Equitable and Other remedies

Question 1

Other than damages being the main remedy for a breach and in certain circumstances the innocent party being entitled to terminate the future performance of the contract. What other remedies are available?

Answer 1

• Action for an agreed Sum
• Specific performance
• Injunction
• Restitution
• Restitutionary damages
• Guarantees
• Indemnities

Question 2

What is specific performance

Answer 2

An equitable remedy. The idea here is that the claimant is asking the court, not for compensation, but for an order requiring actual performance.

In other words making the defendant do what they agreed to do.

Question 3

When would specific performance be available?

Answer 3

Specific performance is not an alternative remedy to damages. It is only available if damage are not an adequate remedy eg in relation to purchases of land.

It is only applicable to postive obligations under a contract

Question 4

Where are you likely to see specific performance remedies used and why would they potentially not be used for sale of goods

Answer 4

In contracts for the sale of land.

Contrast that with sales of goods, where you cannot generally get specific performance- if a seller refuses to supply particular goods the buyer can claim damages and use the compensation to buy goods elsewhere that are just the same.

Question 5

Where are you unlikely to see specific performance being used as a remedy.

Answer 5

Unlikely to be used in employment contracts. The reason for this restriction is that such contracts depend on a certain amount of trust and confidence. If the relationship between the parties has broken down, it would be inappropriate to force them to work together.

Question 6

Is specific performance available ‘as of right’

Answer 6

No as it is an equitable remedy it is at the discretion of the court. It will only be awarded when it is just and equitable to do so.

The court will consider whether the claimant has acted equitable and will also look at whether the order would cause disproportionate hardship to the defendant.

Question 7

What is an injunction as a remedy and what kind of terms is it applicable to

Answer 7

Injunctions are more commonly used to restrain the defendant from doing what they have agreed not to do. So it only applicable to negative terms of a contract

Like specific performance, an injunction is an equitable remedy. So it is only available at the description of the court and will only be awarded where damages would be inadequate.

Question 8

When would an injunction not be granted.

Answer 8

If the effect would be to compel the defendant to do acts that they could not be ordered to do by specific performance.

eg the courts will not order an unjunction that would effectively force an employee to work for a particular employer.

Question 9

What is an action for an agreed sum

Answer 9

It is simply suing for a fixed amount of money that is owed- normally the price of goods or services supplied under a contract.

It is much more of a direct remedy than a claim for damages.

Question 10

What is the criteria for an agreed sum

Answer 10

Money has to be owed and the date of payment must have fallen due.

once a claimant can establish their right to the money, they can claim it, issues such a proving loss and showing that it is not too remote drop out of the picture.

Question 11

What is the remedy of indemnities

Answer 11

Just like a contract of guarantees, it is a way in which a non-defaulting party may be able to claim against a third party in the event of breach.

It creates a primary obligation, it is effectively where one party promises to reimburse pound-for-pound the other party in respect of a particular loss arising under the contract.

Question 12

Do indemnities need to be evidence in writing?

Answer 12

As indemnities are primary obligations they do not have to be evidenced in writing.

Question 13

Where are you likely to see indemnities

Answer 13

In business acquisitions and purchases of land where there is a known specific liability/loss that the buyer will be taking on board.

For example, a potential buyer of land discovers it is contaminated and that cleaning it up will cost money. The buyer could negotiate a price reduction or alternatively seek an indemnity.

An indemnity solves the problem provided the seller reimburses the money when required to do so.

Question 14

What is the primary remedy awarded by courts for a breach of contract?

Answer 14

An award of damages is the main remedy, aiming to compensate the injured party for their loss.

Question 15

What is specific performance, and when is it used?

Answer 15

Specific performance is a court order compelling a party to fulfill a positive contractual obligation. It is used when damages are inadequate and the subject matter is unique.

Question 16

How do positive and negative terms in a contract differ? Give examples.

Answer 16

Positive terms require a party to do something (e.g., work 9–5, buy steel); negative terms require a party not to do something (e.g., not work for a competitor).

Question 17

What are the main limitations on the court’s power to grant specific performance?

Answer 17

Specific performance won’t be granted if:

-damages are adequate.
-The subject isn’t unique
-it causes hardship
- involves employment contracts,
- requires ongoing court supervision.

Question 18

Why is uniqueness important in deciding whether to grant specific performance?

Answer 18

Specific performance is more likely when the contract involves something unique or irreplaceable, like land. Common items, like a car, typically do not qualify.

Question 19

What equitable maxims influence a court’s decision to grant specific performance?

