law: Indian Contract Act, 1872 
  73. Compensation of loss or damage
  
  caused by breach of contract
  When a contract has been broken, the party who suffers by such
  
  breach is entitled to receive, from the party who has broken the contract,
  
  compensation for any loss or damage caused to him thereby, which naturally
  
  arose in the usual course of things from such breach, or which the parties
  
  knew, when they made the contract, to be likely to result from the breach of
  
  it.
  Such compensation is not to be given for any remote and indirect
  
  loss or damage sustained by reason of the breach.
  Compensation for failure to discharge obligation resembling
  
  those created by contract: When an obligation resembling those created by
  
  contract has been incurred and has not been discharged, any person injured by
  
  the failure to discharge it is entitled to receive the same compensation from
  
  the party in default, as if such person had contracted to discharge it and had
  
  broken his contract.
  Explanation:  In estimating the loss or damage arising from
  
  a breach of contract, the means which existed of remedying the inconvenience
  
  caused by non-performance of the contract must be taken into account.
   Illustrations 
  (a) A contracts to sell and deliver 50 maunds of saltpetre to B,
  
  at a certain price to be paid on delivery. A breaks his promise. B is entitled
  
  to receive from A, by way of compensation, the sum, if any, by which the
  
  contract price falls short of the price for which B might have obtained 50
  
  maunds of saltpetre of like quality at the time when the saltpetre ought to
  
  have been delivered.
  (b) A hires B's ship to go to Bombay, and there takes on board,
  
  on the first of January, a cargo, which A is to provide, and to bring it to
  
  Calcutta, the freight to be paid when earned. B's ship does not go to Bombay,
  
  but A has opportunities for procuring suitable conveyance for the cargo upon
  
  terms as advantageous as those on which he had chartered the ship. A avails
  
  himself of those opportunities, but is put to trouble and expense in doing so.
  
  A is entitled to receive compensation from B in respect of such trouble and
  
  expense.
  (c) A contracts to buy of B, at a stated price, 50 maunds of
  
  rice, no time being fixed for delivery. A afterwards informs B that he will not
  
  accept the rice if tendered to him. B is entitled to receive from A, by way of
  
  compensation, the amount, if any, by which the contract price exceeds that
  
  which B can obtain for the rice at the time when A informs B that he will not
  
  accept it.
  (d) A contracts to buy B's ship for 60,000 rupees, but breaks
  
  the promise. A must pay to B, by way of compensation, the excess, if any, of
  
  the contract price over the price which B can obtain for the ship at the time
  
  of breach of promise.
  (e) A, the owner of a boat, contracts with B to take a cargo of
  
  jute to Mirzapur, for sale at that place, starting on a specified day. The
  
  boat, owing to some unavoidable cause, does not start at the time appointed,
  
  whereby the arrival of the cargo at Mirzapur is delayed beyond the time when it
  
  would have arrived if the boat had sailed according to the contract. After that
  
  date, and before the arrival of the cargo, the price of jute falls. The measure
  
  of the compensation payable to B by A is the difference between the price which
  
  B could have obtained for the cargo at Mirzapur at the time when it would have
  
  arrived if forwarded in due course, and its market price at the time when it
  
  actually arrived.
  (f) A contracts to repair B's house in a certain manner, and
  
  receives payment in advance. A repairs the house, but not according to
  
  contract. B is entitled to recover from A the cost of making the repairs
  
  conforming to the contract.
  (g) A contracts to let his ship to B for a year, from first of
  
  January, for a certain price. Freights rise, and, on the first of January, the
  
  hire obtainable for the ship is higher than the contract price. A breaks his
  
  promise. He must pay to B, by way of compensation, a sum equal to the
  
  difference between the contract price and the price for which B could hire a
  
  similar ship for a year on and from the first of January.
  (h) A contracts to supply B with a certain quantity of iron at a
  
  fixed price, being a higher price than that for which A could procure and
  
  deliver the iron. B wrongfully refuses to receive the iron. B must pay to A, by
  
  way of compensation, the difference between the contract price of the iron and
  
  the sum for which A could have obtained and delivered it.
  (i) A delivers to B, a common carrier, a machine, to be
  
  conveyed, without delay, to A's mill, informing B that his mill is stopped for
  
  want of the machine. B unreasonably delays the delivery of the machine, and A,
  
  in consequence, loses a profitable contract with the Government. A is entitled
  
  to receive from B, by way of compensation, the average amount of profit which
  
  would have been made by the working of the mill during the time that delivery
  
  of it was delayed, but not the loss sustained through the loss of the
  
  Government contract.
  (j) A, having contracted with B to supply B with 1,000 tons of
  
