Damages for Non-Delivery under Section 57 of the Sale of Goods Act, 1930: The Buyer's Remedy, the Market Price at the Date of Breach, Sub-Sales, and Damages Compared with Specific Performance

Section 57 is the mirror image of Section 56. Where the seller wrongfully neglects or refuses to deliver, the buyer may sue for damages for non-delivery. Again the Act states no formula, and the measure follows from Section 73 of the Contract Act: the buyer is entitled to be put, so far as money can do it, in the position he would have been in had the goods been delivered. Where there is an available market, that produces the familiar rule of the difference between the market price at the date of breach and the contract price, because the buyer can and should buy substitutes.

1. The Section

Section 57, Sale of Goods Act, 1930

Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery.

The refusal must be wrongful. A seller exercising a lien, or withholding delivery until paid under Section 46(2), is not in breach.
The buyer must be ready and willing to pay, since delivery and payment are ordinarily concurrent conditions under Section 32.
Property is irrelevant. The buyer may sue for non-delivery whether or not property has passed; if it has, he may also sue in conversion.

The measure of damages, the treatment of sub-sales, and what happens with no market

2. The Market Price Rule

Where there is an available market, damages are the difference between the market price at the time the goods should have been delivered and the contract price.
The rule assumes mitigation. The buyer is treated as having gone into the market at once and bought substitutes, so he is compensated for the extra cost.
If the market price is at or below the contract price, the buyer has lost nothing and recovers nominal damages.
Where there is no available market, the court awards the actual loss proved.
Special damages within the second limb of Section 73 may be recovered where the seller knew of the special circumstances, such as a particular sub-contract.

📖 Williams Bros. v. Ed. T. Agius Ltd., [1914] AC 510 (HL)

Facts: A buyer of coal had agreed to resell it at a price below the market price prevailing at the date fixed for delivery. The seller failed to deliver. He argued that the buyer's damages should be limited by reference to the price at which the buyer had sub-sold, since that was all the buyer stood to make.

Held: The House of Lords held that the buyer recovered the full difference between the contract price and the market price. The sub-sale was irrelevant. The buyer still had to buy coal in the market to perform his own contract, and the price he charged his sub-buyer was his own affair.

Ratio: In assessing damages for non-delivery, a sub-sale by the buyer is ordinarily ignored, and the market price rule applies.

📖 Murlidhar Chiranjilal v. Harishchandra Dwarkadas, AIR 1962 SC 366

Facts: A seller failed to perform a contract for the sale of canvas to be delivered at a named place. The buyer claimed damages based on the difference between the contract rate and a rate said to prevail at a different market, but led no evidence of the rate at the place of delivery, and had taken no steps to buy substitutes.

Held: The Supreme Court allowed only nominal damages. The measure was the difference between the contract price and the market price at the place of delivery on the date of breach, and the buyer had not proved it. The Court emphasised the two rules that govern all such claims: compensation only for loss naturally arising or within the contemplation of the parties, and the duty on the injured party to take all reasonable steps to mitigate.

Ratio: Damages for non-delivery are measured at the place and date of delivery, must be proved, and are subject to the duty to mitigate.

3. Damages and Specific Performance

	Damages, s. 57	Specific performance, s. 58
What the buyer gets	Money compensation	The goods themselves
Kind of goods	Any goods	Specific or ascertained goods only
When appropriate	Substitutes are available in the market	The goods are unique or not readily obtainable
Nature of the relief	Available as of right on proof of loss	Governed by the Specific Relief Act, 1963

The two remedies answer different questions. Damages assume that money and the market can replace the goods. Specific performance is for the case where they cannot, and is dealt with in the note on Section 58. A buyer who wants the goods must ask for specific performance; a buyer who wants to be compensated sues under Section 57.

4. The Position Stated Shortly

Section 57 gives the buyer damages where the seller wrongfully fails to deliver.
The measure comes from Section 73 of the Contract Act, not from any formula in the 1930 Act.
With an available market, damages are the difference between market price at the date of breach and the contract price.
Williams Bros v. Agius: a sub-sale by the buyer is ordinarily ignored.
Murlidhar Chiranjilal: the market price must be proved at the place of delivery, and the buyer must mitigate.
Special damages are recoverable where the seller knew of the special circumstances.
Where damages are inadequate, the buyer's remedy is specific performance under Section 58.