Chapter 7 - Remedies for Breach of Contract (Part 1 on Damages) Flashcards
What is a remedy?
Remedy is given to the plaintiff when the defendant breaches a contract.
What are the two types of remedy and explain them.
Monetary remedy is in the form of an award of money compensation while non-monetary remedy is in the form of enforcement of right.
What is the purpose of monetary remedy and non-monetary remedy?
Monetary remedy - Purpose is to compensate the injured party with damages
Non-monetary remedy - Purpose is to enforce plaintiffs rights either by ordering the defendant to perform his obligations under the contract or to order him to stop breaching the terms of the contract.
What is the purpose of remedy?
To restore the parties to the position they would have been, if the breach had not occurred.
What are the remedies plaintiff is entitled to for a breach in conditions, warranties and innominate terms? (List down for all the 3 above)
Breach of Condition - Plaintiff is entitled to terminate the contract and sue for damages or accept the breach and claim for damages
Breach of warranties - Plaintiff is only entitled to claim for damages (*Not Allowed to terminate the contract)
Breach of innominate terms - Plaintiff is entitled to terminate the contract and sue for damages if he has been substantially deprived of the whole benefit of the contract or claim damages, just as in the case of breach of warranty if the consequence of the breach is not serious.
What are the 2 types of monetary compensation?
Damages and Quantum Meruit
What are the 2 types of non-monetary compensation?
Specific Performance and Injunction
What are damages? and what is the amount of damages awarded?
Damages are a form of monetary compensation and are a common law remedy available to the plaintiff as of right.
The amount awarded would depend on the facts of the case itself. The plaintiff must prove he had suffered some loss which is quantifiable in monetary terms.
What are the rules for damages? and name the 2 rules
- The injured party is to be placed, as far as possible, in the same position as he might be in, if the contract had been carried out.
- Rationale is to compensate the plaintiff can not to punish the defendant.
The two rules used are market rule and rule in the Victoria Laundry Case.
What is the market rule under Damages?
Market Rule applies to all contracts for sale of goods where there is an available market. The damages awarded is the difference between the contract price and market price, at the date of the breach. This rule also applies to service contracts.
What is the rule in the Victoria Laundry Case under Damages?
The court will award damages which arise naturally from the breach. This means losses which are within the common knowledge of the parties are recoverable, even if such losses were not specifically mentioned.
The court will not award special damages (special circumstances) unless the parties are aware of the special circumstances, at the time of making the contract. (E.g. Actual knowledge of the special circumstances)
What is agreed damages clause under Damages?
Parties would include a clause in the contract starting the amount of damages that should be paid in the event of a delay or breach. By doing so, parties could avoid going to court to resolve their dispute which could be costly in terms of money and time.
What are the two types of agreed damages clause?
Liquidated Damages
Penalties
What is liquidated damages under agreed damages clause?
If the agreed sum is a genuine pre-estimate of the loss which is likely to happen when there is a breach of contract, the plaintiff would be awarded the agreed sum.
The plaintiff need not prove that the actual amount of loss suffered. He would be awarded the agreed sum even if his actual loss is less.
If the actual loss is greater than what is stated in the liquidated damages clause, he would not be allowed to claim for more than the agreed sum.
What is penalty under agreed damages clause?
The agreed sum is excessively harsh and designed to punish the defendant for his breach, rather than to compensate the plaintiff for his loss. The court will not enforce such clauses and the plaintiff will have to prove his actual loss.
The question is whether the agreed sum is excessively higher compared to the greatest loss in the contract. However, if the plaintiff can prove his actual loss he may be able to claim that amount.
