Contract 4 Remedies

Question 1

Rule on determining if a term is a condition or warranty

Answer 1

Generally, if the effect of a breach of the term deprives the innocent party of the whole benefit of the contract, the term is a condition; if not it is a warranty.

Question 2

Exceptions to the doctrine of complete performance and their respective remedies

(3) SUV

Answer 2

Substantial performance:
work is finished but defective.

Slight or extensive defect is by considering the cost of cure.

Hoenig v isaacs: 1/14 of contract price - minor defect
Bolton v Mahadeva 1/3 of contract price - extensive

Unjust/Wrongful prevention of performance by the other party
Remedies: recovery of damages and lost profits. quantum meruit; quantum valebant

Voluntary acceptance of partial performance by the other party (Sumpter v Hedges)
D must be free to choose to accept or not.
Remedy: quantum meruit

Question 3

Define divisible obligations

Answer 3

parties have agreed payments for a distinct part or stage of the work.

Question 4

Broad ethos of damages for breach of contract

2

Answer 4

Compensatory: the goal is to compensate the claimant, not punish the D.

C must have sustained loss or C may have to pay D’s cost (Obagi v Stanborough (Developments) Ltd)

Question 5

Obagi v Stanborough (Developments) Ltd

Answer 5

D broke a term promising best endeavour to secure planning permission. There was never any chance. C sued. Court awarded nominal damage and ordered C to pay for D’s costs.

Loss is needed for damages to be granted or else C may have to pay D’s costs

Question 6

Factors consider with calculating damages on expectation loss basis

ADORE
(5)

Answer 6

Loss of amenity (Ruxley) A
Loss of opportunity (Chaplin v Hicks) O
Cost of cure/repairs (services) R
Difference in value (current price paid to find replacement) D
Loss of pleasure (enjoyment) (only if pleasure is an important aim of the contract) E

Question 7

Ruxley Electronics and Contruction v Forsyth

Answer 7

Pool built not with the depth requested. Difference in value between a correct pool and the existing oneis nil. Forsyth sued for cost of cure which is excessively high.

Held in this case, loss is related to the consumer surplus, C will be able to recover for loss of amenity.

Question 8

Jarvis v Swan’s Tours and Farley v Skinner

Answer 8

C bought a holiday package which turned to be a catalogue of disaster. lawsuit was accepted since the main aim was for enjoyment and damages can be awarded

Surveyor hired to assess if property to be purchased will be affected by noise. Report came back in the negative but turned out to be untrue. Held damages was awarded for non pecuniary loss.

Enjoyment and peace of mind happens to be the main aim of the contract, damages can be awarded.

Question 9

Statutory authority for contributory negligence

Answer 9

Law Reform (Contributory Negligence) Act 1945

Question 10

Define penalty clause

EU

Answer 10

A penalty clause is one that attempts to put exorbitant or unconsicionaable economic pressure on a party to perform the contract.

A penalty is unenforceable. Where the clause is a penalty, the court is free to assess damages in the usual way and the usual principles of measure of damages, remoteness and mitigation will apply

Question 11

Chaplin v Hicks

Answer 11

C was shortlisted for a talent show but organiser failed to tell her the timeand place of audition. Held she was entitled to damages to compensate for the loss of change of being one of the final 12 winners.

Damages can be awarded for lost opportunity

Question 12

Cavendish Square Holding BV v Makdessi - Penalty clause test

secondary primary obligation

Answer 12

a clause is a penalty clause if it creates a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation

Question 13

Extra criteria for making out a penalty clause as laid down by Dunlop Pneumatic Tyre Co Ltd
(3)

Answer 13

if the sum is extravagant/unconscionable - penalty
withholding payment/more than contract price - penalty
If a single sum is due on the happening of one of mutiple events, varying in severity - penalty

Question 14

Broad ethos of resitution

Answer 14

Prevention of unjust enrichment of one party

Question 15

Golden Strait Corporation v The Golden Victory

Answer 15

Ship chartered to D, allowing exception for cancellation if there is war. D repudiated contract nonetheless. Qs on how dmgs should be assessed given that war broke out immediately after.

Dmgs should be assessed by time of breach. The principle is to cover the loss suffered, so the rule will not apply if the key principle is offended

Question 16

3 situation where restitution may be granted

TomBoyNever

Answer 16

Total failure of consideration - not done any work or work done is completely useless

work/goods delivered but the other party is in breach of contract

work goods delivered but the contract was never formed

Question 17

Discuss Action for an agreed sum

Answer 17

C can start an action for an agreed sum if
the contract provides for one party to pay a definite sum to the other and
the duty to pay has arisen

this is a debt claim; remoteness and mitigation rules do not apply

Question 18

Cavendish Square Holding BV v Makdessi - Penalty clause test

impugned…secondary…detriment…. proportion…. legitimate….enforcement…primary

Answer 18

a clause is a penalty clause if the impugned provision creates a seconday obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation

Question 19

Two basis of damages and their basic principles

ADORE

Answer 19

Expection loss: aim is to put the claimant in the position he would have been in had the contract been properly performed.

For

A (amenity)
D (difference in value)
O (loss of opporunity)
R (cost of repairs/cure)
E (enjoyment)

If expectation cannot be quantified. Reliance loss will be used:

the aim of reliance loss is to put the claimant back in position he would have been in had the contract never been entered into.

Question 20

Remoteness test for breach of contract

contrast it with that of tort

Answer 20

Loss must be within the reasonable contemplation of the parties. This will be case where:

it arises from the ordinary course of things; or

the special circumstanaces causing the loss are known the parties at time contract is made

Remoteness test in tort:
only damages reasonably forseen by a reaonsable person can be recovered.

Question 21

Comment on the following scenarios by apply the test of remoteness in contract:

Normal profits vs special occasion profits
Degree of gains or loss
Normal loss of profits and loss of profits due to missing a special lucrative contract

Answer 21

Normal profits are forseeable but profits from a special contract are not

If the type is the same and within the parties contemplation then the culpable party should be liable for the full scale of that loss

Normal loss of profits and loss of that due to missing lucrative contract is not the same. the latter might not be foreseeable

Question 22

Discuss time assessment for damages

Answer 22

Damages are assessed by reference to the time of breach, but the key principle is the damage must cover the loss suffered, so the normal rule should not be applied if the key principle is offended.

Question 23

Principle for the award of Resitutionary damages

Answer 23

Restitutionary damages may be awarded where D’s breach is deliberate and for their own reward, that C can’t show any loss and C has legitimate interest to restrict D’s behaviour

Question 24

Rule of granting specific performance order

Answer 24

it is a discretionary remedy. it will not be granted if the court have to supervise, for service contract, or for contract where a relationship of trust is paramount (Ruxley)

Question 25

Warner Brothers Pictures Incorporated v Nelson

Answer 25

An injunction will not be granted to enforce negative promise

Question 26

Page One Records v Britton

Answer 26

the court will not enforrce a promise in a contract if the injunction would result in the party remaining idle and detrimentally impacting their career