Section 537: Compensation for breach of contract

1) In the case of breach of a contract under Section 535, the party aggrieved by it shall be entitled to recover from the party in breach of the contract damages for the actual loss or damage caused by the breach or such loss or damage which the contracting parties knew when they made the contract to be likely to result from the breach.

2) If the parties to a contract, in anticipation, at the time of its formation specify a sum in the contract, which becomes payable for breach of the contract, the aggrieved party shall be entitled to recover a reasonable amount not in excess of that sum from the other party, pursuant to sub-section (1).

3) If the contract does not provide for compensation referred to in sub-section (2), the party claiming such compensation shall be entitled to recover a reasonable amount for the direct and actual loss or damage resulted from the breach of contract or for the breach of contract or for compensation.

Provided that no compensation may be recovered for any indirect or remote loss or damage.

4) If a contract, which is concluded for the completion of any act within a fixed period, contains a provision that compensation as referred to in sub-section (2) is payable if such an act cannot be completed within that period, the party paying such compensation may request for the extension of the period for the completion of the contract in proportion to the amount of compensation paid by him or her.

5) The right of a party to a contract to seek other legal remedies for the breach of a contract shall not be deemed adversely affected merely by the reason that the amount of compensation has been paid pursuant to this Section.