Chapter 7: Breach of contract and remedies

Question 1

Breach of contract definition

Answer 1

Failure by a party to perform his obligations under that contract or an indication of his intention not to do so (anticipatory breach)

Question 2

Anticipatory Breach

Answer 2

If the breach takes place before the appointed time for performance of the contract it is known as anticipatory breach

Question 3

What can the injured party do in an anticipatory breach ??

Answer 3

Sue at once for damages

Wait until the time or performance to see if other party carries out their side of the agreement or,

Ignore the breach, carry out their side of the agreement in full and sue for the full contract price

Question 4

Supervening events (Risk)

Answer 4

The risk of waiting for the time of performance is that something may happen between the date of the anticipatory breach and the time of performance that renders the contract impossible to complete

Question 5

Remedies for breach of contract

Common Law remedy

Answer 5

Common Law Remedy : Damages (Compensation ££)

Question 6

Remedies for breach of contract

Liquidated damages

Answer 6

Pre-estimate by the parties of the damage caused by the potential breach

Courts will allow liquidated damages if they are genuine attempt to pre-quantify any potential loss

Courts will set aside such clauses if they appear to be a penalty causing a bad bargain for one party

Question 7

Remedies for breach of contract

Unliquidated damages (doctrine of restriction)

Answer 7

Intended as compensation for the claimant’s loss, to put him in the position he would have been in had the contract been performed, not punishment for the defendant

Question 8

Remedies for breach of contract

Type of loss recoverable

Answer 8

Financial loss
Personal Injury
Damaged property

(Contract for enjoyment)
Disappointment
Vexation
Mental distress

Question 9

Remoteness of damages - definition

Answer 9

The damage must flow naturally from the breach and ought to have been in the reasonable contemplation of the parties at the time the contract was made

Question 10

Remoteness of damages - claimants must take what

Answer 10

Claimants must take reasonable steps to mitigate loss

Question 11

Equitable remedies for breach of contract

Damages are the default Common Law remedy but the courts may, at their discretion, award one of the following equitable remedies:

SP
I
R
QM

Answer 11

Specific performance - makes you do something

Injunction - stops you doing something

Rescission - Restores you to pre contractual position. Only available if the contract can be completely rescinded ie. the status quo can be restored

Quantum Merit - Claimants brings an action for the value of work done in a partially completed contract