Our firm Josh and Mak International can offer a comprehensive range of services to clients dealing with breach of contract issues. These services may include, but are not limited to, the following:
- Legal Consultation and Advice: Offering expert legal advice to clients about their rights, obligations, and the implications of a breach of contract. This can involve interpreting contract terms, advising on the legal remedies available, and providing a strategic approach to resolving the dispute.
- Drafting and Reviewing Contracts: Assisting clients in drafting robust contracts with clear terms and conditions to minimize the risk of future disputes. This service also includes reviewing existing contracts to identify potential legal issues or ambiguities that could lead to a breach.
- Negotiation Services: Representing clients in negotiations with the other party to reach an amicable settlement. This can be a crucial service for clients who prefer to resolve disputes outside of court to save time and costs.
- Alternative Dispute Resolution (ADR): Offering services in ADR mechanisms like mediation and arbitration. These processes can provide a less adversarial and more cost-effective way of resolving contract disputes than traditional litigation.
- Litigation: Representing clients in court if a dispute escalates to litigation. This includes preparing legal documents, presenting arguments and evidence, and navigating the procedural aspects of a trial.
- Enforcement of Judgments: Assisting clients in enforcing court judgments or arbitration awards related to breach of contract cases. This involves initiating proceedings to ensure compliance by the defaulting party.
- Risk Management and Compliance: Advising clients on risk management strategies to avoid potential breaches and ensure compliance with contractual obligations. This could also involve training clients’ staff on contract management and compliance issues.
- Recovery of Damages: Assisting in calculating and claiming damages resulting from a breach of contract. This includes both general and special damages, depending on the nature of the breach.
- Termination of Contracts: Advising on the legal implications and procedures for the termination of contracts, ensuring that clients’ interests are protected while minimizing legal risks.
- Drafting Legal Notices: Preparing and sending legal notices to the defaulting parties in breach of contract scenarios, which is often a preliminary step before initiating formal legal proceedings.
By offering these services, we provide comprehensive legal support to individuals and businesses navigating the complexities of contract law in Pakistan. Please get in touch at aemen@joshandmak.com
Client information Article follows below
The judicial attitude towards breach of contract in Pakistan, as reflected the recent court citations of Pakistan as discussed in this client information article , reveals a consistent approach that upholds the principles of contract law, particularly the award of damages and the burden of proof in cases of breach. These cases, ranging from employment disputes to financial obligations, demonstrate the court’s commitment to ensuring fairness and justice in contractual relationships.
In the citation “2023 SCMR 1189” involving Habib Bank Limited and Mehboob Rabbani, the Supreme Court of Pakistan underscores the fundamental principle that the plaintiff or claimant bears the burden of proving the existence of a contract, the occurrence of a breach, and the extent of the damages claimed. This aligns with the general principles of contract law, where the claimant must establish these elements to succeed in a breach of contract claim.
The same citation also elaborates on the purpose and scope of awarding damages. The principle of restitutio in integrum (restoration to original condition) is highlighted, emphasizing that damages are not intended as a deterrent or punitive measure but as a means to compensate the aggrieved party, placing them in the position they would have been in had the breach not occurred. This principle is a cornerstone of contract law, aiming to make the injured party whole.
Furthermore, the distinction between general and special damages is addressed in the same citation. General damages cover losses that naturally arise from the breach of contract, while special damages refer to specific losses that were foreseeable at the time the contract was made. This distinction is crucial in determining the extent and nature of the compensation awarded.
In the case of wrongful dismissal of an employee, as seen in the citation involving Habib Bank Limited, the court took a stern view. The judgment focused on the financial and reputational losses suffered by the employee due to wrongful dismissal, stressing the importance of fair and just treatment in employment contracts. The court held that once wrongful dismissal is established, the onus shifts to the employer to prove that the claimed damages are too remote or unrelated to the breach. This approach reinforces the principle of fairness and justice in employment relationships and highlights the significance of proper procedural conduct by employers.
In the citation “2023 PLC(CS) 891,” the court again dealt with the principles of awarding damages and the burden of proof in breach of contract cases. This consistent approach in various judgments indicates a solid and predictable judicial stance on breach of contract cases in Pakistan.
Lastly, in the citation “2023 PLC(CS) 1209,” involving a constitutional petition by a contract employee, the court maintained that the appropriate remedy for a contract employee alleging breach of contract is to file a suit for damages, rather than seeking constitutional relief. This demarcation of remedies underscores the court’s adherence to contractual principles and procedural propriety.
These recent cases collectively demonstrate the judiciary’s commitment to upholding the principles of contract law, particularly concerning the award of damages and the burden of proof in breach of contract cases. The consistent application of these principles across various contexts signifies a judicial approach that values fairness, justice, and adherence to established legal doctrines in contractual disputes.
The Essentials of Breach of Contract: Legal Provisions and Principles
Contract Act, 1872 – Section 73 and 74: Central to most breach of contract cases is the Contract Act, 1872, particularly Sections 73 and 74. These sections deal with the compensation for loss or damage caused by breach of contract and the compensation for breach of contract where penalty stipulated. The rulings often revolve around the assessment of damages – both general and special, and the application of these sections forms the bedrock of judicial reasoning in breach of contract cases.
