‘A’ is a cotton supplier who contracts to sell 500 bales of cotton to a fabric manufacturer ‘B’ on a fixed day. A knows nothing about ‘B’s business requirement and mode of operating business. ‘A’ fails to supply the promised cotton and as a result B had to keep his mill closed for three days. ‘B’ claims for the damages not only for the breach of contract but also special loss caused to him due to closure of Mill for three days. Advise Mr. ‘B’.
B can claim ordinary damages for A for the breach of contract by A to supply 500 bales of cotton to B on a fixed day.
When a contract is breached, the affected party is entitled for damages. Damages means money compensation allowed to the affected party by the Court.
The object of awarding damages for the breach of a contract is to put the affected party in the same position as if he had not been affected. The Court is often subject to difficultly to determine the exact amount to be given as compensation to the affected party. The Court is guided by some norms and principles.
When a contract is breached, the injured party is entitled to receive:
Such damages as would arise naturally in the course of things. This relates to ordinary damages.
Ordinary damages are awarded if the loss is direct and natural arising in the usual course of things from such breach of contract. In other words, there must be some proximate link between the loss and the breach of contract.
Special damages are awarded only if the parties had contemplated at the time of making the contract that such damages would reasonably be the probable result of breach of contract.
There must be special circumstances which would cause special loss in case of breach of contract. Such special circumstances must be brought to the notice of the other party. Only then, special damages can be claimed for the breach of such contract.
In the given case, B can claim only ordinary damages caused to him due to closure of mill for three days, as he had not intimated A about the special requirement of cotton for the manufacture as the time of entering into the contract.
So, B can claim ordinary damages for the breach of contract and not for the loss caused to him due to closure of mill for 3 days.