price which B can obtain for the ship at the time of the breach of promise.

(e) A, the owner of a boat, contracts with B to take a cargo of jute to Mirzapur, for sale at that place, starting on a specified day. The boat, owing to some avoidable cause, does not start at the time appointed, whereby the arrival of the cargo at Mirzapur is delayed beyond the time when it would have arrived if the boat had sailed according to the contract. After that date, and before the arrival of the cargo, the price of jute falls. The measure of the compensation payable to B by A is the difference between the price which B could have obtained for the cargo at Mirzapur at the time when it would have arrived if forwarded in due course, and its market price at the time when it actually arrived.

(f) A contracts to repair B’s house in a certain manner, and receives payment in advance. A repairs the house, but not according to contract. B is entitled to recover from A the cost of making the repairs conform to the contract.

(g) A contracts to let his ship to B for a year, from the first of January, for a certain price. Freights rise, and, on the first of January, the hire obtainable for the ship is higher than the contract price. A breaks his promise. He must pay to B, by way of compensation, a sum equal to the difference between the contract price and the price for which B could hire a similar ship for a year on and from the first of January.

(h) A contracts to supply B with a certain quantity of iron at a fixed price, being a higher price than that for which A could procure and deliver the iron. B wrongfully refuses to receive the iron. B must pay to A, by way of compensation, the difference between the contract price of the iron and the sum for which A could have obtained and delivered it.

(i) A delivers to B, a common carrier, a machine, to be conveyed, without delay, to A’s mill, informing B that his mill is stopped for want of the machine. B unreasonably delays the delivery of the machine, and A, in consequence, loses a profitable contract with the Government. A is entitled to receive from B, by way of compensation, the average amount of profit which would have been made by the working of the mill during the time that delivery of it was delayed, but not the loss sustained through the loss of the Government contract.

See also  Section 170 Indian Contract Act 1872 (Bailee's particular lien)

(j) A, having contracted with B to supply B with 1,000 tons of iron at 100 rupees a ton, to be delivered at a stated time, contracts with C for the purchase of 1,000 tons of iron at 80 rupees a ton, telling C that he does so for the purpose of performing his contract with B. C fails to perform his contract with A, who cannot procure other iron, and B, in consequence, rescinds the contract. C must pay to A 20,000 rupees, being the profit which A would have made by the performance of his contract with B.

(k) A contracts with B to make and deliver to B, by a fixed day, for a specified price, a certain piece of machinery. A does not deliver the piece of machinery at the time specified, and in consequence of this, B is obliged to procure another at a higher piece than that which he was to have paid to A, and is prevented from performing a contract which B had made with a third person at the time of his contract with A (but which had not been then communicated to A), and is compelled to make compensation for breach of that contract. A must pay to B, by way of compensation, the difference between the contract price of the price of machinery and the sum paid by B for another, but not the sum paid by B to the third person by way of compensation.

(l) A, a builder, contracts to erect and finish a house by the first of January, in order that B may give possession of it at that time to C, to whom B has contracted to let it. A is informed of the contract between B and C. A builds the house so badly that, before the first of January, it falls down and has to be re-built by B, who, in consequence, loses the rent which he was to have received from C, and is obliged to make compensation to C for the breach of his contract. A must make compensation to B for the cost of rebuilding the house, for the rent lost, and for the compensation made to C.

(m) A sells certain merchandise to B, warranting it to be of a particular quality, and B, in reliance upon this warranty, sells it to C with a similar warranty. The goods prove to be not according to the warranty, and B becomes liable to pay C a sum of money by way of compensation. B is entitled to be reimbursed this sum by A.

(n) A contracts to pay a sum of money to B on a day specified. A does not pay the money on that day, B, in consequence of not receiving the money on that day, is unable to pay his debts, and is totally ruined. A is not liable to make good to B anything except the principal sum he contracted to pay, together with interest up to the day of payment.

(o) A contracts to deliver 50 maunds of saltpetre to B on the first of January, at a certain price. B afterwards, before the first of January, contracts to sell the saltpetre to C at a price higher than the market price of the first of January. A breaks his promise.

In estimating the compensation payable by A to B, the market price of the first of January, and not the profit which would have arisen to B from the sale to C, is to be taken into account.

(p) A contracts to sell and deliver 500 bales of cotton to B on a fixed day. A knows nothing of Bs mode of conducting his business. A breaks his promise, and B, having no cotton, is obliged to close his mill. A is not responsible to B for the loss caused to B by the closing of the mill.

(q) A contracts to sell and deliver to B, on the first of January, certain cloth which B intends to manufacture into caps of a particular kind, for which there is no demand, except at that season. The cloth is not delivered till after the appointed time, and too late to be used that year in making caps. B is entitled to receive from A, by way of compensation, the difference between the contract price of the cloth and its market price at the time of delivery, but not the profits which he expected to obtain by making caps, nor the expenses which he has been put to in making preparation for the manufacture.

(r) A, a ship-owner, contracts with B to convey him from Calcutta to Sydney in A’s ship, sailing on the first of January, and B pays to A, by way of deposit, one-half of his passage-money. The ship does not sail on the first of January, and B, after being in consequence detained in Calcutta for some time and thereby put to some expense, proceeds to Sydney in another vessel, and, in consequence, arriving too late in Sydney, loses a sum of money. A is liable to repay to B his deposit, with interest, and the expense to which he is put by his detention in Calcutta, and the excess, if any, of the passage-money paid for the second ship over that agreed upon for the first, but not the sum of money which B lost by arriving in Sydney too late.

See also:

Section 72 Indian Contract Act 1872 (Liability of person to whom money is paid, or thing delivered, by mistake or under coercion)

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