Contract 10 - Remedies

Question 1

What remedies are there for breach of contract?

Answer 1

• Compensatory damages 💵
• Specific Performance 🫵
• Injunction ✋

Question 2

What is the default approach to damages and 2 ways of calculating it?

Answer 2

Put innocent party in position they would’ve been in had the contract been performed
1. Expectation Interest 👉
2. Reliance Interest 👈

Question 3

What are the two methods of calculating the damages?

Answer 3

• Expectation used where profit is ascertainable - looks forwards to profit 👉
• Reliance used where profit is uncertain - looks back to costs incurred 👈

Question 4

What are the different ways of calculating expectation interest 👉

Answer 4

1. Cost of Cure: cost of substitute/remedial work required - C must act reasonably 👷‍♂️💊
2. Diminuition in value: difference in value between performance received & performance promised 🏠📉🏚️
3. Loss of Amenity: where loss is not in economic value, but still has value to them 💩

Question 5

What are the cases for calculating the expectation interest:
- Cost of Cure 👷‍♂️💊
- Diminution of value 🏠📉🏚️
- Loss of amenity 💩

Answer 5

💊 = Defective works
Must act reasonably, knocking down and rebuilding a house is not reasonable for aesthetic issues 🏠💥🏠
(💊&🏠🏚️ often same result)

💩
Cost of rectification out it proportion to benefit obtained.
Pool too shallow, 🏊😭🤫💰

Question 6

How is expectation interest calculated?

Answer 6

Expected profit + expenses incurred

Question 7

What is reliance interest and when used?
👈

Answer 7

Putting C in position they would’ve been in had contract never been entered into

• used where expectation damages are highly speculative 🤷‍♀️
• recover preparation expenses 🤓
• expenses prior to breach 👷💥

Question 8

What is the reliance interest?
👈

Answer 8

• Used when expectation is highly speculative. 🤷‍♀️
• Puts back into position would have been. 🔂
• only applies to wasted costs 🗑️

Question 9

What are the wasted cost requirements for reliance interest?
👈

Answer 9

• C would’ve recouped those expenses had contract been properly performed
  💰👀
• D must prove this wouldn’t be the case
  🤬💰👀

Question 10

What’s the case on reliance interest?
👈

Answer 10

⭐️
Star pulled out of film at last minute. Claimed for costs of director even though incurred before contract with star. ✅

🎥💃🤬💰 😎

Question 11

What’s the case on wasted costs for reliance interest?
👈🗑️

Answer 11

Landlord wrongly terminated mechanic Tenant’s lease early. T tried to sue for their fixed machinery left in the property. As T couldn’t have taken the machinery under the terms of the lease anyway, there was no loss

👷‍♂️🏭⚙️🎩🤬🤪😭

Question 12

What losses have special rules and exceptions?

Answer 12

1. Mental Distress🤪: damages not awarded unless a major object / purpose of contract 📝was to provide pleasure, relaxation & peace of mind 🧘‍♀️
   .
2. Loss of Reputation😎😭: damages not awarded unless an 🧑‍🍳 employment contract contains implied term of trust and confidence such that employer must carry out work in honest way 😇
   .
3. Loss of Chance🎲: recoverable in damages if lost chance is quantifiable in monetary terms & there was a real chance opportunity may have come to fruition (gameshow) 🎰

Question 13

Can damages be recovered on behalf of another?

Answer 13

No

Question 14

What is a liquidated damages clause?

Answer 14

Stipulates a certain sum payable on particular breach
💥💵

Question 15

How are liquidated damages clauses interpreted?

Answer 15

Starting point = upheld

Courts intervene will strike it out where it’s a
- penalty clause ⚽️,
AND
- C will be entitled to unliquidated damages 💵

Question 16

What is the test for determining whether a liquidated damages clause is a penalty clause?

