Given Below is a Statement of Legal Principle Followed by a Factual Situation. Apply the Principle to the Facts and Select the Most Appropriate Answer. Principle - Legal Reasoning

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Given below is a statement of legal principle followed by a factual situation. Apply the principle to the facts and select the most appropriate answer.

Principle: When there is a breach of contract, the resulting damages will have to be paid by the party breaching the contract to the aggrieved party. However, the parties are free to agree as to damages payable in advance in case there is a breach of contract.

Facts: Mr. Ramesh entered into a contract with Mr. Ramakrishna for selling his green Alto Car for Rs. 3 lakhs. Mr. Ramakrishna was to pay Rs. 3 lakhs on or before 25th April 2005 and take possession of the car. The party failing to honour the contract has to pay Rs. 40,000/- as damages to the other party. Mr. Ramakrishna has not performed his part of the contract. Mr. Ramesh is claiming Rs. 40,000/-

Options

  • Mr. Ramesh can sell the car in the second-hand market  and if he suffers any loss, then only he can claim that  amount from Mr. Ramakrishna 

  • Mr. Ramakrishna is liable to pay the agreed damages

  • Mr. Ramesh has to prove that he has suffered ` 40.000/  - as damages to get it

  • None of the above

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Solution

Mr. Ramakrishna is liable to pay the agreed damages

Explanation:

Ramakrishna is liable to pay ₹40,000 as agreed in the contract.

Concept: Contract Law
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