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A contracts to deliver 500 bales of cotton to B on a fixed day. A knows nothing of B’s operating…

Section 73 permits compensation for loss that arises naturally in the usual course of things or that the parties knew to be likely when contracting. Illustration (p)…

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A contracts to deliver 500 bales of cotton to B on a fixed day. A knows nothing of B’s operating arrangements and has no notice that non-delivery will cause a closure. A fails to deliver, and B has to close the mill for want of cotton. Under section 73 of the Indian Contract Act, 1872, is A liable for the closure loss?

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Answer and explanation

Correct answer B

Section 73 permits compensation for loss that arises naturally in the usual course of things or that the parties knew to be likely when contracting.

Illustration (p) excludes the loss from closing the mill on these facts. The question is limited to that loss.

Option feedback

Option A

Section 73 does not make every consequence of breach recoverable.

Option B

Illustration (p) treats the closure loss on these facts as too remote because the seller lacked knowledge of the buyer’s business arrangements.

Option C

The stated quantity alone does not supply the missing knowledge in illustration (p).

Option D

Proof of amount does not make a remote loss recoverable.

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