Civil Procedure Code, 1908: The Civil Procedure Code, especially Order XXXIX, Rules 1 & 2, and Order VI, Rule 1, are frequently cited in these cases, especially concerning interim relief and procedural aspects of the suits.
Specific Relief Act, 1877: Sections 12, 19, 21, 42, 54, and 56 of the Specific Relief Act are often invoked, particularly in cases involving requests for specific performance, injunctions, and declarations.
Case Analysis: Reflecting the Judicial Perspective
Commercial Contracts and Performance Guarantees: In “2023 CLC 1422”, the Karachi High Court dealt with the encashment of a bid bond in a contract for the supply of LNG. The Court upheld the right of the defendant authority to encash the bid bond, emphasizing the commercial understanding and experience of the plaintiff company. The ruling highlights the judiciary’s respect for the sanctity of commercial contracts and the enforcement of performance guarantees.
Employment Disputes and the Master-Servant Relationship: The case “2023 PLC(CS) 889” reflects the court’s adherence to the master and servant rule in employment contracts. The judgment acknowledges the employer’s right to terminate employment, provided the contractual terms, like notice or payment in lieu thereof, are adhered to.
Damages in Breach of Contract: The Supreme Court in “2022 SCMR 1572” elucidated the principles for awarding damages in a breach of contract. The Court differentiated between the principal amount due under the contract and additional claims for damages, stressing the need for specific evidence to substantiate claims for special or general damages.
Investigations into Company Affairs: “2022 CLD 468” showcases the Court’s reluctance to permit investigations into a company’s affairs based solely on allegations of breach of contract in commercial dealings, highlighting the need to prevent frivolous litigation and maintain the sanctity of contractual remedies.
Remedies for Breach of Contract: In several cases, such as “2022 CLC 1797” and “2022 CLC 1772”, the courts have consistently held that the primary remedy for breach of contract is damages, and specific performance is generally not enforceable, particularly in personal service contracts. The courts stress that monetary compensation is often an adequate remedy for breach of contract.
Key Legal Provisions in Breach of Contract Cases
Contract Act, 1872: Sections 73 and 74 are frequently cited in breach of contract cases, focusing on compensation for loss or damage and penalty stipulation.
Civil Procedure Code, 1908: This code, particularly Order II, Rule 2, and Order XXXIX, Rules 1 & 2, governs the procedural aspects of filing and adjudicating breach of contract suits.
Specific Relief Act, 1877: Sections 12, 56(i), and 58, addressing specific performance and relief in contract cases, are often referenced.
Sale of Goods Act, 1930: Section 58 is crucial in cases involving the delivery of specific or ascertained goods.
Judicial Attitudes and Interpretations
Emphasis on Compensation and Specific Performance: In cases like “2022 YLR 1207” and “2021 SCMR 1257”, courts have shown a tendency to prioritize compensation for loss or damage, as well as specific performance in applicable scenarios. The courts strive to restore aggrieved parties to their original position or ensure contract fulfillment.
Dealing with Breach in Commercial Contracts: The case “2021 PLD 57” involving Sadan General Trading LLC and Trading Corporation of Pakistan, demonstrates the courts’ approach to commercial contract breaches, focusing on reasonable compensation and the assessment of loss.
Breach in Employment Contracts: In “2021 PLC(CS) 711”, the Peshawar High Court dealt with breach of contract in public sector employment, highlighting the applicability of constitutional jurisdiction in such matters.
Consideration of Forfeiture and Penalty Clauses: The courts, as seen in “2022 YLRN 184” and “2021 SCMR 1728”, pay close attention to the reasonableness of forfeiture and penalty clauses, ensuring that such provisions are not unconscionable or excessively penal.
Interim Relief and Injunctions: In “2022 CLC 37”, the Islamabad High Court examined the conditions under which interim relief or injunctions may be granted, considering the potential for multiplicity of proceedings and the preservation of the status quo.
Contractual Employment and Constitutional Petitions:
Citations: 2021 PLD 328 and 2021 PLC(CS) 1040 (Karachi-High-Court-Sindh)
These cases affirm that contract employees, whose service terms are governed by the ‘master and servant’ principle, do not possess a vested right for regular appointment or regularization. The only remedy available to them is to file a suit for damages for breach of contract or failure to extend the contract, as they are debarred from approaching the High Court in its constitutional jurisdiction for such matters.
Liquidated Damages and Special Damages in Contract Breaches:
Citation: 2021 MLD 1009 (Karachi-High-Court-Sindh)
In this case, the appellants’ claim for liquidated damages was upheld, emphasizing that evidence deemed cogent for one part of a claim cannot be disregarded for another part emanating from the same claim. The court distinguished between liquidated damages and general damages, granting both in this instance.
Civil Disputes and Criminal Procedure:
Citation: 2020 MLD 780 (Peshawar-High-Court)
The court highlighted that civil disputes pertaining to breach of contract should be dealt with according to civil law. The case focused on the non-applicability of certain sections of the Criminal Procedure Code to civil matters like breach of contract.
