Section 74. Compensation for breach of contract where penalty stipulated for

74. Compensation for breach of contract where penalty stipulated for .—[1] [When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for. Explanation .—A stipulation for increased interest from the date of default may be a stipulation by way of penalty.] Exception .—When any person enters into any bail-bond, recognizance or other instrument of the same nature, or, under the provisions of any law, or under the orders of the[2] [Central Government] or of any[3] [State Government], gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of the condition of any such instrument, to pay the whole sum mentioned therein. Explanation .—A person who enters into a contract with Government does not necessarily thereby undertake any public duty, or promise to do an act in which the public are interested. Illustrations (a)A contracts with B to pay B Rs. 1,000, if he fails to pay B Rs. 500 on a given day. A fails to pay B Rs. 500 on that day. B is entitled to recover from A such compensation, not exceeding Rs. 1,000, as the Court considers reasonable. (b)A contracts with B that, if Apractises as a surgeon within Calcutta, he will pay B Rs. 5,000. A practises as a surgeon in Calcutta. B is entitled to such compensation; not exceeding Rs. 5,000, as the Court considers reasonable. (c)A gives a recognizance binding him in a penalty of Rs. 500 to appear in Court on a certain day. He forfeits his recognizance. He is liable to pay the whole penalty. 1. Subs. by Act 6 of 1899, s. 4, for the first paragraph of s. 74. 2. Subs. by the A.O. 1937, for "Government of India". 3. Subs. by the A.O. 1950, for "Provincial Government". 1[(d)A gives B a bond for the repayment of Rs. 1,000 with interest at 12 per cent. at the end of six months, with a stipulation that, in case of default, interest shall be payable at the rate of 75 per cent. from the date of default. This is a stipulation by way of penalty, and B is only entitled to recover from A such compensation as the Court considers reasonable. (e) A, who owes money to B a money-lender, undertakes to repay him by delivering to him 10 maunds of grain on a certain date, and stipulates that, in the event of his not delivering the stipulated amount by the stipulated date, he shall be liable to deliver 20 maunds. This is a stipulation by way of penalty, and B is only entitled to reasonable compensation in case of breach. (f) A undertakes to repay B a loan of Rs. 1,000 by five equal monthly instalments, with a stipulation that in default of payment of any instalment, the whole shall become due. This stipulation is not by way of penalty, and the contract may be enforced according to its terms. (g) A borrows Rs. 100 from B and gives him a bond for Rs. 200 payable by five yearly instalments of Rs. 40, with a stipulation that, in default of payment of any instalment, the whole shall become due. This is a stipulation by way of penalty.] 75.Party rightfully rescinding contract, entitled to compensation .—A person who rightfully rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfilment of the contract. Illustration A, a singer, contracts with B, the manager of a theatre, to sing at his theatre for two nights in every week during the next two months, and B engages to pay her 100 rupees for each night's performance. On the sixth night, A wilfully absents herself from the theatre, and B, in consequence, rescinds the contract. B is entitled to claim compensation for the damage which he has sustained through the non-fulfilment of the contract. [ CHAPTER VII.— SALES OF GOODS. ] Rep.by the Indian Sale of Goods Act , 1930 (3 of 1930), s . 65. 76. [' Goods' of defined .] Rep. by s . 65,ibid. 77. [' Sale defined. ] Rep. by s . 65,ibid. 78. [ Sale how effected .] Rep. by s . 65,ibid. 79. [ Transferofownershipofthingsold,whichhasyettobeascertained,madeorfinished .] Rep.bys . 65, ibid. 80 . [ Completion of sale of goods which the seller is to put into state in which buyer is to take them .] Rep. by s . 65,ibid. 81 . [ Completion of sale of goods, when seller has to do anything thereto in order to as certain price .] Rep. by s . 65,ibid. 82. [ Completion of sale, when goods are uncertained at date of contrac t.] Rep. by s . 65,ibid. 83 . [ Ascertainment of goods by subsequent appropriation .] Rep. by s . 65,ibid. 84. [ Ascertainment of goods by seller's selection. ] Rep. by s . 65,ibid. 85 . [ Transfer of ownership of moveable property, when sold together with immoveable .] Rep. by s . 65, ibid. 86 . [ Buyer to bear loss after good have become his property .] Rep. by s . 65,ibid. 87 . [ Transfer of ownership of goods agreed to be sold while non existent .] Rep. by s . 65,ibid. 88 . [ Contract to sell and deliver, at a future day , goods not in seller's possession at date of contract .] Rep. by s . 65,ibid. 89 . [ Determination of price not fixed by contract .] Rep. by s . 65,ibid. [ DELIVERY .] Rep. by s . 65, ibid. 90. [ D e livery how made .] Rep. by s . 65,ibid.