Remedies for Breach of Contract

Question 1

If the term breached is a condition, to what is the claimant entitled? And a warranty?

Answer 1

Condition - terminate and claim damages.

Warranty - damages only.

Question 2

How will the court assess innominate terms? What must occur for the claimant to terminate? Case.

Answer 2

Courts will look at the effect of breach. If the claimant is deprived of substantially the whole benefit of the contract, he may terminate. Hong Kong Fir Shipping v Kawasaki.

Question 3

When will damages be an appropriate remedy?

Answer 3

Where the claimant has suffered loss.

Question 4

When will a specified damages clause be enforceable? If not valid, what will it be?

Answer 4

When it is a genuine attempt to pre-estimate loss. If not, it will be a penalty clause.

Question 5

What 4 guidelines will be used to consider whether a clause is a specified damages clause or a penalty clause? Case.

Answer 5

Dunlop v New Garage:

1. Is the sum extravagant/unconscionable compared to greatest possible loss?
2. If breach is non-payment of money, is sum in clause greater than amount owed?
3. Is there a fixed sum to be paid for any breach, major or minor?
4. The fact it is difficult to pre-estimate loss will not prevent the clause being a specified damages clause.

Question 6

What is the normal way in which damages are generally assessed? What is the aim? Case.

Answer 6

Expectation loss basis - to put claimant in position he would have been in had contract been performed - Robinson v Harman.

Question 7

What is the usual measure of damages?

Answer 7

Cost of cure or difference in price.

Question 8

Where cost of cure is disproportionately high, what is an alternative approach? Case.

Answer 8

Loss of amenity, i.e. difference between what was paid for and received - Ruxley Electronics v Forsyth.

Question 9

Can a claimant claim for lost opportunity? Case.

Answer 9

Yes. The opportunity must not be too speculative and it must be possible to quantify the potential loss with some degree of accuracy. Chaplin v Hicks.

Question 10

Are damages generally awarded for distress/disappointment? Case. Exception. Case.

Answer 10

No - Addis v Gramophone. Unless contract is specifically for enjoyment - Jarvis v Swan Tours.

Question 11

If losses cannot be accurately quantified, what is an alternative measure of damages? Case.

Answer 11

Reliance loss basis - compensation for expenses incurred in reliance on contract - Anglia TV v Reed.

Question 12

Must a claimant take reasonable steps to mitigate their losses? Case.

Answer 12

Yes - British Westinghouse v Underground Electric Railway.

Question 13

What are the rules surrounding remoteness? Case.

Answer 13

Hadley v Baxendale. The loss must:

1. Arise naturally from the breach.
2. If not, be within the parties’ reasonable contemplation at the time of contracting.

Question 14

How will ordinary profit and unusual profit fall within the remoteness rules? 2 cases.

Answer 14

Victoria Laundry v Newman Industries; Brown v KMR.

1. Ordinary profit will arise naturally from the breach, i.e. limb 1 of Hadley v Baxendale.
2. Unusual profit will only be with the parties’ contemplation, i.e. limb 2 of Hadley v Baxendale, if the defendant had actual notice of it.

Question 15

If the type of loss is deemed of a type contemplated, can the claimant recover the full extent of his losses, even if not contemplated? Case.

Answer 15

Yes - Parsons v Uttley Ingham.

Question 16

In what circumstances will a claimant’s damages be reduced? Authority.

Answer 16

Where the claimant has contributed to their loss. Law Reform (Contributory Negligence) Act 1945.

Question 17

What 2 equitable remedies are available?

Answer 17

1. Specific performance - orders defendant to perform his obligation.
2. Injunction - restrains breach.

Question 18

What remedy is available where the breach is simply non-payment?

Answer 18

A debt action.

Question 19

What is the aim of restitution? In what circumstances may it be available?

Answer 19

To avoid unjust enrichment.

1. Complete failure of consideration.
2. Reasonable sum for work done on quantum meruit basis, as exception to doctrine of complete performance (see later).

Question 20

What is the doctrine of complete performance? Case.

Answer 20

Contractual obligations must be performed precisely and exactly - Cutter v Powell.

Question 21

If the buyer has not yet paid, can he sue for damages for a breach? If so, what might the consequence be? Case. What should he claim instead?

Answer 21

Technically, yes, but will only be entitled to nominal damages as there is no loss. May have to pay all costs in proceedings - Obagi v Stanborough. Should argue that he should not have to pay, relying on the doctrine of complete performance.

Question 22

Name 4 exceptions to the doctrine of complete performance which will enable a party to seek compensation for work done. Cases.

Answer 22

1. Wrongful prevention of performance. Can claim damages or restitution, on quantum meruit basis.
2. Voluntarily acceptance of partial performance, on quantum meruit basis - Sumpter v Hedges.
3. Substantial performance, i.e. completed with defects. Can claim full amount less deduction to fix defect, as occurred in Hoenig v Isaacs. If there is no substantial performance, then no sum can be recovered - Bolton v Mahaveda.
4. Divisible obligations. Can claim for obligations completed.

Question 23

What are restitutionary damages?

Answer 23

Damages awarded where claimant has suffered no loss, but defendant has made a gain at the expense of the claimant.

Question 24

In what circumstances will a full account of profit be awarded? Case.

Answer 24

Exceptional circumstances, e.g. national security. A-G v Blake.

Question 25

In what circumstances may restitutionary damages be awarded? Case.

Answer 25

Experience Hendrix v PPX Enterprises:

1. Breach is deliberate and for the defendant’s gain.
2. Claimant has suffered no loss.
3. Claimant has legitimate interest in restraining the Defendant’s behaviour.

Question 26

Give an example of a way in which restitutionary damages have been awarded. Case.

Answer 26

Wrotham Park Estate v Parkside Homes. Claimants awarded a sum which would have been a reasonable quid quo pro had an agreement actually been made.