Contractual Obligations and Constitutional Jurisdiction:
Citation: 2020 PLD 400 (Lahore-High-Court-Lahore)
This case underscores that enforcement of contractual obligations is not typically within the scope of the High Court’s constitutional jurisdiction. The High Court can interfere where rights are based on a statute or when duties are vested in a public functionary, but contractual rights and obligations between private parties are generally enforced through regular courts.
Specific Performance and Compensation in Contract Breaches:
Citation: 2020 CLC 1974 (Karachi-High-Court-Sindh)
In cases of specific performance, the court can grant compensation for breach of contract and award additional compensation. The case emphasized the discretionary nature of specific performance, especially when enforcing it causes hardship to third parties.
Principles for Award of Damages:
Citation: 2020 MLD 213 (Karachi-High-Court-Sindh)
The court stated that to succeed in a claim for damages under Section 73 of the Contract Act, 1872, the claimant must provide positive evidence. Liquidated damages under Section 74 are only granted when a party proves default or breach of contract.
Earnest Money and Forfeiture in Property Contracts:
Citation: 2020 CLC 300 (Karachi-High-Court-Sindh)
This judgment deals with the forfeiture of earnest money in property contracts. The court held that advance or earnest money can be forfeited if a purchaser fails to fulfill contractual commitments, but the court has discretion to interpret and implement such forfeiture clauses.
Termination of Contractual Employment and Compensation:
Citation: 2020 PLC(CS) 1359 (Karachi-High-Court-Sindh)
This case illustrates that an employee can claim compensation for the unexpired period of a contract due to breach. Termination clauses in contracts are critical, and if termination constitutes a breach, the aggrieved party can claim compensation.
Enforceability of Master-Servant Contracts:
Citation: 2020 PLC(CS) 80 (Karachi-High-Court-Sindh)
The enforceability of contracts in master-servant relationships, particularly in private organizations, was addressed. The court held that an employer is not obliged to continue employment and can choose to pay compensation for breach of contract. It further stated that contracts of personal service cannot be specifically enforced under the Specific Relief Act, 1877.
Conclusions and take-aways
The key takeaways from the above-cited cases on breach of contract in Pakistan are as follows:
Limited Constitutional Jurisdiction in Contractual Employment: The cases “2021 PLD 328” and “2021 PLC(CS) 1040” from Karachi High Court underscore that contractual employees do not have a vested right to claim regularization of their services or to approach the High Court in its constitutional jurisdiction for grievances related to employment contracts. The appropriate remedy for them is to file a civil suit for damages alleging breach of contract.
Entitlement to Liquidated and Special Damages: In “2021 MLD 1009” (Karachi High Court), the court recognized the entitlement of claimants to both liquidated damages and general damages in cases of breach of contract. This reflects the principle that parties to a contract may be entitled to various forms of damages depending on the circumstances of the breach.
Civil Disputes and Criminal Procedure: The Peshawar High Court in “2020 MLD 780” differentiated between civil disputes, like breach of contract, and criminal matters. It clarified that civil disputes should be resolved through civil law procedures and are not generally within the scope of criminal procedure.
Contractual Obligations and High Court’s Jurisdiction: The Lahore High Court’s judgment in “2020 PLD 400” emphasized that the enforcement of contractual obligations between private parties is not usually within the High Court’s constitutional jurisdiction. Fundamental rights are not typically violated in private contractual disputes, thus relegating such matters to regular civil courts.
Discretion in Granting Specific Performance: The case “2020 CLC 1974” (Karachi High Court) illustrates that the court has discretion in granting specific performance, particularly when enforcing the contract would be unfair or cause hardship to third parties. The court may choose to award compensation instead.
Proving Damages: In “2020 MLD 213” (Karachi High Court), the court highlighted the necessity of proving damages through positive evidence. This decision underscores the importance of substantiation in claims for damages under contract law.
Forfeiture of Earnest Money: The Karachi High Court in “2020 CLC 300” dealt with the forfeiture of earnest money in property contracts. The court has the discretion to interpret and implement forfeiture clauses, ensuring that such clauses are not unreasonably harsh or exorbitant.
Compensation for Early Termination of Contractual Employment: The case “2020 PLC(CS) 1359” (Karachi High Court) demonstrates that employees can claim compensation for the unexpired period of a contract if it is terminated early, provided there is a breach of the contract terms.
Enforceability of Master-Servant Contracts: In “2020 PLC(CS) 80” (Karachi High Court), it was held that contracts of personal service cannot be specifically enforced under the Specific Relief Act, 1877. The court noted that an employer in a private organization is not obligated to continue employment and can opt to pay compensation for breach of contract.
These cases collectively highlight the nuanced approach of Pakistani courts in dealing with breach of contract cases. They emphasize the importance of adhering to contractual terms, provide clarity on the types of damages available, and outline the jurisdictional limits of constitutional petitions in contractual matters. The courts emphasize the importance of evidence in proving claims and the discretion they possess in awarding damages or enforcing specific performance, particularly considering the impact on third parties. The judgments also reiterate that contractual disputes between private parties are generally outside the purview of constitutional petitions, underscoring the need to approach appropriate civil courts for redressal.
