Topic 2 - Equitable remedies

Question 1

A final injunction is granted a trial as part of the outcome of the case. What name is given to an injunction given before trial, generally to restrain further or threatened acts which the claimant says would be a breach of contract?

Answer 1

interim injunction

Question 2

veseel in behnke v bede was more than 30 yrs old. t/f/

Answer 2

true

Question 3

cohen v roche

Answer 3

Facts of the Case:

The claimant owned a furniture shop and entered an agreement to purchase a quantity of Hepplewhite chairs to sell in his shop. The defendant, in breach of contract, refused to deliver the chairs. The claimant sued for breach of contract and sought specific performance for delivery of the chairs.

Held:

The court refused to grant specific performance. The claimant would be adequately compensated by an award of damages. The chairs were considered ‘ordinary articles of commerce and of no special value or interest’. The claimant could have purchased the chairs elsewhere.

Question 4

.behnke v bede shipping co

Answer 4

Facts:

C had contracted to purchase a ship which precisely met the requirements of German shipping regulations, allowing them to use it immediately without modifications; but was also available at a significant discount because of the age of the ship.

Behnke claimed a declaration of purchasing city steamship from D, and asked for a specific performance of that contract and an injunction restraining def from parting with the steamship to anyone but behnke and if not then damages for breach of contract

Def denied existence of contract, said it was not enforceable by reason of s4 of the sale of goods act

Issues:

The plaintiff claims a decree of specific performance. This claim is strongly contested on behalf of the defendants.

Held:

the ship, although not particularly special to others, was of ‘peculiar and practically unique value’ to the C.

Pro forma contract constitute an offer in writing, which wpiuld consittute as against rhe sellers a written note or memorandum

Question 5

howard perry v british railways board

Answer 5

Facts of the case:

D (the British Railway Board) refused to allow C company to take delivery of its steel because they feared retaliation from their own employees who were supporting strikes by steelworkers. D told C that they could have it back when the strike ends

D did not assert that the steel was theirs but only that they could have it later

Decisions/Held:

Specific delivery was ordered.

Question 6

beswick v beswick

Answer 6

Facts:

A sold his coal business to B, his nephew, on the condition that B help maintain his widow, C, once A had died. B reneged on the promise and C sued him.

Issues:

Only nominal damages could be given since the estate did not suffer any loss due to the breach, hence specific performance is required

Key points:

The personal representative of a deceased party to an agreement may enforce that agreement by means of a decree of specific performance.

In a claim for monetary damages, specific performance has the same effect of letting a party to the contract sue for loss suffered by a third party

here must be something more that makes the award of nominal damages especially unjust, such in the present case where the widow would be left without support

Held:

HL held that 3rd party beneficiaries of a contract cannot sue on it, due to privity of contract. However C was able to sue for specific performance of the duty as the executrix of A’s will. HL said specific performance should be used if it would provide a “more perfect justice”

C succeeded only in her capacity as administratrix

Specific performance was ordered for payment to be made

Question 7

posner v scott lewis

Answer 7

Facts:

D owned a block of flats, the terms of the leases requiring the employment of a resident porter. When the resident porter resigned and went to live in a nearby block, D arranged with him that he would return daily to perform his duties. P sought an order for specific performance of the covenant.

Key points:

Here neither personal services, nor a continuous series of acts, were required, but merely the execution of an agreement containing provisions for such services.

Held:

employment of a non-resident porter was not a sufficient compliance with the covenant because it ignored the feeling of enhanced security which the presence of a resident porter engendered in the residents. The covenant was specifically enforceable and damages would not be ordered in lieu.

Question 8

cooperative insurance society v argyll stores

Answer 8

Facts of the case:

The plaintiffs granted the defendants a lease of the units in a shopping centre for a term of 35 years from August 1979 to operate a supermarket.

The lease in clause 4(19) contained a covenant to keep the premises open for retail trade during the usual hours of business in the locality.

The supermarket was the largest shop in the shopping centre and the greatest attraction.

The plaintiffs invited the defendants to continue trading until a suitable assignee could be found and offered to negotiate a temporary rent concession, but, without *2 replying, the defendants closed the supermarket and stripped out the fixtures and fittings

• Several sound objections to an order for specific performance, including the difficulties of enforcement and supervision by the court, the possibility of oppression caused by the threat of contempt proceedings and the potential for injustice where a defendant’s loss in having to continue trading might be greater than the loss caused to a plaintiff through breach of the covenant.

the obligation in the lease was not sufficiently precise to allow certainty as to what would constitute compliance, and specific performance should not be ordered.

