Restitutionary Damages Vs. Compensatory Damages: Explained

In an important judgment by the Madras High Court delivered on December 15, 2021, the Court explained the circumstances under which an aggrieved party is entitled to compensatory damages and restitutionary damages, respectively.

A contract is a legally enforceable agreement executed between two or more parties creating legal obligations. When there is any breach of contract, one of the remedies is the aggrieved party's entitlement to damages. The Indian Contract Act, 1872 ("Act") entails the contractual obligations, breach of contracts, and its consequences and remedies. Section 73 of the Act deals with grant of damages. Under Section 73 of the Act, a party is entitled to such damages which arise in the natural course due to breach and which could be contemplated at the time of entering into the contract.