4:5 Remedies for Breach of Contract PDF

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Remedies for Breach of ContractSTEP 1: WHAT IS THE PROBLEM? Identify the type of contract: SGA, SGSA, OR CRA Identify the term in dispute. The term will be a condition, warranty or an innominate term. Term Definition Condition Term going to the root of the contract Warranty Less important term Innom...

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Remedies for Breach of Contract STEP 1: WHAT IS THE PROBLEM? 1. Identify the type of contract: SGA, SGSA, OR CRA 2. Identify the term in dispute. The term will be a condition, warranty or an innominate term. Term Condition Warranty Innominate Term

Definition Term going to the root of the contract Less important term Neithe condition not warranty (Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kasisha Ltd).

Generally, if the effect of a breach of the term deprives the innocent party of the whole benefit of the contract, the term is a condition; if not it is a warranty. To determine whether the term is a condition, warranty or innominate term, the court will take in to account (Schuler v Wickman):   

Circumstances surrounding the making of a contract The contract as a whole Whether the parties described the term as a condition or warranty. (N.B This can be rebutted).

3. Identify the monies paid/owed. STEP 2: HOW WAS THE CONTRACT DISCHARGED? CONSIDER (1) DOCTRINE OF BREACH ; (2) DOCTRINE OF COMPLETE PERFORMANCE; OR (3) DISCHARGE BY AGREEMENT. A contract can be discharged by breach, complete performance, agreement or frustration. 1. Doctrine of breach The effect of the breach will depend on the term beached.

KEY CASES TIMELINE

REMEDIES DAMAGES EQUITABLE REMEDIES

QUANTUM MERUIT

DAMAGES

Hadley v Baxendale [1854]

London Joint Stock Bank v MacMillian [1918]

The breach must be a loss naturally arising from the Mill owner breach or one in the contracted with a contemplation of The court held that carrier for delivery there was no liability both parties when of crankshaft to his the contract was since the loss was mill. Delivery was formed. not one in the late. Mill owner could not grind corn. defendants contemplation when Alderson B said: Damages … should the contract was be such as may formed. ..reasonably be considered arising either naturally, i.e according to the usual course of things …or such as may be reasonably supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach”. Cheques The court held the The breach must be client liable for the the factual cause of Clients of bank are loss because he had the damage contractually bound directly caused it by to write their failing in his duty. cheques so that they Mill

Mill owner unsuccessfully sued for loss of profit.

Jackson v Horizon Holidays [1975]

cannot be easily altered. Here the client failed in this duty and a third party altered the cheque causing the bank loss. Bad holiday In a contract for a holiday, the hotel was dirty, no facilities and food was poor (contrary to description).

Farley v Skinner [2001]

Airport noise Claimant hired surveyor before buying a house. Sued solicitor for loss of amenity for report saying that there was no airport noises, but there was.

Attorney-General v Blake [2001]

British Secret Service British Secret Service agent told secrets to Russia in cold war. Escaped to Russia. Wrote a book. Breach of contract under Official Secrets Act 1989.

The claimant was given damages for own mental stress and that suffered by his family too. The claim succeeded since holiday contracts give the provisions of comfort, pleasure and peace of mind. The House of Lord held that for loss of amenity to succeed, it was not essential that the contract was to provide pleasure, relaxation e.c.t. The claimant did not forfeit his right to nonpecuniary damages by not moving and he was awarded £10,000. The court of appeal allowed an injunction against Blake. On damages, held that without the Attorney-General showing loss by the government, these were only nominal. The House of Lords upheld the court

Claimants can also recover for a ‘mental distress’, although this is generally limited to where the contract is one for pleasure.

A claimant can recover for loss of a valuable amenity. Look at Ruxley Electronics and Construction Ltd v Forsyth [1995]

A claimant can recover for an account of profits illegally gained

British Westinghouse Electric and Manufacturing Co.Ltd v Underground Electric Railways Co. of London Ltd

Turbines

Dunlop Pneumatic Tyre Co v New Garage and Motor Co.

Dunlop (garage) was bound to pay £5 in respect of breaches such as selling the tyres under the manufacturers recommended price. When it did, Dunlop sued.

British Westinghouse Electric contacted to supply turbines. Turbined delivered did not match specification. Buyers had to replace them with turbines bought from another supplier.

and allowed Attorney-General a full account of Blakes profit of the book. The court held that only losses sustained before the original turbines were replaces were recoverable.

The House of Lords considered that the sum was a genuine assessment of loss and not a penalty. Lord Dunedin developed a test for establishing genuine liquidated damages: (1) An extravagant sum is always a penalty. (2) Payment of a large sum for not settling a small debt is a penalty. (3) A single sum is in respect of a variety of breaches is a penalty. (4) The wording in the contract is

The claimant has the duty to mitigate the loss. Lord Haldane LC said a claimant must take all ‘reasonable steps to mitigate the loss consequent on the breach which debars him from claiming in respect of…damage which is due to his neglect”. For liquidated damages, the sum must fairly represent an accurate assessment of the likely loss and not be a mere penalty.

not conclusive. (5) Where assessment of the actual loss before the contract made is possible, this will not prevent recovery....