Chapter VI - Of the Consequences of Breach of Contract
Section 75
Section 75: Compensation after rightful rescission
Section 75 recognises compensation for a person who rightfully rescinds a contract. The rescission must be legally justified, and the compensation concerns damage sustained through non-fulfilment.
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This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
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.
Rule and business relevance
The provision connects rightful rescission with a claim for the resulting damage. Its illustration involves a party ending a performance contract following the other's wilful failure and claiming the damage caused by non-fulfilment.
Limits and related provisions
A party cannot create the right merely by calling its own cancellation 'rescission'. Establish the legal basis and actual loss, and read the claim with the applicable compensation rules. Restoration of benefits is a separate issue that should also be assessed.
Hypothetical business example
Hypothetical: a customer lawfully ends a service contract after a qualifying refusal of performance. It documents the grounds and resulting loss before claiming compensation, rather than assuming any self-chosen cancellation fee is payable.
Practical decision flow
Establish the legal ground and valid exercise of rescission.
Identify the damage caused by the contract's non-fulfilment with supporting records.
Apply the relevant compensation limits and address any benefits to be restored separately.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Establish the legal ground and valid exercise of rescission.
- Identify the damage caused by the contract's non-fulfilment with supporting records.
- Apply the relevant compensation limits and address any benefits to be restored separately.
Avoid
- A party cannot create the right merely by calling its own cancellation 'rescission'. Establish the legal basis and actual loss, and read the claim with the applicable compensation rules. Restoration of benefits is a separate issue that should also be assessed.
Glossary
- Rightful rescission
- A legally justified rescission, not merely a unilateral label.
- Non-fulfilment damage
- The damage sustained through failure to fulfil the contract.
Frequently asked questions
Does any cancellation qualify?
No. Section 75 requires rightful rescission.
Must the compensation relate to non-fulfilment?
Yes. That causal connection appears in the provision.
Does compensation automatically decide what happens to advances?
No. Restoration and other benefit questions should be examined under their applicable rules.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026