Section 75 Contract Act: Party rightfully rescinding contract, entitled to compensation

Section 75 of Indian Contract Act: Party rightfully rescinding contract, entitled to compensation

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

A person who rightfully rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfilment of the contract.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Contract Sec 2(h)

Legal Commentary & Landmark Judgments: Section 75

Section 75 of the Indian Contract Act, 1872 guarantees that a person who rightfully rescinds a contract is entitled to compensation for any damage sustained through non-fulfillment.

Statutory Rights & Obligations: Section 75 provides that a person who rightfully rescinds a contract (such as for anticipatory breach under Section 39, fraud under Section 19, or delay where time is of the essence under Section 55) is entitled to compensation for any damage which he has sustained through the non-fulfillment of the contract.
Statutory Relief & Application: It harmonizes the remedy of rescission with the right to claim compensatory damages, confirming that rescinding an agreement does not waive the injured party's claim for damages under Section 73.

Key Landmark Precedents:

Murlidhar Chiranjilal v. Harishchandra Dwarkadas (AIR 1962 SC 366): The Supreme Court held that when a contract is rightfully repudiated, the injured party is entitled to damages under Section 75 measured by the difference between the contract price and market price on the breach date.
State of Kerala v. M.A. Mathai (2007) 10 SCC 195: The Supreme Court affirmed that a contractor who rightfully abandons a contract due to fundamental breach by the employer is entitled to recover compensation under Section 75 for expenditures incurred and lost profits.

Legal Commentary:

Section 75 protects parties forced to terminate contracts due to counterparty default. The termination notice should explicitly state that the rescission is made under Section 75 without prejudice to the claimant's right to pursue full damages under Section 73 and Section 74.

Section 75: Party rightfully rescinding contract, entitled to compensation

Section 75 of Indian Contract Act: Party rightfully rescinding contract, entitled to compensation

Legal Commentary & Landmark Judgments: Section 75