Can I sue a supplier for missed delivery and claim loss of profits under an Indian contract?

OfCourse, you can sue the supplier. Kindly keep the entire case record available for examination prior to submission as proof. The remedies available under law to pursue and claim your losses as also damages. You can share details about the location of the delinquent supplier. We are in Delhi and should be able to help if it involves invoking the jurisdiction of the Court in Delhi/New Delhi. Kindly feel free to ask for clarifications, if any.

1. Legal Remedies Under the Indian Contract Act

​Under Section 73 of the Act, when a contract is broken, the party who suffers is entitled to receive compensation for any loss or damage caused to them.

​Compensatory Damages: You can claim for the direct loss caused by the delay (e.g., if you had to procure materials from elsewhere at a higher price).

​Loss of Profits (Special Damages): You can claim for the two lost orders only if the supplier was aware, at the time of contracting, that such losses were a likely result of a breach. This is known as the rule of "remoteness of damage."

​Refund of Advance: If you choose to terminate the contract due to the breach, you are entitled to a full refund of the 60% advance plus interest.

​Specific Performance: If the raw materials are unique and cannot be sourced elsewhere, a court can compel the supplier to deliver them.

​2. Overcoming the "Unavoidable Delay" Defense

​The supplier's claim of "unavoidable delay" usually refers to a Force Majeure clause.

​The Burden of Proof: In Indian law, the party invoking Force Majeure must prove that the event was beyond their control and prevented performance. Mere difficulty or "unavoidability" without documented proof (like a government strike, natural disaster, etc.) is not a valid legal excuse.

​Time is of the Essence: If your contract stated that delivery time was "of the essence," any delay gives you the immediate right to void the contract and seek damages.

​3. Essential Evidence to Collect

​To build a robust case, you should preserve the following:

​The Contract/Purchase Order: Specifically sections detailing delivery timelines, penalty clauses for delays, and "time is of the essence" mentions.

​Proof of Communication: Emails or letters where you notified the supplier of the urgency and the potential loss of specific orders if they failed to deliver.

​Evidence of Lost Orders: Documents showing the cancellation of the two major orders and the projected profit margins from those deals.

​Demand Notice: A formal legal notice sent by an attorney demanding delivery or compensation. This is often a mandatory precursor to litigation in India.

​Recommended Next Steps

​Issue a Legal Notice: Have an attorney draft a formal notice demanding the immediate delivery of goods or a refund of the 60% advance with interest and damages for loss of profit.

​Review the Force Majeure Clause: Check your written agreement to see how "unavoidable delays" are defined.

 

 

On the facts presented, where 60% advance was paid for supply of raw materials and the supplier delayed delivery by approximately six weeks, resulting in cancellation of two confirmed downstream orders, the supplier is prima facie in breach of contract under Indian law. In the absence of any valid and proved force majeure event, a bald plea of “unavoidable delay” is legally untenable, as operational or logistical difficulties do not excuse performance unless expressly covered by the contract and duly established. Under Section 73 of the Indian Contract Act, 1872, the aggrieved buyer is entitled to claim refund of the advance along with interest and compensation for losses that naturally arose in the usual course of business, including loss of profits, provided such losses were within the contemplation of the parties at the time of contracting and are reasonably quantifiable. If the contract does not contain an arbitration agreement, the buyer is legally entitled to institute a Commercial Suit under the Commercial Courts Act, 2015 (subject to the specified value threshold), seeking recovery of the advance, damages for delay, loss of profits due to cancellation of customer orders, and costs. The success of such a claim would substantially depend upon documentary evidence including the contract or purchase orders, proof of advance payment, contemporaneous correspondence evidencing delay, cancellation of downstream orders, and reasonable computation of lost profits