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When a party to the contract makes a breach of contract, there are two possible alternatives available to the other party.

Firstly to bring an action for the breach of contract, and secondly he may bring an action for specific performance of the contract.

COMPENSATION IN CASE OF BREACH

1. Compensation for loss or damage caused by breach of contract.

For the breach of contract damages is the most appropriate remedy. When a contact 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 or indirect loss or damage sustained by reason of the breach.

2. Compensation for breach of contact where penalty stipulated for.

When a contract has been broken and a sum has been named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether actual damage or loss is proved to have been caused thereby, to receive from the party who as broken the contract reasonable compensation not exceeding the amount so named or, the penalty stipulated for.

3.Party rightfully rescinding contract entitled to compensation

A person who rightfully rescinds a contract is entitled to compensation for any damage, which he has sustained through non-fulfillment of the contract.

Specific performance means actual execution of the contract as agreed between the parties.

Specific Performance of any contract may, in the discretion of the court be enforced in the following situations –

• When there exists no standard for ascertaining the actual damage caused by the non-performance of the act agreed to be done; or

• When the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief.

Exceptions: where compensation would be adequate relief are:

1. Agreement by a landlord for repair of the rented premises;

2. Contract for the mortgage of immovable property;

3. Contract for the sale of any goods, for instance machinery or buffaloes. However, a contract to deliver rare coins would be specifically enforceable, as compensation would not constitute adequate relief in such a case;

4. An agreement to pay money by installments;

5. An agreement for lending money.

BESIDES THE FOLLOWING:

• A contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the court cannot enforce specific performance of its material terms, cannot be specifically enforced.

• Another situation when a contract cannot be specifically enforced is where "the contract is in its nature determinable". A contract is said to be determinable, when a party to the contract can put it to an end.

• A contract the performance of which involves the performance of a continuous duty, which the Court can not supervise, cannot be specifically enforced.