A agrees to deliver 500 bales of cotton to B on a fixed date. A knows nothing about how B runs the…
Section 73 allows compensation for loss arising naturally in the usual course or known by the parties to be likely when they contracted. Illustration (p) treats the…
Choose your answer
A agrees to deliver 500 bales of cotton to B on a fixed date. A knows nothing about how B runs the business. A fails to deliver, and B has to close the mill for lack of cotton. Under the Indian Contract Act, 1872, can B recover the loss from the closure from A?
Answer and explanation
Correct answer B
Section 73 allows compensation for loss arising naturally in the usual course or known by the parties to be likely when they contracted.
Illustration (p) treats the mill-closure loss as too remote on these facts because the seller did not know the buyer’s business arrangements.
Option feedback
Option A
Section 73 excludes remote and indirect loss, even where it follows the breach.
Option B
The stated facts match illustration (p), which excludes recovery for the mill closure.
Option C
The quantity alone does not establish notice of the buyer’s particular business risk.
Option D
Proof of the amount does not cure remoteness.
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