Here Are The Remedies If A Home-Buying Deal Falls Through

Here Are The Remedies If A Home-Buying Deal Falls Through

Here Are The Remedies If A Home-Buying Deal Falls Through

Anannya Bhardwaj and her husband Aman Bhardwaj booked a pre-launch apartment in Greater Noida in 2010. The developer had promised to deliver the flat within two years. Despite waiting for four years, no work started on the ground and Bhardwajs decided to take the matter to the court. The developer was neither refunding the money nor adjusting them in some other project. 

Their lawyer told them that a real estate purchase agreement is a type of contract of sale where the seller promises to deliver the end product (i.e. the house) to the buyer at a stipulated time. If the seller, in this case the developer, tries to scuttle the deal then the buyer can seek remedy from the court under Contracts Act. Under the Contracts Act, if the buyer or the seller fail to honour the terms and conditions of the contract, then the other party has the legal claim against the erring party.

If a dispute arises between the parties to the sale, they go by the dispute resolution process written in the contract – which most of the times states the jurisdiction of the local court. 

What if a contract falls through?

When a contract is breached, one or both parties would want to get the contract enforced on their terms, or may try to recover for any financial loss. This may also opt for mediation or arbitration. These two out-of-court options come under alternative dispute resolution. 


When an individual or business breaches a contract, the other party to the agreement is entitled to relief. The remedies include damages, specific performance, or cancellation and restitution. 

Damages: It is the most common remedy for a breach of contract. The different kinds of damages are:

  • Compensatory damages: Here the aim is to put the non-breaching party in the position that they would have if the breach of contract had not taken place.
  • Punitive damages: These are the payments that the erring party must make to fully compensate the non-breaching party. Punitive damages are meant to punish the erring party for particularly wrongful acts.
  • Nominal damages: These are token damages awarded when a breach has occurred, but no actual money loss to the non-breaching party could be proved.
  • Liquidated damages: These are specific damages that were previously identified by the parties in the contract itself, in the event that the contract was breached. They are a reasonable estimate of actual damages that might result from a breach. 

Specific performance: It is best described as the erring party's court-ordered performance. A buyer or the seller who wants to compel the recalcitrant party to honour the agreement under already agreed-upon terms can seek an injunction by seeking a court order to complete the sale. However, a court has the sole discretion to order a real estate sale through specific performance. 

Cancellation and restitution: A non-breaching party may cancel the contract and sue for restitution if it has given benefit of doubt to the breaching party. Here restitution means that the non-breaching party is put back in the position it was in prior to the breach, while the cancellation of the contract makes the contract void and relieves all the parties of any obligation under the said agreement.

You may opt for any remedy but it's always advisable to take legal opinion and act accordingly.

Last Updated: Wed Nov 02 2016

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