Remedies

• remedies in contract law are divided into;

  • legal remedies
  • equitable remedies
  • remedies under a specific statute
• Compensatory damages:

  • always available when a contractual term has been broken, so if the claimant hasn't actually suffered any loss they can still claim for damages.
  • purpose of damages is to put the victim in the position they would've ben in if the contract had been properly performed.
  • usually awarded for reliance loss or expectation loss.
• nominal damages: Wrotham Park

  • if no loss is actually suffered but there is a breach, court might award these.
  • in Wrotham Park, it was decided they must try and quantify the sum reasonably.
• Speculative damages: Chaplin V Hicks

  • more future losses are covered but court has to be careful when doing this.
• Causation and remoteness of damage:

  • claimant must prove that the breach caused the loss, this is the but for test. Remoteness of damage doesn't establish how much will be payable but merely which losses an be the subject of damage.
• test of remoteness: Hadley V Baxendale

  1. measured objectively according to what loss is a natural consequence of the breach
  2. second part is subjective and is based on specific knowledge of potential losses in th minds of both parties when the contract is formed.
• Remoteness test has been developed in Victoria Laundry:

  • recoverable less should be measured against a test of reasonable foreseeability
  • foreseeability of loss itself is dependent on knowledge at the time the contract was made
  • knowledge is of two types; common knowledge and actual knowledge as in Hadley V Baxendale.
• loss of bargain:

  • place claimant in the same financial position as if the contract had been performed.

  1. difference in value between the goods or services required in the contract and those actually provided.
  2. where there is a market damages will be the difference between the contract price and the price in the market. If claimants profit remains there is no loss.
• reliance loss: Anglia Telivision

  • this is the expense incurred by a claimant who relied on a contract being performed.
• restitution- a repayment of any money or other benefits passed to the defendant in advance of the contract that is breached.
• Mitigation of loss- the injured party must take reasonable steps to minimise the effects of the breach.
• White V Mcgregor- a claimant isnt bound to go to extraordinary lengths to mitigate the loss, only do what is reasonable in the circumstances.
• liquidated damages- where the amount of damages has been fixed by a term in the contract.
• In Dunlop the court developed the rules for determining the difference between genuine liquidated damages and a penalty;

  • extravagant sum will always be a penalty
  • payment of a large sum for failure to settle a small debt is probably a penalty
• Quantum meruit: 3 common circumstances in which such an award is made:

  • in a contrat for services where no price is stated
  • where circumstances of the case show that a fresh agreement can be implied in place of the original one
  • where a party has elected to consider the contract discharged by the others breach or where a party has been prevented from performing by the other party.
• Equitable remedies: Specific Performance

  • opposite of an injunction. It is ordering one party to perform their contractual obligation.

  Wont be available in the following circumstances:

  • where damages would be an adequate remedy
  • contracts involving personal service and contracts of employment
  • where contract cannot supervise the enforcement of contrct
  • impossibility
• Rescission: Clarke V Dickson

  • equitable remedy means the parties are returned to the positions they were in before the contract was made.

  Not available in following situations;

  • restitution to original pre contract position is impossible
  • contract is affirmed
  • delay
  • 3rd party has gained rights over property.