A contract is said to have been breached when the terms of the contract are violated or when the commitment made is broken. “Breach of contract” constitutes the pre-condition for a claim of damages, be it liquidated, unliquidated or otherwise. Thus, regardless of how much benefit the defendant makes from the contractual agreement, there can be no argument for damages until the contract is broken. A violation must be adjudicated and proven, not simply agreed upon by the parties, in order to be established.

The Law of Damages under Indian Contract Act, 1872:

Section 73 & 74 of the Act contain provisions relating to breach of contractual obligations. Section 73 of the Act deals with damages arising upon breach of a contractual obligation, resulting in losses to the aggrieved party. Under this section the damages that are awarded to the aggrieved party are in the nature of unliquidated damages upon assessment of the loss and injury suffered and doesn’t compensate for indirect or remote losses arising out of such breach. Section 74 deals with liquidated damages where the contract stipulates the quantum of damages in case of a breach of the contract.