remedies in contract law

• Remedies in Contract Law

  • Repudiation
  • Damages
  • Rescission
  • The Consumer Rights Act 2015 – Remedies for a Breach of Terms Implied into a Contract to Supply Goods (S. 20, S. 23, S. 24)
  • The Consumer Rights Act 2015 – Remedies for a Breach of Terms Implied into a Contract to Supply Services (S. 55, S. 56)
  • Restitution
  • Quantum Meruit
  • The Law Reform (Frustrated Contracts) Act 1943 – S. 1(2), S. 1(3), S. 1(4)
  • Misrepresentation Act 1967 – S.2(2)
• Remedy

  Remedies in contract law are divided into three categories:

  • Legal remedies - available against a person who is in breach of contract. These can be damages or remedies against the goods.
  • Equitable remedies - discretionary - court might award if legal remedies are not the most appropriate.
  • Remedies under a specific statute - acts of parliament that provide specific remedies in certain situations.
• Compensatory Damages


  • A claim for damages is always available, as of right, to the claimant when a contractual term has been broken
  • The purpose of damages is to put the victim in the position they would have been in if the contract has been properly completed and performed by the defendant.
  • This means that the Court looks at what should have happened and the consequences of this performance not happening.
• Compensatory Damages – Causation and Remoteness


  1. Factual Causation: Use the 'but for' test to show that the breach factually caused the loss. If the loss would have happened regardless of the breach, then the breach could not be said to have caused the loss. (Monarch Steamship v Karlshamns)
• Calculating Compensatory Damages - Loss of a Bargain


  This tries to place the claimant in the same financial position as if the contract had been properly performed. This can be done in various ways.
• Calculating Compensatory Damages - Reliance Loss


  This is the expense incurred by a claimant who relied on a contract being performed.

  A claimant may also be able to recover expenses that they had to spend in advance of a contract that has been breached (Anglia Television v Reed).

  A claimant may also be able to recover damages for the loss of an amenity (Farley v Skinner).
• Calculating Compensatory Damages - Expectation Loss


  This is the usual measure of damages for a breach of contract. It refers to the innocent party's loss of bargain. It includes the profits that the party would have expected to receive had the contract been performed, whilst taking into account the costs the party would have incurred to earn that profit. The aim of expectation loss is to put the innocent party in the same position as if the contract had been performed.
• Calculating Compensatory Damages - Restitution


  This is a repayment of any money, or other benefits passed to the defendant in advance of the contract that is breached.
• Compensatory Damages - Duty to Mitigate the Loss


  The injured party must take reasonable steps to minimise the effects of the breach (British Westinghouse Electric v Underground Electric Railways).

  In an anticipatory breach, the innocent party is not bound to sue immediately when they know there is a possibility of a breach. They can choose to wait until the breach is an actual breach (Hochester v de la tour)
• Compensatory Damages - Liquidated Damages


  Liquidated damages are where the amount of damages has been fixed by a term in the contract. The Courts will award this fixed amount if it represents an accurate and proper assessment of loss. If not, it is seen as a penalty and is not enforceable (Parking Eye v Beavis).
• Compensatory damages - Liquidated damages - Quantum Meruit


  This means that the Courts will award damages based on as much as the contract is worth.

  There are three common circumstances in which an award will be made:

  • In contract for services where no price is stated (Upton Rural v Powell)
  • Where the circumstances of the case show that a fresh agreement can be implied in place of the original one (Steven v Bromley)
  • Claiming for work they have already done (Planche v Colburn)
• Besides compensatory damages, the Courts can also award Nominal Damages (no loss suffered but breach in contract), 'Wrotham Park' Damages (try to quantify the sum which might be reasonably negotiated between the parties for giving permission to the wrongdoer to act as they did and Speculative Damages (granted in speculative situations e.g. mental distress)
• Equitable Remedies


  Equity helps to add flexibility to the strict nature of the law, which helps with achieving justice. Equitable remedies are awarded where damages is an inadequate remedy and justice would not be served merely by damages. Equitable remedies are not a right, as they are at the discretion of the Courts. Unlike damages, equitable remedies are not constrained by remoteness of damage or causation.
• Injunction


  One equitable remedy available in contract law is an injunction. One type of an injunction is a mandatory injunction. This is a court order requiring a party to the contract to do something.
• Equitable remedies - Specific Performance


  This is where the Courts order one party to perform their contractual obligation. Specific performance will not be available where damages would be an adequate remedy or contracts involving personal service and contracts of employment (Page One Records v Britton).
• Equitable remedies - Rescission


  A 'rescission' is an equitable remedy. All equitable remedies are discretionary meaning the courts will only award it when it is fair to do so in all circumstances. Rescission is the idea of putting the parties back into the positions they were in before the contract was made – it's as if the contract had never existed.
• The remedy of rescission is not available in certain situations:

  • Restitution to the original pre-contract position is impossible.
  • The contract is affirmed.
  • Delay
  • A Third Party has gained rights over the property.
• Termination of Contract for Breach


  This can be a repudiatory breach by the guilty party to the contract. At common law, a breach can result in the termination of the contract if the affected so chooses, where:

  • There is a breach of condition, or a breach of an innominate term construed as a condition.
  • One party refuses to perform their obligations under a contract at all or the substantial part of its obligations, including anticipatory breach.
  • One party makes it impossible to perform the contract.
• Misrepresentation Act 1967


  Where there has been a misrepresentation, the Courts can look to the Misrepresentation Act 1967. In Section 2(2), this states that the Courts have the discretion to use the equitable remedy of rescission, or they may award damages. Rescission will typically be given before damages for a misrepresentation unless certain situations have arisen.
• Sale of Goods Act 1979


  The Sale of Goods Act 1979 contains three specific rights for an unpaid seller of goods:

  • A lien, which is a right to retain possession of the goods of the debtor until paid. This is an unpaid seller's lien.
  • In case of the insolvency of the buyer, a right of stopping the goods in transit and regaining possession of the goods from a carrier.
  • A right of resale as limited by the Act.
• Compensatory Damages - Causation and Remoteness


  To be able to award compensatory damages, the claimant must prove that the breach caused the loss, not just provided the opportunity for the loss.

  This is proved by showing factual and legal causation has been met
• Compensatory damages - Causation and Remoteness


  2. Legal Causation: Check for the remoteness of the damage caused by the breach. This does not establish how much compensation will be payable (damages), merely which losses can be subject of compensation (damage). (Hadley v Baxendale)
• Calculating Compensatory Damages - Loss of a Bargain


  One way is by calculating the difference in value between the goods or services required and those actually provided (Bence Graphics International v Fasson).

  Another way is by calculating the difference between the contract price and the price in the market. If the claimant still is in profit, there is no loss (Charter v Sullivan). If there is no available marker, then the claimant can recover the full loss (Thompson v Robinson)

  Another way is by calculating the loss of profit not just for the goods but also in other contracts.
• The Consumer Rights Act 2015


  • Supply of goods - Terms implied - s.9, s.10, s.11. Remedies - s.20, s.23, s.24
  • Supply of Services - Terms implied - s.49, s.52. Remedies - s.55, s.56