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When a contract names a sum payable upon breach, a court awarding compensation generally considers:

Correct answer: D. Reasonable compensation not exceeding the named sum

  • A. Punishment of the breaching party as the main objective
  • B. The named sum automatically in every case
  • C. Only the claimant's personal estimate of loss
  • D. Reasonable compensation not exceeding the named sum

Explanation

Under the Contract Act, the named amount sets an upper limit, while the court awards reasonable compensation according to the circumstances. The stipulated sum is not automatically recoverable merely because it appears in the contract.

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About Civil Law

Civil law governs disputes involving private rights, including contracts, property, family relations, torts and compensation. The subject explains breach of duty, civil liability, damages, specific relief, injunctions and other remedies, while distinguishing private claims between individuals from criminal proceedings brought to punish offences against the state.

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