A contract is breached when one party fails, without lawful excuse, to do what it promised. The main laws are the Indian Contract Act, 1872 and the Specific Relief Act, 1963.
Step 1: Read the contract
Look for the payment terms, deadline, termination clause, damages clause and the arbitration or court jurisdiction clause. If there is an arbitration clause, the dispute normally goes to an arbitrator rather than a court.
Step 2: Send a legal notice
A written notice states the facts, the breach, what you want and a reasonable time to comply. It is not always compulsory, but it shows seriousness, builds your record and often leads to settlement.
Your remedies
1. Damages (compensation)
Section 73 allows compensation for loss that arises naturally from the breach or that both parties knew was likely. You must prove the loss and take reasonable steps to reduce it. Courts do not give “punitive” damages in contract cases.
2. Liquidated damages and penalty
If the contract fixes an amount payable on breach, section 74 allows the court to award reasonable compensation not exceeding that amount. The party need not prove the exact loss in every case, but the court can reduce an excessive sum.
3. Specific performance
You can ask the court to order the other party to do what it promised, for example to complete a sale of a flat. After the 2018 amendment, specific performance is a general rule rather than an exception, subject to certain limits. The buyer must show that he was always ready and willing to perform his part.
4. Injunction
A court order stopping someone from doing something, for example sharing confidential information or selling the same property to someone else.
5. Rescission (cancellation)
You can ask the court to cancel the contract, for instance where it was induced by fraud or misrepresentation.
6. Quantum meruit
If you did work and the contract ends before payment, you can claim reasonable payment for it.
Time limits
Most claims must be filed within three years from the date of breach. For specific performance of a contract, the period is three years from the date fixed for performance, or from when you came to know it will be refused. Do not wait.
Commercial disputes: mediation first
For commercial disputes above the prescribed value, the Commercial Courts Act requires you to attempt pre-institution mediation before filing a suit, unless urgent relief is needed.
Practical tips
- Keep all emails, WhatsApp chats, invoices and receipts
- Do not cancel the contract without checking the termination clause
- Continue performing your own part, or you may weaken your case
- Think about settlement: litigation can be long and costly
Frequently asked questions
Can I recover legal costs from the other side?
Courts can award costs, but these are often less than the actual fees. Your contract may also have a clause on costs.
What if the contract was oral?
Oral contracts are valid, but proving them is harder. WhatsApp messages and payment records can help.
What is the difference between damages and specific performance?
Damages give you money for your loss. Specific performance makes the other side actually do the act.
Is breach of contract a criminal offence?
Not by itself. But cheating or breach of trust, if shown with dishonest intention from the start, can be criminal.
Tell us briefly what has happened and we will guide you on the next step. Hemanth & Associates, Malleshwaram, Bengaluru.
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Last reviewed: October 2026. This article is for general information only. It is not legal advice and does not create an advocate-client relationship. Laws, fees and procedures change, and every case depends on its own facts, so please consult a qualified advocate before acting. In line with Bar Council of India rules, this page is not an advertisement or solicitation.
