Remedies for Breach of Contract Flashcards
Identify the Term in Dispute
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)
a. Condition
b. Warranty
c. Innominate Term
a. A term going to the root of the contract
b. Less important term
c. Neither a condition / warranty - Hong Kong Fir Shipping
How was the Contract Discharged
- Doctrine of Breach
2. Doctrine of Specific Performance
Doctrine of Breach - Type of Term and Type of Breach
• 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
Doctrine of Breach - Damages - Compensatory
- Compensate C and not to Punish D
2. C must have sustained loss - Obagi
Doctrine of Breach - Damages - Expectation Loss
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
Doctrine of Breach - Qualification of Damages
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
Doctrine of Breach - Damages - Reliance Loss
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
Doctrine of Breach - Damages - Subject to Remoteness
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
Doctrine of Breach - Damages - Remoteness - Simpler the activity, the easier it would be to imply knowledge
Balfour Beatty
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)
Victoria Laundry v Newman
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)
Parsons Livestock
Doctrine of Breach - Damages - Remoteness - Normal profit is a Different Type of loss to High profits from a Specially Lucrative Contract
Brown v KMR Services
Doctrine of Breach - Damages - Subject to Mitigation
• 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
Doctrine of Breach - Damages - Time Assessment for Damages
• 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
Doctrine of Breach - Specified Damage or Penalty Clause? -
Dunlop v New Garage
Doctrine of Breach - Specified Damage or Penalty Clause? - Is the sum extravagant / unconscionable?
Penalty
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
Penalty
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
Presumption of a Penalty
Doctrine of Breach - Specified Damage or Penalty Clause? - Difficult / Impossible to pre-estimate the loss caused by the breach
Specified Damage
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
Philips Hong Kong Ltd v A-G of Hong Kong
Doctrine of Breach - Restitution
The goal is to prevent the Unjust Enrichment of one party
A Restitution Claim may arise in two situations;
- Recovery of paid money due to ‘total failure of consideration’
- Compensation for Work Done / Goods supplied
Doctrine of Breach - Restitution - Contract was Never Performed – Supplier may be able to claim for a Reasonable Sum for Work Done / Goods Supplied
British Steel v Cleveland
Doctrine of Breach - Restitutionary Damages
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
Doctrine of Complete Performance
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
Doctrine of Complete Performance - Exceptions - Wrongful Prevention of Performance by the Other Party
Can recover damages including lost profits
- Robinson v Harman
Quantum Meruit
- Planche v Colburn
Doctrine of Complete Performance - Exceptions - Voluntary Acceptance of Partial Performance by the Other Party
Defendant must have the option to take or not to take the work done
Can claim Quantum Meruit - Sumpter v Hedges
Doctrine of Complete Performance - Exceptions - Substantial Performance
- Work is Finished but is Slightly Defective
- 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
Equitable Remedies - Specific Performance will not be granted for Contracts where a Relationship of Trust is Paramount
Ruxley v Forsyth
Equitable Remedies - Injunction - Negative Promises can be enforced
Warner v Nelson
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
Page One Records v Britton
