3.5 BREACH OF CONTRACT & REMEDIES

Question 1

Breach of contract

Answer 1

When one party fails to meet obligation under contract

Question 2

Simple breach of contract

Answer 2

Innocent party can’t put an end to contract

But innocent party can sue for damages

Question 3

Repudiation

Answer 3

When one party by words or actions makes it known That it doesn’t intend to perform its obligations under contract

Question 4

Anticipatory breach

Answer 4

When one party lets the other know before the time of performance that it’ll not be performing its obligations, this breach will lead to repudiation

Question 5

Remedies for breach of contract

Answer 5

1. Damages (most common) are monetary compensation the court orders the at fault party to pay the innocent party
2. Specific performance is a court prefer requiring completion of the contract
3. Injunction is a court order requiring a named party to do, or not to do, something
4. Declaring order is statement by the court of the rights and obligations of the parties

Question 6

Mitigation

Answer 6

For damages…

The innocent party must take responsible steps to minimize the loss suffered

Eg. Fired for wrongful dismissal - you have obligation to go find new job to replace income and minimize damages that would be suffered

Question 7

Causation

Answer 7

For damages…
Innocent party can only recover losses that were caused by the breach of contract, speculative losses cannot be recovered

Question 8

Remoteness

Answer 8

For damages…
only damages that are reasonably proximate to (not remote from) the breach can be covered

What was foreseeable when the contract was formed?

Question 9

Consequential damages

Answer 9

Cover indirect losses

Eg. Business interruption losses

Question 10

Liquidated damages

Answer 10

Compensation agreed to by the parties at the time of contract formation

Question 11

Bonus clause

Answer 11

Additional payment for performance that exceeds minimum requirements

Question 12

Quantification of damages

Answer 12

Typically based on cost of performance

Courts are hesitant to award damages unless it’s quantified (clear that the money was or will be spent on rectifying the breach)

Question 13

Diminution of value

Answer 13

Where the cost of rectification will be excessive compared to the benefit rectification will bring, damages maybe based on diminution of value

Question 14

Quantum Meruit

Answer 14

The amount it is worth

When it’s not appropriate for remainder of the contract to be enforced but compensation is given for the work already done

Requires that there’s no contract in place for the work in issue

Eg. Driveway take out pavement. Hit water. End work. Pay for contract loading and time.

Question 15

Exclusion clause

Answer 15

Exclude damages/remedies to innocent party

Question 16

Limitation clause

Answer 16

Limits liability instead of excluding it

Question 17

Consequential damage clause

Answer 17

Exclude/limit clause that restricts the ability to claim for loss/profit/damages indirectly related to the claim being made

Eg. Allows parties to provide products at low cost even if failure of product may lead to large loss

Question 18

Inability

Inadvertence

Disagreement

Answer 18

Inability to perform is not justification for breach of contract

Intent is not relevant to whether a contract was breached

If parties disagree over the interpretation of contract the party who is later determined to have been wrong will be liable if they breached the contract based on their wrong understanding of it
- litigation allows parties to continue performing contract under protest and reserve right to claim additional payment later (performing under protest)

Question 19

Lack of profit

Answer 19

Party intentionally breach contract where so sequence for doing so in less than completing it

Eg. Bankruptcy

Question 20

Purpose of damages under tort

Answer 20

The remedy to tort is damages

Purpose is to put injured party back into position they were in before being harmed

Damages are restorative vs. Punitive (although still awarded in some cases)

Question 21

Types of tort damages

Answer 21

1. General (non-pecuniary): non-monetary loses
   eg. Loss of life amenities
2. Special (pecuniary): monetary losses
   Eg. Medical bills, cost of future care, lost wages, repairs
3. Aggravated: an increase in damages resulting from defendants conduct
4. Nominal: plaintiffs right has been breached but damages are not provable