Key points:

(1) In most commercial situations, where the object of the exercise is to make money, damages will be an adequate remedy, even though the breach causes the plaintiff considerable commercial inconvenience:

(2) Clarity is essential in the court’s order, which has to be specific

(3) An order to perform a series of acts continuously and indefinitely creates the possibility of repeated applications to interpret and enforce the order, which the court does not welcome.

(4) Specific performance should be refused if it would be a potential instrument of oppression. The consequences of an order compelling a person to run a business for a substantial or indefinite period cannot be predicted by the court.

5) It will often be possible for a defendant to evade the spirit of such an order, while obeying its letter. As the judge said, the court cannot dictate the quality or scale of the business. The defendant can trade on a limited scale, economically, unenthusiastically or unattractively, thus doing the plaintiff little good and making a mockery of (while none the less obeying) the court order

(6) To compel the operation for an indefinite period of a business by a person who is unwilling to operate it and has formed a commercial judgment that it is not viable is a serious restriction on the operation of the market and commercial flexibility.

Held:

Appeal allowed

there was a settled practice that mandatory injunctions which required a defendant to carry on a business would not be granted. Argyll would be operating at a loss.

 

Points to take away: 

Not all contracts are done in a way that they cover every possible outcome/eventuality

The vagueness of the contract may make the courts less inclined to grant specific performance

Question 9

constant supervision definition

Answer 9

if agreement in nature will require constant supervision of courts than specific performance will not be granted

Question 10

specific performance definition

Answer 10

order to do something

Question 11

joseph v national magazine co ltd

Answer 11

Facts:

plaintiff entered into a contract with the defendants to write an article under his name to appear in the defendants’ magazine.

Upon receiving the article, the editor made a number of alterations to it.

The plaintiff refused to allow the article as altered to appear under his name, although he wished to make certain alterations himself to the article as submitted.

He claimed specific performance and damages for breach of contract.

Held:

the plaintiff was entitled to write his own article in his own style, expressing his own opinions, and was not bound to submit to have his name published as the author of a different article expressing other opinions in a different style; therefore, he did not repudiate the contract;

as the exact terms of the article were never agreed on between the parties, it was not an agreement of which specific performance would be ordered by the court, but he was entitled to damages quantified at GBP 200.

Question 12

patel v ali

Answer 12

Facts of the case:

The first and second defendants were joint owners of a property and contracted to sell it to the plaintiffs. The husband of the first defendant was declared bankrupt during the process of the sale and his trustee sought an injunction to restrict completion. T

he bankruptcy court allowed the sale on the basis that the trustee would prosecute his claim on the proceeds of the sale. The plaintiffs issued a writ for specific performance but could not serve it on the second defendant as they had left the country.

The first defendant, at this time, was very ill after a series of serious health issues and was heavily dependent on relatives and friends to run the home.

An order of specific performance of the contract was ordered by the court. The plaintiff’s appealed on the basis of the hardship that would be caused to the first defendant.

Decisions:

The court found that in instances of the sale of property or land, the remedy of specific performance was often withheld on the proof of special facts and that the court was justified in refusing specific performance on the grounds of hardship.

In light of the current scenario, it was held that forcing the sale of the property would inflict hardship to the first defendant which amounted to injustice.

Therefore the order was dismissed and damages were awarded to the plaintiffs.

Question 13

denne v light

Answer 13

Facts of the case:

Contract to buy strips of land but they were landlocked meaning no access to them.

Could not allow SP to force to buy land as owner had no right of way to it, would have to rely off good will of others

Decisions:

The court refused to grant specific performance to A on the ground of hardship on B

Question 14

walters v morgan

Answer 14

Facts:

The defendant purchased some land. The claimant wished to mine the land and produced a draft lease and pressured the defendant into signing the lease before he realised the value of the land.

Once the defendant had discovered the true value, he refused to allow the defendant to mine the land. The claimant sued for breach of contract and sought specific performance. The defendant sought to have the contract rescinded for misrepresentation.

Held:

no misrepresentation since the claimant had not said anything to mislead the defendant as to the value of the land.

Silence can not amount to misrepresentation.

court refused specific performance as claimant sought to take advantage of the defendants ignorance by rushing him to sign the lease

Question 15

falke v gray

Answer 15

Facts:

the Court assessed whether a contractual bargain was capable of specific performance and held that it was not. In this case the plaintiff knew the value of the vases greatly exceeded the £40 offered and that the defendant did not know their true value, which exceeded £200.

This case undermines the basic principle of contract law that the parties do not need to come with equal bargaining power.

Falcke v Gray allowed the defendant to escape the contract without apparent penalty as the order of specific performance was dismissed without costs and there was no discussion of the damages to be awarded in its place.

