Page 36 - 01. Indian Contract Act, 1872

Differences between ordinary and special damages

Ordinary Damages Special Damages
1 Damage which was naturally in the Damages which result from the breach
usual course of things. of contract under special circumstances.
Includes damages which the
2 Include damages which are due to aggrieved party suffers due to indirect
natural and probable loss.
consequences.

Differences between liquidated damages and penalty

Liquidated Damages Penalty Damages

If the sum payable by the defaulting
1 If the sum payable by the defaulting
party represents a fair and genuine pre-
estimate of damages such specified party is not based on probable loss, but
sum is known as liquidated damages, are disproportionate to the damages,

Thus, they are based on probable loss. such specified sum is known as
penalty.

It is imposed by way of punishment, so
They are imposed by way of
2 as to prevent the aggrieved party from
compensation to the aggrieved party.
committing a breach.

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