  iron at 100 rupees a ton, to be delivered at a stated time, contracts with C
  
  for the purchase of 1,000 tones of iron at 80 rupees a ton, telling C that he
  
  does so for the purpose of performing his contract with B. C fails to perform
  
  his contract with A, who cannot procure other iron, and B, in consequence,
  
  rescinds the contract. C must pay to A 20,000 rupees, being the profit which A
  
  would have made by the performance of his contract with B.
  (k) A contracts with B to make and deliver to B, by a fixed day,
  
  for a specified price, a certain piece of machinery. A does not deliver the
  
  piece of machinery, at the time specified, and, in consequence of this, B is
  
  obliged to procure another at a higher price than that which he was to have
  
  paid to A, and is prevented from performing a contract which B had made with a
  
  hired person at the time of his contract with A (but which had not been
  
  communicated to A), and is compelled to make compensation for breach of that
  
  contract. A must pay to B, by way of compensation, the difference between the
  
  contract price of the price of machinery and the sum paid by B for another, but
  
  not the sum paid by B to the third person by way of compensation.
  (l) A, a builder, contracts to erect and finish a house by the
  
  first of January, in order that B may give possession of it at that time to C,
  
  to whom B has contracted to let it. A is informed of the contract between B and
  
  C. A builds the house so badly that, before the first of January, it falls down
  
  and has to be rebuilt by B, who in consequence, loses the rent which he was to
  
  have received from C, and is obliged to make compensation to C for the breach
  
  of his contract. A must make compensation to B for the cost of rebuilding of
  
  the house, for the rent lost, and for the compensation made to C.
  (m) A sells certain merchandise to B, warranting it to be of a particular
  
  quality, and B, in reliance upon this warranty, sells it to C with a similar
  
  warranty. The goods prove to be not according to the warranty, and B becomes
  
  liable to pay C a sum of money by way of compensation. B is entitled to be
  
  reimbursed this sum by A.
  (n) A contracts to pay a sum of money to B on a day specified. A
  
  does not pay the money on that day. B, in consequence of not receiving the
  
  money on that day, is unable to pay his debts, and is totally ruined. A is not
  
  liable to make good to B anything except the principal sum he contracted to pay
  
  together with interest up to the day of payment.
  (o) A contracts to deliver 50 maunds of saltpetre to B on the
  
  first of January, at a certain price. B, afterwards, before the first of
  
  January, contracts to sell the saltpetre to C at a price higher than the market
  
  price of the first of January. A breaks his promise. In estimating the
  
  compensation payable by A to B, the market price of the first of January, and
  
  not the profit which would have arisen to B from the sale to C, is to be taken
  
  into account.
  (p) A contracts to sell and deliver 500 bales of cotton to B on
  
  a fixed day. A knows nothing of B's mode of conducting his business. A breaks
  
  his promise, and B, having no cotton, is obliged to close his mill. A is not
  
  responsible to B for the loss caused to B by closing of the mill.
  (q) A contracts to sell and deliver to B, on the first of
  
  January, certain cloth which B intends to manufacture into caps of a particular
  
  kind, for which there is no demand, except at that season. The cloth is not
  
  delivered till after the appointed time, and too late to be used that year in
  
  making caps. B is entitled to receive from A, by way of compensation, the
  
  difference between the contract price of the cloth and its market price at the
  
  time of delivery, but not the profits which he expected to obtain by making
  
  caps, nor the expenses which he has been put to in making preparation for the
  
  manufacture.
  (r) A, a ship owner, contracts with B to convey him from
  
  Calcutta to Sydney in A's ship, sailing on the first of January, and B pays to
  
  A, by way of deposit, one-half of his passage-money. The ship does not sail on
  
  the first of January, and B, after being in consequence, detained in Calcutta
  
  for some time, and thereby put to some expense, proceeds to Sydney in another
  
  vessel, and, in consequence, arriving too late in Sydney, loses a sum of money.
  
  A is liable to repay to B his deposit, with interest, and the expense to which
  
  he is put by his detention in Calcutta, and the excess, if any, of the
  
  passage-money paid for the second ship over that agreed upon for the first, but
  
  not the sum of money which B lost by arriving in Sydney too late.