Remedies for Breach of Contract

Question 1

Identify the Term in Dispute

Answer 1

The Court will take into account;
• Circumstances surrounding the making of the contract
• Contract as a whole
• Whether the parties described the term as a condition or warranty (can be rebutted)

Question 2

a. Condition
b. Warranty
c. Innominate Term

Answer 2

a. A term going to the root of the contract
b. Less important term
c. Neither a condition / warranty - Hong Kong Fir Shipping

Question 3

How was the Contract Discharged

Answer 3

1. Doctrine of Breach

2. Doctrine of Specific Performance

Question 4

Doctrine of Breach - Type of Term and Type of Breach

Answer 4

• Condition – Terminate future performance and sue for damages
• Warranty – Sue for damages for loss suffered
• Innominate – If the breach deprives the innocent party of substantially the whole benefit of the contract, the innocent party can;
- Terminate the contract and sue; or
= Hong Kong Fir Shipping
- Affirm the contract and sue for damages

Question 5

Doctrine of Breach - Damages - Compensatory

Answer 5

1. Compensate C and not to Punish D

2. C must have sustained loss - Obagi

Question 6

Doctrine of Breach - Damages - Expectation Loss

Answer 6

Robinson v Harman
In so far as money can, Claimant is to be placed in the same situation with respect to damages as if the contract had been performed

Question 7

Doctrine of Breach - Qualification of Damages

Answer 7

Difference in value (goods)
Cost of cure (services)
Loss of Amenity - Ruxley Electronics v Forsyth
Loss of Pleasure - GR = No - Addis v Gramophone, but if the contract’s purpose was the Claimant’s enjoyment = Yes - Jarvis v Swan’s Tours
Important Object of Contract - Farley v Skinner

Question 8

Doctrine of Breach - Damages - Reliance Loss

Answer 8

Anglia Television

• Put the Claimant in a position he would have been had the contract never been entered into
• Covers expenditure wasted as a result of the breach

Question 9

Doctrine of Breach - Damages - Subject to Remoteness

Answer 9

Hadley v Baxendale
Loss must have been within the Reasonable Contemplation of the Parties at the time of the Contract;
i. Arising naturally from the breach
ii. Unusual loss, if special circumstances causing the loss are known to the parties at the time the contract is made

Question 10

Doctrine of Breach - Damages - Remoteness - Simpler the activity, the easier it would be to imply knowledge

Answer 10

Balfour Beatty

Question 11

Doctrine of Breach - Damages - Remoteness - Innocent party can recover loss which at the time of the contract was within the Reasonable Contemplation of the parties as liable to result from the breach (Not Special Contracts)

Answer 11

Victoria Laundry v Newman

Question 12

Doctrine of Breach - Damages - Remoteness - If a particular Type of loss is within the parties’ Reasonable Contemplation then the culpable party is liable for the Full Scale of that loss (even if higher than contemplated)

Answer 12

Parsons Livestock

Question 13

Doctrine of Breach - Damages - Remoteness - Normal profit is a Different Type of loss to High profits from a Specially Lucrative Contract

Answer 13

Brown v KMR Services

Question 14

Doctrine of Breach - Damages - Subject to Mitigation

Answer 14

• Claimant cannot recover damages for losses which he could have avoided by taking Reasonable Steps
• Can claim expenses incurred trying to mitigate the loss even if unsuccessful
- British Westinghouse

Question 15

Doctrine of Breach - Damages - Time Assessment for Damages

Answer 15

• Damages should reflect the loss suffered and, although the assessment at the date of breach rule would normally achieve this, it should not be applied where it did not
- The Golden Victory

Question 16

Doctrine of Breach - Specified Damage or Penalty Clause? -

Answer 16

Dunlop v New Garage

Question 17

Doctrine of Breach - Specified Damage or Penalty Clause? - Is the sum extravagant / unconscionable?

Answer 17

Penalty

Question 18

Doctrine of Breach - Specified Damage or Penalty Clause? - If breach is not paying a sum of money, if the sum in the clause exceeds the amount that ought to be paid

Answer 18

Penalty

Question 19

Doctrine of Breach - Specified Damage or Penalty Clause? - If a single lump sum is due on the happening of one of multiple events, varying in severity

Answer 19

Presumption of a Penalty

Question 20

Doctrine of Breach - Specified Damage or Penalty Clause? - Difficult / Impossible to pre-estimate the loss caused by the breach

Answer 20

Specified Damage

Question 21

Doctrine of Breach - Specified Damage or Penalty Clause? - Specified Damage clauses could be valuable in Commercial Contracts because they enable the parties to know, with a Reasonable Degree of Certainty, the extent of their liability

Answer 21

Philips Hong Kong Ltd v A-G of Hong Kong

Question 22

Doctrine of Breach - Restitution

Answer 22

The goal is to prevent the Unjust Enrichment of one party

A Restitution Claim may arise in two situations;

1. Recovery of paid money due to ‘total failure of consideration’
2. Compensation for Work Done / Goods supplied

Question 23

Doctrine of Breach - Restitution - Contract was Never Performed – Supplier may be able to claim for a Reasonable Sum for Work Done / Goods Supplied

Answer 23

British Steel v Cleveland

Question 24

Doctrine of Breach - Restitutionary Damages

Answer 24

May be awarded where the Defendant’s breach is deliberate and for own reward – Claimant cant show any loss and the Claimant has a legitimate interest to restrict the Defendant’s behaviour - Experience Hendrix

Question 25

Doctrine of Complete Performance

Answer 25

General Rule: A party only has to perform their obligations when the other party has performed their part of the contract
- Performance must be precise and exact - Cutter v Powell

Question 26

Doctrine of Complete Performance - Exceptions - Wrongful Prevention of Performance by the Other Party

Answer 26

Can recover damages including lost profits
- Robinson v Harman
Quantum Meruit
- Planche v Colburn

Question 27

Doctrine of Complete Performance - Exceptions - Voluntary Acceptance of Partial Performance by the Other Party

Answer 27

Defendant must have the option to take or not to take the work done
Can claim Quantum Meruit - Sumpter v Hedges

Question 28

Doctrine of Complete Performance - Exceptions - Substantial Performance

Answer 28

1. Work is Finished but is Slightly Defective
2. Consider the Nature and Extent of the Defects
   - Compare contract price with the amount needed to rectify the defects
   
   • Slight Defects = Marginal Remedies (1/14th) - Hoenig v Isaacs
   • Gross Defects = Substantial Remedies (1/3rd) - Bolton v Mahadeva

Question 29

Equitable Remedies - Specific Performance will not be granted for Contracts where a Relationship of Trust is Paramount

Answer 29

Ruxley v Forsyth

Question 30

Equitable Remedies - Injunction - Negative Promises can be enforced

Answer 30

Warner v Nelson

Question 31

Equitable Remedies - Injunction - Court will Not enforce a promise in a contract if the injunction would result in the party remaining idle and detrimentally impacting their career

Answer 31

Page One Records v Britton