Question 16

cannon v hartley

Answer 16

Facts:

D covenanted to settle money he became entitled to in a trsust his daughter had an intenrest in the remainder

When D became entitled money, he refused to settle the money into thr trust

Decisions of court:

His daughter was entitled for damages for breaching the covenant

Question 17

price v strange

Answer 17

Facts:

Def was lessee of a property divided into dlats and maisonettes and plaintiff was builder living on 1st and second floors and tenancy expired in 1971 – he was sharing accom with a brother and sister in alw and this was breach of the covenants in the expired lease, and it would require to be altered if he had a fresh tenancy

Def was in trouble because premises were out of repair and landlord had serced a notice under s146 of law of property act

Reached an oral agreement

Decisions of the court:

Current obligations from the starr that landowner is dependent upon performance by the builder

Question 18

araci v fallon

Answer 18

Facts:

F had entered into an agreement whereby he was to ride X’s horse (N), when requested, over a period of one year. The agreement provided that he was not to ride any other horse when he had been asked to ride N, and that he was to pay liquidated damages in the event of his choosing not to ride N when asked to do so.

F was thus under both a positive obligation to ride N when asked, and a negative obligation not to ride a rival horse in any race where he had been asked to ride N.

X asked F to ride N in the Derby. F refused, having agreed to ride a rival horse for another owner. X sought an interim injunction to prevent F from riding any horse other than N in the race.

The court declined to exercise its discretion to grant an injunction to prevent F from breaching his contractual obligations.

Issues:

There was a real possibility that if F rode the horse of his choice then he would finish ahead of N by reason of his skills as a jockey and his special knowledge both of N and of X’s race strategy. In that event, X would claim damages for the effect of F’s not riding N, and for the effect of his riding the other horse.

There was no evidence either that the rival owner would be unable to secure another jockey or that the British Horseracing Authority would refuse to permit a change of jockey; a change of jockey, whether due to injunction or injury, was one of the many risks run by those betting on horses; and the public interest in the Derby did not justify the refusal of relief.

Key points:

The principles to be applied were, firstly, that where there was a negative stipulation, breach could be restrained by injunction.

The balance of convenience test did not apply where there was a clear breach of a covenant not to do a particular thing.

where the granting of the injunction amounted to a final determination at the interim stage, the court would take into account the strengths and weaknesses of the respective cases, and the likelihood of the claimant’s eventual success at trial.

Held:

While the grant of an injunction would be a grievous blow for F, it would not be oppressive or unjust. He had brought the situation on himself by his deliberate and cynical disregard of the contract into which he had entered

Appeal allowed

Question 19

american cyanamd v ethicon

Answer 19

Facts:

Appellant held a patent for surgical sutures

Respondent was a company that intended to launch a suture to British market which appellant claimed was in breach of its patent

Appellant initially granted a injunction preventing respondents use of suture until trial of patent infringement

A discharged injunction based on basis that patent infringement case was not made out

Decisions of the court:

Held that:

Not courts role to onsider conflicting evidence In respect of an interim application, matter for trial

All that was necessary at this stage was that the claimant should show that there was a real issue to be tried

Court could onsider whether damnages would not be an adequate remedy an if c would be able to give an undertaking in damages to the def

Difficulty regarding availability of damages on either side, and court should consider balance of convenience between parties

If factors evenly balances, maintain status quo

Appeal allowed

Question 20

warner brothers v nelson

Answer 20

Facts:

defendant, a film artist, entered into a contract with the plaintiffs, film producers, for fifty-two weeks, renewable for further periods of fifty-two weeks at the option of the plaintiffs whereby she agreed to render her exclusive services as such artist to the plaintiffs,

and by way of negative stipulation not, during the period of the contract, to render such services to any other person

Obita Dicta:

slavery is not the less slavery because the chains are guilded

Key points:

there is a formal admission by the defendant that her services, being “of a special, unique, extraordinary and intellectual character” gives them a particular value “the loss of which cannot be reasonably or adequately compensated in damages” and that a breach may “cost the producer great and irreparable injury and damage,” and the artiste expressly agrees that the producer shall be entitled to the remedy of injunction

Held:

effect of the contract was not to drive the defendant either to specific performance or to idleness, so that an injunction would in effect enforce a contract to perform personal services.

damages were not an appropriate alternative remedy and that an injunction must be granted, but limited as to period in terms which the Court, in its discretion, thought reasonable.

contract was not meant to force the defendant to specific performance but that an injunction would enforce the contract to perform and therefore specific performance was not an appropriate remedy. This was also the case for damages as they could not be appropriate quantified under the circumstances. On this basis, an injunction, with a time limit was applied to prevent Nelson from carrying out the other contract.