Answer 16

1. Primary🥇 or Secondary 🥈Obligation?

• Primary 🥇= part of primary obligations of contract;
• Secondary 🥈= obligation triggered by breach to compensate

2. If secondary 🥈, clause is a penalty ⚽️ if it imposes a detriment out of all proportion to any legitimate interest ⚖️

Question 17

What are the cases on liquidated damages

Answer 17

🎩😈🥇📝
- B sold business to A. B not to compete with A or else won’t get all the cash A owed B for business & A will be able to buy B’s remaining shares at much reduced price. Primary obligation just a price adjustment and mechanism for allowing A and B to part ways.

🚙🪙🥈😇
- B overstayed his parking and was charged £85. Court agreed this was secondary obligation triggered by breach and therefore a penalty. But penalty not excessive.

Question 18

What determines whether damage is too remote?
🔭

Answer 18

Damages should be:
- Normal risk 🥱i.e. incurred in “the usual course of things”
- Special risk ⭐️ i.e. such amount as the parties would have contemplated, at the time of the contract, as the probable result of breaching it.🧐

Question 19

What cases concern remoteness of damage?
🔭

Answer 19

Repair Mill shaft, D was negligent causing delay and C to lose business
D not aware that C had no spare shaft or that shaft needed for business - no claim.
🍞🍆⭐️😭

C caused Laundromat delay in getting boiler:
- normal loss of trade - allowable
- special loss of trade from unique contracts D not aware of - not allowable
👕⚙️🥱/⭐️

Question 20

What is the case on reasonable mitigation?

Answer 20

Supplier wrongly thought Buyer hadn’t paid for silks and so asked for cash on original terms but broke the contract in so doing. Buyer refused and sued Supplier including increase in silk price. Buyer could not claim for increase in price as should have mitigated loss by taking Buyers up on their offer.

👘💰🤬😭

Question 21

What is specific performance and when is it awarded?
🫵

Answer 21

• Requires D to carry out its obligations under a positive term of the contract 🤲
• Only used in exceptional cases, where damages are not an appropriate/adequate remedy 💵❌
• Equitable principles apply ⚖️

Question 22

What is an advantage of specific performance?
🫵

Answer 22

Breach of SP has more severe consequences than breach of contract
🗡️

Question 23

When will specific performance not be awarded?
🫵

Answer 23

Not awarded where:
- it would cause undue hardship 🤒
- no consideration given even by deed 💰

Not awarded for breach of:

• employment contracts, 🧑‍🍳
• constant court supervision required 👨‍⚖️
• contract not binding on both parties 📝↔️

Question 24

What is a prohibitory and interim prohibitory injunction?
✋

Answer 24

• Prohibitory Injunction: court order restraining a party from breaching a negative term
• Interim: temporary order to protect a party until a matter reaches trial

Equitable principles apply, only granted where
- Just and convenient
AND
- damages not appropriate

Question 25

What is the effect of not complying with an injunction?

Answer 25

Be in contempt of court
👮‍♀️

Question 26

What limiting factors are there on damages?

Answer 26

1. Causation⛓️: factual (dominant cause) and legal (no NAIs that break chain)
2. Remoteness🔭: loss of a type ordinarily and naturally arising from breach; and if losses are too unusual, D must have had sufficient actual knowledge to be aware of risks of these losses
3. Mitigation😇: injured party should take reasonable steps to minimise effect of breach - no obligation to but losses attributable to failure to do so aren’t recoverable

Question 27

What is restitution interest and the requirements for it?
😈💵😭

Answer 27

C’s interest they have in restoration of benefits which defaulting party has acquired at its expense - i.e. account for profits

1. Inadequacy of other remedies 😡
2. C has legitimate interest in depriving D of their profit😇

Book deal and secrets.

Question 28

What are the implications of a guarantee?

Answer 28

Promise by G to ensure that A carries out his obligations or step in a do them if A doesn’t
- G’s obligation ceases when A’s does 🪢
- If contract between A & B changes G will be discharged 🕊️
- Guarantee must be in writing and signed by G 📝

Question 29

What are the implications of an indemnity?

Answer 29

Promise by I to reimburse B if they suffer loss because of A.
- I’s obligation does not ceases when A’s does ⛓️
- If contract between A & B changes it will be remain 🦤