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X agreed to sell Y 1,000 tons of iron at ₹100 per ton by 31 August 2022. X agreed to buy the iron from…

Section 73 compensates loss that arises naturally from breach or that the parties knew was likely when they contracted. A knew that timely delivery was needed for the…

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X agreed to sell Y 1,000 tons of iron at ₹100 per ton by 31 August 2022. X agreed to buy the iron from A at ₹80 per ton, telling A that the iron was needed to perform the contract with Y by that date. A failed to supply it. X could not reasonably obtain substitute iron in time, and Y cancelled the resale contract. X proves no other loss and paid no damages to Y. What can X recover from A under section 73 of the Indian Contract Act, 1872?

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Answer and explanation

Correct answer A

Section 73 compensates loss that arises naturally from breach or that the parties knew was likely when they contracted. A knew that timely delivery was needed for the resale. X could not reasonably obtain a substitute and lost ₹100 minus ₹80, or ₹20 per ton, totalling ₹20,000 for 1,000 tons. No downstream liability or other loss was proved. Illustration (j) applies the same measure to a lost iron resale.

Option feedback

Option A

Correct. The proved resale margin was ₹20 per ton, for total lost profit of ₹20,000.

Option B

Incorrect. X proved the lost margin but did not prove any damages owed or paid to Y.

Option C

Incorrect. X proved lost profit but no liability for damages to Y.

Option D

Incorrect. Section 73 compensates proved loss from breach and does not impose a penalty.

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