Actionable and Non-Actionable Claim

The definition of an actionable claim, as provided in Section 3 of the Transfer of Property Act, is very brief and can be challenging to fully understand at first glance.

Without going into legal complication, Here I am trying to make it more digestible.

Actionable Claim

In general parlance, an actionable claim refers to

·       A legal right;

·       That can be enforced by a court of law.

Examples of actionable claims include a creditor's right to recover money owed by a debtor, a shareholder's right to dividends from a company, or an insurance policyholder's right to receive payment for a claim.

An actionable claim is often transferable, meaning that it can be sold or assigned to another person or entity. For example, a creditor may sell their right to recover a debt to a third-party collection agency.

In summary, an actionable claim is a legal right that can be enforced through legal action, and it is an important concept in both business and personal finance.

A person's right to receive rent from a tenant for the use of their property.

The right to receive rent can be enforced in a court of law if the tenant fails to pay the rent owed, and the property owner has the legal right to take action to recover the unpaid rent. This may involve filing a lawsuit or taking other legal steps to enforce the terms of the lease or rental agreement.

Some other examples of actionable claims are:

1.    A business's right to receive payment from a customer for goods or services provided.

2.    A shareholder's right to receive dividends from a company in which they hold shares.

3.    A lender's right to receive repayment of a loan from a borrower.

4.    An insurance policyholder's right to receive payment for a claim covered by their policy.

5.    A patent holder's right to exclude others from making, using, or selling their invention.

6.    A beneficiary's right to receive payments from a trust fund.

7.    A person's right to receive compensation for damages caused by another person's negligence.

8.    A company's right to collect royalties from the use of its intellectual property, such as trademarks or copyrights.

9.    A person's right to receive payments from a structured settlement, such as for a personal injury lawsuit.

Non Actionable claims:

Non-actionable claims are claims that cannot be enforced through legal action. Here are some examples of non-actionable claims:

1.    Moral or ethical obligations: A person may have a moral or ethical obligation to do something, such as returning a favor or performing a kind act. However, this obligation is not legally enforceable.

2.    Expressions of opinion: A person's opinion about something, even if it is negative or harmful, is not generally actionable. For example, if someone says that they don't like your taste in music, you cannot take legal action against them.

3.    Predictions about the future: A person's prediction about a future event, even if it turns out to be wrong, is generally not actionable. For example, if someone predicts that a particular stock will perform poorly, and you invest in it anyway and lose money, you cannot generally take legal action against them.

4.    Broken promises without consideration: A promise made without consideration (something of value given in exchange) is generally not actionable. For example, if someone promises to give you a gift but then fails to do so, you cannot take legal action against them.

5.    Personal preferences: A person's personal preferences, such as their favorite color or food, are not actionable. For example, if you order a blue car but the dealer only has red cars available, you cannot take legal action against them because of your preference for blue.

Actionable and non-actionable claim

The court in Gujarat Maritime Board v. Larsen and Toubro Ltd., (2016) 16 SCC 146, made a distinction between actionable and non-actionable claims:

The court considered a dispute between the Gujarat Maritime Board (GMB) and Larsen and Toubro Ltd. (L&T) over a contract for the construction of a port in Gujarat, India. L&T had claimed that the GMB had breached the contract by delaying payments and by failing to provide certain facilities as promised.

The court noted that there were two types of claims at issue: (1) claims for breach of contract, which are actionable claims; and (2) claims for loss of profits and business opportunities, which may or may not be actionable depending on the circumstances.

With respect to the claims for breach of contract, the court held that they were actionable because they were based on a legal right that had been violated by the GMB's alleged breaches of the contract.

With respect to the claims for loss of profits and business opportunities, the court noted that these types of claims are not necessarily actionable in all cases. In order to be actionable, the court held that the claimant must show that the loss was caused by the defendant's breach of a legal duty or obligation, and that the loss was a direct and foreseeable consequence of the breach.

In this case, the court ultimately held that L&T's claims for loss of profits and business opportunities were not actionable because they had not shown that these losses were caused by the GMB's breaches of the contract. The court noted that the contract did not guarantee any specific level of profits or business opportunities, and that L&T had failed to show that the GMB's breaches had caused the alleged losses. Therefore, the court dismissed these claims as non-actionable.

Conclusion

In conclusion, an actionable claim is a legal right that can be enforced through legal action, such as a creditor's right to recover money owed by a debtor or an insurance policyholder's right to receive payment for a claim covered by their policy. These claims are transferable and can be sold or assigned to another person or entity. On the other hand, non-actionable claims are claims that cannot be enforced through legal action, such as moral or ethical obligations, expressions of opinion, predictions about the future, broken promises without consideration, and personal preferences.

It is important to distinguish between actionable and non-actionable claims, as this can affect a party's ability to seek legal recourse for a dispute. Claims for breach of contract are generally actionable, while claims for loss of profits and business opportunities may or may not be depending on the circumstances. In order to be actionable, the claimant must show that the loss was caused by the defendant's breach of a legal duty or obligation and that the loss was a direct and foreseeable consequence of the breach.