Forfeiture As Compensation Under The Contract Act, 1872

1. Forfeiture means loss or denial of something in case if there is a penalty or fine imposed due to an action or an omission by moving away from one's obligations. In Contract law, it is generally used to indicate that, with former consensus between the parties, the amount which is clearly indicated in terms of the contract to be given as earnest is not given back to the purchaser who has given his money, if due to his fault or failure, the contract is broken in nearby future.
2. The question in regard to claim for forfeiture of amount as compensation is to be considered with reference to Sections 73 and / or 74 of the Contract Act.

Section 73 of the Contract Act, 1872 deals with the compensation for loss or damage caused by breach of contract. The same is extracted below: -