Other Remedies for Breach of Contract Flashcards
Lecture 9
What are Liquidated (Agreed) Damages Clauses?
- Definition: Terms in contract which state amount of money to be paid in event of breach
- Eliminates uncertainty
- Courts have jurisdiction to control content of such clauses
- Diestal v Stevenson: if loss suffered is greater than amount stipulated, IP cannot claim for the actual loss
{Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co} What can we learn from the following case?
- Contract expressly stipulated that the buyer of tyres should not resell tyres below list price; that for every tyre sold below the list price a sum of £5 had to be paid to seller
- HOL: clause stipulates sum that is a genuine pre-estimate of damage and is fair
How would you distinguish between liquidated damages and penalty clauses?
- L enforceable v P unenforceable
- Effect of L is to fix amount of damages
- Purpose of P is to penalise party in breach
- Question of intention of parties, not form (title or description of clause)
What can we learn from the case of Cavendish Square Holding BV v Talal El Makdessi [Penalty]
- Facts: sale of controlling interest in advertising company (‘Price adjustment clause’)
- Emphasis shifted to q whether clause is penal or not, rather than whether it is a pre-estimate for loss
- Clause penalty if secondary obligation imposes detriment is out of all proportion to any legitimate interest of IP
What can we learn from the case of ParkingEye Ltd v Beavis [Penalty]
- Facts: Beavis parked in privately owned shopping centre car park. For staying longer than two hours he was charged 85GBP
- Found: no penalty
- Two objectives: provide effective use of parking space + provide income to operative costs
- “Legitimate interest in enforcement” (interests beyond financial interests)
(Other equitable remedies) What is specific performance and how is it significant?
- When the court orders a party to perform their contractual obligation
- Equitable remedy available at discretion of the courts
- Generally seen as a supplementary remedy (granted when damages where not adequate)
- Fair and reasonable in all circumstnace
Provide restrictions on availability of specific performance (i.e., where SP will not be awarded)
- Damages must not be an adequate remedy {Sky Petroleum}
- For contracts of personal service (e.g., contract of employment)
- Not require constant court supervision {Co-operative Insurance Society}
- Specific performance only granted if it is just and equitable to do so
Others: cases hardship, unfair, taking advantage of mistake, impossible, vague contract
(Other equitable remedies) What are injunctions and how is it significant?
- Available where a negative promise in a contract is broken + prevent parties from taking prohibitive actions
- Equitable remedy therefore discretionary
- Not granted where it is adequate remedy
How do you distinguish between prohibitory and mandatory injunction?
- Prohibitory: prevent defendant from carrying prohibited action in future {Warner Bros case}
- Mandatory: compel the defendant to undo work that has been done in breach of a negative stipulation in contract {Wakeham v Wood}
(Other equitable remedies) What is restitution and how is it significant?
- Where the claimant has paid money or rendered service/s to the defendant and received nothing in return, then the claimant may sue the defendant for restitution of money paid or of the services rendered
- Mainly a claim of restitution, not bad on common law
- Generally, requires total failure of consideration
(Other equitable remedies) What is ‘Quantum Meruit’ and how is it significant?
- Means: “the amount one deserves” (e.g., part payment)
Cases include:
1. Party paying for work, stops the work from being carried out
2. Circumstances where work performance without actual agreement on payment, but obvious payment is expected (e.g., taxi)
- Claimant entitled to receive reasonable remuneration
