ABC Ltd, (the plaintiff) Company, stopped the working because of the broken crankshaft. The plaintiff sent the crankshaft, as a business custom, through carrier for manufacturing a new one. Because of the delay in the ar

In cases where there is a breach of contract or delays in performance, the promisor who breaches is liable to pay compensation for damages suffered by the promisee. The compensation can be classified as: i. Those for damages that usually arise in the event of breach of contract; and ii. Those for damages which parties know and anticipated at the time of entering into the contract called special damages. This kind of special damages can be claimed only on previous notice or on lack of due diligence. However, no compensation is payable for any remote or any indirect loss. While assessing the damage the inconvenience caused to the aggrieved party on account of non-performance should be assessed carefully, as the party entitled for compensation, he has a duty to take steps to minimise the loss. The contention that the plaintiff did not explain to defendant that delay in delivering the crank shaft would delay resumption of the mill and this would result in losses to the plaintiff may not be accepted. The prevalent business custom says if delayed performance resulted loss to the other party, it should be compensated. In the given circumstances, delayed delivery is an accepted fact. So defendant may be made liable for compensation. Alternate Answer In cases where there is a breach of contract or delays in performance, the promisor who breaches is liable to pay compensation for damages suffered by the promisee. The compensation can be classified as: i. Those for damages that usually arise in the event of breach of contract; and ii. Those for damages which parties know and anticipated at the time of entering into the contract called special damages. This kind of special damages can be claimed only on previous notice or on lack of due diligence. However, no compensation is payable for any remote or any indirect loss. While assessing the damage the inconvenience caused to the aggrieved party on account of non-performance should be assessed carefully, as the party entitled for compensation, he has a duty to take steps to minimise the loss. The facts of the given situation are similar to the English Contract Law case of Hadley v. Baxendale. The case laid down the following two branches: a) The first branch deals with damages "as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things". For the sake of brevity, we may refer it as "General damages "; b) the second branch deals with damage "as may reasonably be supposed to have been in contemplation of both parties, at the time they made the contract, as the probable result of the beach of it". This may be referred as "Special damages". In the present situation, reference may be made to case of Hadley v. Baxendale and illustration (p) of section 73 of Indian Contract Act, 1872; the plaintiff is entitled to seek just the cost of replacing damaged components and a limited amount of general damages. Their assertion for the damages sustained due to the cessation of their operations while the remaining equipment was inoperative, due to the lack of the missing components, is invalid since they neither informed the defendant that the crankshaft was a critical component of the machinery nor did the defendants possess this knowledge.