Multiple choice

In case amount of compensation is stipulated in contract and breach of contract occurs; compensation will be allowed:

  1. Stipulated amount

  2. More than stipulated amount

  3. Less than stipulated amount

  4. At the discretion of court but not more than stipulated amount
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a contract stipulates a penalty amount for breach, courts have discretion under Section 74 to award reasonable compensation not exceeding the stipulated amount. The court is not bound by the stipulated figure and can award less if it is excessive. Section 73 provides the general principle for compensation.

Keep practicing — related questions