259. Where a contract is broken by one of the parties, the other party acquires, or may acquire, three distinct rights:

(a) He may be discharged from further performance.

(b) If he has done anything under the contract, he has a right to sue on the quantum meruit, a cause of action distinct from that arising out of the original contract, and based upon a contract created by law.

(c) He has a right of action on the original contract, or term of the contract broken, and may maintain:

(1) A suit to obtain damages for the loss sustained by the breach.

(2) A suit to obtain specific performance of the contract by the other party.36

We have seen that if a contract is discharged by the breach the party injured is exonerated from further performance, provided he treats the breach as a discharge. Where he relies on a discharge, his remedy is by setting up his discharge as a defense in an action brought by the other party on the contract. In addition to his right to a discharge from performance, he has a right, if he has done anything under the contract, to sue on the quantum meruit for compensation for his partial performance.86 This cause of action is distinct from that arising out of the original contract. It is based upon a new contract, generally called an implied contract, but really a quasi contract, or contract created by law, because of the receipt by the other party of the benefits of such performance. In addition to these rights, the party so injured by a breach has a right of action based upon the original contract or term of the contract broken. This remedy exists not only where he is discharged by the breach, but also where he is not discharged, or where, though he was entitled to claim a discharge, he has preferred to waive such right, and go on with the contract. His remedy in this case is of two kinds: (1) He may seek, in a court of law, to obtain damages for the loss he has sustained by himself taking the initiative and bringing an action for damages, or by waiting until the other party sues him, and then asserting his right by way of recoupment, counterclaim, or cross action. He may resort to this remedy whether he claims a discharge by reason of the other's breach or not. (2) He may, in the case of certain contracts and under special circumstances, obtain specific performance of the contract by the other party, by bringing a suit in equity for that purpose. Of course he would not be entitled to such performance unless he performed the contract on his part, or offered to perform it, and therefore he cannot resort to this remedy where he claims a discharge from further performance.

33 Hansard v. Robinson, 7 Barn. & C. 90; Conflans Quarry Co. v. Parker, L. R. 3 C. P. 1. See "Lost Instruments," Dec. Dig. (Key-No.) § 1; Cent. Dig. §§ 1-5.

34 Collier on Bankruptcy (9th Ed.) 314, 404, 405.

35 Anson, Cont (4th Ed.) 308, 309.

We shall only treat of these two remedies in the most general way, and give briefly some of the elementary rules, for they do not properly come within the scope of our work.

36 Ante, p. Phillips v. Wiginton, 1 AdL & E. 333; Prickett v. Badser,

1 C. B. (N. S.) 296; Howard v. Daly, 61 N. Y. 362, 369, 19 Am. Rep. 285; Derby v. Johnson, 21 Vt. 17; Brinkley v. Swicegood, 65 N. C. 626; Britt v. Hays, 21 Ga. 157; Urquhart v. Mortgage Co., 85 Minn. 69, 88 N. W. 264. See, also, ante, p. 590. See "Work and Labor," Dec. Dig. (Key-No.) § 9; Cent. Dig. §§ 23, 24; "Contracts;' Cent. Dig. §§ 1476-1478.

Same - Damages 37

260. Every breach of contract entitles the party injured to sue for damages. .

261. The rule as to the measure of damages is that the plaintiff is, so far as money can do it, to be placed in the same situation as if the contract had been performed. If he has suffered no actual loss, he is entitled to nominal damages. But - LIMITATION OF RULE - The damages recoverable are only such as might have been supposed by the parties to be the natural result of the breach.

262. The parties may assess the damages themselves by provision in the contract, but they cannot provide for a penalty.

263. Damages are by way of compensation, and not of punishment, and, as a rule, only the pecuniary loss can be recovered; but -

EXCEPTION - There is an exception in case of the breach of a promise to marry.

The damages awarded for a breach of contract should represent the loss actually sustained, the rule of the common law being, as stated above, that a party who has been injured by a breach of contract "is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed." 38 Every breach of contract gives the injured party a right of action, and the right to a verdict in his favor; but, if no actual loss at all accrues from the breach, he is only entitled to nominal damages, - that is, "a sum of money that may be spoken of, but that has no existence in point of quantity." 39