Answer 19

Courts apply principles like “clean hands” (the claimant must act fairly) and “delay defeats equity” (undue delay may bar the remedy).

Question 20

Why is specific performance generally not awarded for breaches of employment contracts?

Answer 20

Because courts avoid forcing continued work relationships where trust and confidence may be broken. It’s seen as inappropriate and unworkable.

Question 21

In the case of Aaron and Dan’s Deliveries, why wouldn’t the court order specific performance?

Answer 21

Because it involves an employment contract. The court avoids enforcing such contracts due to trust issues and the general rule against it.

Question 22

What is a prohibitory injunction in contract law?

Answer 22

A prohibitory injunction is a court order restraining a party from breaching a negative term of a contract.

Question 23

What is an example of a scenario where a prohibitory injunction might be sought?

Answer 23

If Mrs. Allsorts agreed not to open a rival sweetie shop after selling her business to Mr. Sherbert but attempts to do so, Mr. Sherbert may seek a prohibitory injunction to prevent the breach.

Question 24

What are the shared limitations of prohibitory injunctions and specific performance?

Answer 24

Both are equitable remedies and will not be granted if the claimant has violated equitable maxims or if damages are an adequate remedy.

Question 25

Under what conditions will a court grant a prohibitory injunction?

Answer 25

Only if it is just and convenient, damages are inadequate, and the claimant comes with clean hands. It will not be granted in cases involving employment contracts.

Question 26

What discretion does the court have when issuing a prohibitory injunction?

Answer 26

The court can limit the injunction to what it considers reasonable in the circumstances, rather than granting it in full.

Question 27

In William Robinson, how did the court exercise discretion in the prohibitory injunction?

Answer 27

The court limited the injunction to prevent the defendant only from engaging in a narrower class of business related to the claimant’s goods, rather than any business whatsoever.

Question 28

In the scenario with Mr. Graham and Mr. Patel, why was the prohibitory injunction not granted?

Answer 28

Because Mr. Patel did not come to court with clean hands, having spread defamatory rumours about Mr. Graham, which made the court unlikely to award an equitable remedy.

Question 29

What is a contract of guarantee? and what kind of obligation does it create

Answer 29

A contract where the guarantor agrees to pay a debt if the debtor fails to do so. It creates a secondary obligation triggered by the debtor’s default.

Question 30

In a contract of guarantee, who are the main parties involved?

Answer 30

The debtor (who owes the money), the guarantor (who agrees to pay if the debtor defaults), and the creditor (to whom the money is owed).

Question 31

What triggers the guarantor’s obligation in a contract of guarantee?

Answer 31

The guarantor’s obligation is triggered only when the debtor defaults on repaying the debt.

Question 32

Must a contract of guarantee be in writing to be enforceable?

Answer 32

It must be evidenced in writing and signed by the guarantor to be valid and enforceable.

Question 33

What does “evidenced in writing” mean in the context of a guarantee?

Answer 33

There must be some written proof of the agreement, signed by the guarantor, though the whole contract doesn’t need to be written

Question 34

Why was the guarantee by Felix’s parents not enforceable in the SQE scenario?

Answer 34

Because it was given orally with no written evidence, making the guarantee void and ineffective.

Question 35

What is the legal status of a guarantee that is not evidenced in writing?

Answer 35

It is void and cannot be enforced in court, even if the guarantee was clearly stated orally.

Question 36

In the case of Felix and his parents, what was the correct answer regarding enforceability?

Answer 36

The guarantee cannot be enforced because there is no written evidence signed by the guarantor.

Question 37

What is an indemnity in contract law?

Answer 37

An indemnity is a contractual promise where one party agrees to reimburse the other in full for a specific loss arising under the contract.

Question 38

Does an indemnity create a primary or secondary obligation?

Answer 38

It creates a primary obligation, meaning the indemnifier is directly responsible for reimbursing the agreed loss without requiring a prior default by another party.

Question 39

is a written agreement required for an indemnity to be valid?

Answer 39

No, indemnities do not need to be evidenced in writing. They can be valid even if made orally.

Question 40

In what types of transactions are indemnities commonly used?

Answer 40

Indemnities are often used in commercial transactions, such as business acquisitions and land purchases, especially where there is a known liability.

Question 41

What is the difference between a price reduction and an indemnity in a transaction involving known liability?

Answer 41

A price reduction lowers the upfront cost immediately, while an indemnity ensures the seller reimburses the buyer for the liability as and when the cost is incurred.

Question 42

How does an indemnity differ from a guarantee?

Answer 42

A guarantee is a secondary obligation triggered by default and must be in writing; an indemnity is a primary obligation and does not require written evidence.