Remedies for Breach of Contract
A remedy is what the court gives the party who has suffered through non-performance of the contract.The main remedies available for breach of contract are;
- the common law remedy of Damages
- Equitable remedies,including specific perfomrance and injunction
- in some cases the contract may be able to be terminated (repudiation)
- if one party has breached the contract,the other party is usually awarded damage,which consists of a money payment made by theparty in breach of the contract to the other party.
- the procise amount to be awarded will be decided on the court
- damages are a common law remedy(originally developed by the judges)
THE CONTRACTUAL MEASURE OF DAMAGES
- the awarding of damages in contract law was explained by Parke B in Robinson V Harman 1848 - when a party substains a loss by reasonof breach he is to be placed in the same situatuon as if the contract took place.
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PECUNIARY DAMAGES (financial)
pecuniary damges generally aim to compensate the injured party for their financial losses,in determining the exact sum that the claimant will recover the court will haveregards to the main ways in which loss is calculated; (1) loss of bargain/expectation loss & (2) reliance loss
loss of bargain/expectation loss
damages here are awarded to in order to put the claimant,financially in,into the position that he would of been in had the contract been properly performed.in sales of goods cases damages will often be the difference between the agreed contrat price and the actual market price on the day,the court will compensate for the cost of replacement.
Ruxley Electronics&Construction LTD V forsyth 1995 - the claimets built a swimming pool for the defendant and it wasnt the correct size so he refused to pay and claimed breach of contract and damages for the cost of removing the pool and buidling the correct one because the pool could still be used the HOL awarded him less amount of money than requested but did awarde for loss of amenity.
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these loses are sometimes refered to as consequential losses,in the sence that they are losses that have been incurred as a consequence of replying on the other party's original contractual promise.
Anglia Television V Reed 1972 - an actor pulled out of a film contract very late so that no replacement could be found.the amount of profit to be made by the film was uncertain so instead of loss of bargain the claimants where awarded in reliance loss.
Non-Pecuniary Damages (non financial loss)
in some situations compensation for non financial loss such as mental distress will be recoverable,it is difficult to put a value on these more abstract loses,the english court were reluctant to award damages under this heading,as in Addis V Gramophone Co LTD 1909-where the distress resulting from a wrongful dismissal could not be recovered.
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there are two key exceptions to this rule,both of which were further refined by the house of Lords decision in Farley V Skinner (no2) 2011.the surveyor had been instructed as part of a object of contract to survey and value a house to report on the likely impact of aircraft noise,he failed to carry out this part of the contract and the house buyer was unable to enjoy his house due to the noise.
(1) where the object of the contract is to provide; Pleasure,Relaxation,Peace of mind or freedom from distress, damages are recoverable this was applied in relattion to a contract for a holiday in Jarvis V Swan Tours 1973-the claimant was awarded damages to compensate for his distress as the holiday did not meet the stadards advertised.
Hamilton jones V David & Snape 2004 is an exmaple of a contract with the purpose of providing freedom from distress. ( the defendants soliciotors negligently enabled the claiments mentally ill husband to illegally remove the children.) the damages were rewarded as the main purpose of involving the solicitors was to prevent the children from being moved.
(2) where the breach causes physicalinconvenience and discomfort,which leads to mental suffering damages are recverable.the potential limits on such damages have been suggested by Miller V Carnival PLC 2010
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if a claimant is to be awarded damages he must show ;
- that there was a Breach of contract;
- that the breach Caused the loss complained of,did the breach of damages actually cause the loss claimed for .(C&P Haulage V Middleton 1983)
- that the loss was not too Remote from the breach of contract - Hadley V Baxendale 1854, established the basic rule that the person in breach will only be liable for losses which; are Reasonably foreseeable,Specifically warned,too remote.
- that he has attempted to Mitigate the losses that he is claiming, this limits the amount of damages the claimant can be awarded.he must keep his losses to a minimum and cant claim for any loss that could reasonably have been avoided .
the common law remedy is damages,which is available as of right.Equity has developed a range of remedies that are available at the discretion of the court.a person who doesnt obey a equitable remedy is in contempt of court and can be sent to jail.
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specific performance is a court oder telling the party in breach to fulfil his obligations.it is a discretionary remedy and will not be given if,for example damages would be adequate.it is an equitable remedy so the court has discretion in deciding whether or not to award it.Discretion is exercised in accordance with 5 key principles;
- sales of goods act
- specific performance will not be granted if constant supervision by the court is needed
- it is not available in relation to a contract of personal services ie employment.
- it is subject to the principle of mutuality,if the order is avilable to one party it is also to the other.
- the party seeking the remedy must have conducted himself properly.
a court order telling a party to a contract not to do something.The most common example is a promise not to work for anyoneelse during or within a specified time after leaving employment.this is another example of a discretionary remedy & wil generally not be granted if its effect will be to force someone to perform a contract for personal services.