The Indian Contract Act, 1872 is one of the oldest laws in India.
Contracts were entered from times immemorial and the mercantile transactions
were governed by customs. Back then personal laws were applied in mercantile
laws before one could have the codified law. There was no issue when both the
parties to the contract professed the same religion but the issue arose when
the transactions involved people from different religions. Especially, when any
disagreement arose between the parties then there was a need for uniform
principles of law that could be applied between the parties to resolve the
issues.
During the British regime an attempt was made to codify and establish
uniform principles of mercantile laws resulting in the enactment of the Indian
Contract Act, 1872. The Contract Act does not purport to codify the entire law
relating to contracts as it specifically preserves any usage or custom of trade
or any incident of any contract not inconsistent with the provisions of the
Act. In simple words contract can be understood as an agreement which is
enforceable by law.
The term damages in law would mean the monetary compensation paid to the claimant for any loss or injury caused. This is a Common law remedy which can either be liquidated or unliquidated.
Liquidated damages are provided when there is a breach of contract as loss or injury incase of contract is quantifiable whereas unliquidated damages are provided in case of Torts where the actual monetary loss is not determined or foreseen before the wrong occurs.
Tort is a civil wrong which is independent of any contract or breach of trust. Though breach of contract and breach of trust too come under the branch of civil law but they are different from torts. The remedy in the form of unliquidated damages in case of a Tort owes its origin to Common law action which has its basis on justice, equity and good conscience.