Remedies for Breach of Contract: Damages, Specific Performance or Rescission

Most people think about a broken contract in terms of compensation. Pakistani law offers more than that, and in some situations money is precisely what you do not want - a buyer who has paid for a plot generally wants the plot, not damages. Knowing which remedies exist, and which the court is likely to grant, shapes how the claim should be framed from the outset.

The remedies available

The remedies are not always alternatives. A property buyer may seek specific performance and an injunction restraining the seller from transferring to anyone else in the meantime. Framing the claim to include the protective relief is often more important than the final remedy.

Specific performance

An order requiring the defaulting party actually to perform. It is discretionary, and generally available where damages would not adequately compensate.

Where it is commonly sought:

• Sale of immovable property. Each property is treated as unique, so money is not an adequate substitute.
• Transfer of shares in a private company, where equivalent shares cannot be bought elsewhere.
• Unique goods with no market substitute.

Where it is generally refused:

• Contracts of personal service, which courts will not compel.
• Where damages are adequate - ordinary goods available in the market.
• Where the claimant is not ready and willing to perform their own side.
• Where enforcement would require constant supervision.
• Where there has been undue delay or unfair conduct by the claimant.

Readiness and willingness is the point on which property buyers most often fail. You must show you were, and remain, ready and willing to perform - typically that the balance consideration was available. Keep evidence of funds and of every attempt to complete.

Rescission

Rescission unwinds the contract and seeks to restore the parties to their pre-contract positions. It suits situations where you want out rather than performance or compensation.

Typically considered where:

• The contract was induced by misrepresentation.
• There was fraud or fundamental mistake.
• Performance has become impossible in a fundamental respect.

Practical limits: rescission requires that the parties can substantially be restored to their original positions, and undue delay or affirmation of the contract after discovering the problem can bar it. Money already paid is generally recoverable as part of the restoration.

Injunctions

Frequently the most commercially valuable remedy, because it operates immediately.

• Restraining an onward sale of property pending a specific performance claim.
• Enforcing restrictive covenants such as non-compete or confidentiality provisions.
• Preventing disposal of assets that would frustrate a judgment.
• Preserving the status quo while the dispute is decided.

Interim injunctions require prompt action. Delay undermines the argument that the matter is urgent, and delay is the most common reason applications fail.

If a defaulting seller is about to transfer the property to someone else, an injunction is more urgent than the substantive claim. Once a third party acquires an interest, your position becomes markedly more difficult - see illegal occupation for the related problem.

Choosing the remedy

1. What do you actually want? The thing itself, your money back, or compensation.
2. Is the subject matter unique? If yes, specific performance is realistic.
3. Are you ready and willing to perform? Essential for specific performance.
4. Is urgent protection needed? Seek an injunction immediately, whatever the final remedy.
5. Can the defendant satisfy a money judgment? If not, damages may be worthless.
6. Have you delayed? Delay damages discretionary remedies particularly.
7. What does the contract say about dispute resolution - see arbitration clauses.

Practical steps on breach

• Act quickly. Delay prejudices injunctions and specific performance.
• Do not affirm the contract inadvertently if you intend to rescind.
• Put the breach in writing and call for performance, keeping proof.
• Preserve evidence of readiness - funds available, steps taken to complete.
• Mitigate where you are claiming damages - see damages.
• Consider an injunction first where assets may be moved or property transferred.
• Take advice before accepting part performance, which can affect your remedies.

The most common self-inflicted wound is waiting. Parties spend months negotiating with a defaulting counterparty, and by the time they file, the property has been sold on or the assets moved. Negotiate if you wish, but protect your position in parallel.

Property contracts: the most common context

Most specific performance claims in Pakistan arise from agreements to sell immovable property, so the practical points are worth setting out.

If you are the buyer and the seller refuses to complete:

1. Act immediately. Delay is the main reason claims fail.
2. Seek an injunction restraining transfer to any third party, alongside the substantive claim.
3. Evidence readiness - proof that the balance consideration was and remains available.
4. Document every attempt to complete - notices sent, dates offered, attendance at the sub-registrar.
5. Preserve the agreement, receipts for any bayana paid, and all correspondence.

If you are the seller and the buyer will not complete:

• Check what the agreement says about forfeiture of earnest money, remembering a court examines whether the sum is reasonable compensation.
• Consider whether you want the sale enforced or the contract ended.
• Do not resell without dealing with the first agreement, or you create competing claims.

See our guide on what happens when a buyer backs out after paying bayana.

Frequently asked questions