REMEDIES IN CONTRACT

Question 1

There are 2 basic types of remedies in contract law:

Answer 1

1. Damages
2. Equitable Remedies

Question 2

Most common remedy granted by Canadian courts is……….

Answer 2

Monetary award to compensate a party for its loss caused by breaching contract whether that is through failure to perform, inadequate performance, etc.

Question 3

Similar vs Different: Contract vs Tort Law for Damages

Answer 3

SAME
-Compensation
-Not meant to be “punitive” → not meant to punish bad behaviour, although more common in tort
-Goal is not to punish the person who broke the contract — it’s just to compensate the innocent party for what they lost.

DIFFERENT:
-Damages in contract are measured from the time the parties entered the contract, vs Tort → measured from time of tortious act
-Tort damages tend to be larger
-Contributory Negligence in Tort → If the injured person partly caused the harm, their compensation may be reduced (or denied)
-Mitigation in Contract → Person who suffers the breach must try to reduce their losses

Question 4

Types of Damages In Contract: 6 Types (EL CRON)

Answer 4

1. Expectation Damages
   Compensation for lost profit that was reasonably expected from the performance of the contract
   Difference in price, loss, etc.
2. Consequential Damages
   Secondary damages → losses which indirectly flow from the breach
   Example: additional costs to repair damages caused by breach
3. Reliance Damages
   These are losses that happen when a party spends money preparing to fulfill a contract, but the other party doesn’t follow through
   Goal is to reimburse the innocent party for money they spent in reliance on the contract being fulfilled
4. Nominal Damages
   Minimal monetary award (perhaps $1) where aggrieved party can show breach but NO REAL LOSS
   Rarely sought, why would anyone bother going to court to get so little money?
5. Liquidated Damages
   When both parties agree in advance on a specific dollar amount that will be paid if the contract is breached.
   The court will enforce the amount → It saves time and avoids arguments later about how much was lost.
   If it looks like a penalty (too high just to scare the other party), or If it’s too low to reflect any real loss (unrealistic estimate), then the court will ignore it and calculate proper damages on its own.
6. Other Damages
   General damages for mental distress is not as common in Contract Law, as in Tort Law
   Typically, because contract focuses on financial loss, rather than emotional
   “Peace of Mind Contract” → special contracts where one party is paying for reassurance, comfort, or security, not just a product or service
   If peace of mind is a core purpose of the contract, then mental distress damages may be available if that peace is disrupted.

Question 5

Epand on Equitable Remedies:

Answer 5

1. Special Performance
   -Court requiring party to do positive act (like community service)
2. Injunction
   -Court may make an order restraining a party from doing some act, or from not doing it
   Restraining party from breaching a term of contract, restraining party from continuing its unwanted performance

Question 6

5 Rules for Granting Equitable Remedies:

Answer 6

1. The Plaintiff must have “clean hands”;
2. No unreasonable delay;
3. No remedy will be granted if it would affect an innocent third party;
4. No remedy if only nominal consideration;
5. Damages must be seen to be inadequate in the circumstances.