Remedies For Breach Of Contract: Common Law And Equitable Remedies

Circumstances That Lead to Discharge of Contract

Analyse remedied available for an affected party for breach of contract with examples of case law “.

The contract is legal agreement between the two persons. Each party of the contract makes promise to perform a duty and pay consideration. When any party of the contract terminates the contractual obligations, then contract is to be discharged. If contract gets discharged, then there will be no liability of parties even their obligations to be performed remain unfinished. There are some circumstances in which contract is deemed to be discharged such as discharge by performance, discharge by agreement, discharge by frustration and discharge of contract by breach.

The discharge of contract by breach occurs when one party of contract gets fail to perform contractual obligation or the performances are defective. Breach may be actual breach or anticipatory breach. When one party to the contract breaches contract then other party may ask a court to provide remedies. The affected party to the contract may sue at the time of anticipatory breach or it can wait for file a case when actual breach occurs. In this essay, remedies are available to the affected party with help of case law is discussed and examined.

There are various remedies for breach of contract, common law remedies and equitable remedies. The common law remedies are compensatory damages, action for price and quantum meruit. The equitable remedies available to innocent party are specific performance, injunction and rescission. These remedies available to affected party are explained as below-

1. Award of Damages- The damages are awarded to compensate the innocent party to the contract. Here, damages refer to the monetary compensation. It includes compensatory damages, liquidation damages, punitive damages, nominal damages and the restitution (Stone and James, 2017). These are discussed as follows-
2. Compensatory damages- The purpose of awarding the compensatory damages is to make the affected party whole again. The compensatory damages are for monetary amount that is proposed to compensate the innocent party for the losses occurred due to breach of contract. The compensatory damages are categorized as expectation damages and consequential damages (Wishart, 2018).
3. Liquidation damages- It refers to the monetary amount which contracting parties agree will be paid by the breaching party. The court will impose the liquidated damages clause if these will be not easy to estimate. The examples for liquidated damages are reasonable down payment and reasonable proportions of full contract price (Zeller, 2017).
4. Punitive charges- These damages are not same as compensative damages which are required to pay back the claimant for the financial loss and the physical injury (Wimalasena and Gunatilake, 2018).
5. Nominal damages- when the plaintiff has wounded and plaintiff did not suffer financial losses then nominal damages are awarded in this case. When plaintiff did not incur financial losses but it is not possible to calculate them, nominal damages are awarded in this case. There is no intention of nominal damages to compensate the victim but the intention is awarded to justify rights of plaintiff. Nominal damages are small amounts. Sometimes it can be less than $1. It means that nominal damages are just awarded to recognize the wrongdoing (Stone and James, 2017).
6. Restitution- The restitution seeks to give compensation to the person who has suffered losses and got injury because of conduct of other persons. It will be given for out of pocket expenditures due to conduct of offenders. The restitution will be awarded on the condition of calculation with certainty. It can be given in civil cases such as in case of personal injury and case of breach of contract (Weeramantry, 2015)

In case Rockingham County v Luten Bridge Co, 35 F.2d 301 (4^th Cir. 1929), Rockingham County entered into contract with Luten bridge co to make a bridge. When Luten had finished little work on it then Rockingham County gave a notice to cancel the contract. The plaintiff claimed against Rockingham. The court gave order for full amount of claim in favor of plaintiff. Rockingham made an appeal against judgment. In the changed circumstances, it was waste to complete the bridge. The plaintiff must mitigate the damages (Sornarajah, 2017).

In case Chaplin v Hicks [1911] 2 KB 786 court of appeal, the plaintiff was an actress. The plaintiff took participation in beauty contest. Hick had given advertisement in newspaper. The top 50 would be selected and 12 would be appointed. The plaintiff was selected in top 50 but not invited for interview. Plaintiff filed a case against Hick and got $100 assessed by jury. Hicks made an appeal that damage was speculative. The court dismissed the appeal by saying that plaintiff was entitled for damages because of loosing chance to get employment (Elliot and Quinn, 2009).

1. Quantum Meruit- The quantum meruit refers as much as earned or in proportion to the work done. The quantum meruit means when the work has begun by a person and before the completion of work, the other party has terminated the contract. The other party does some impossible things so that the person cannot get finished the work. The person can claim for the work which has done as per the contract (Schill, 2017).
2. Action for price- The action for the price is the condition in which trader or seller asks the court to make force on the purchaser to pay agreed price of both parties to the contract. For example, in the contract of sale, seller has been transferred goods to the purchaser. The purchaser refuses to make payment. In this case seller can make an action for the price against the purchaser. The price is required to be paid on particular day regardless the delivery of goods. If date passes and payment has not been made by the purchaser then seller can bring an action for the price (Nihaaj, 2018).
3. Specific performance- The Specific performance is available at the choice of magistrate. It is an equitable remedy. As per this remedy, the court gives the order to one party to perform the contractual obligation. It is only available in the limited circumstances. The court considers the type of the contracts, equity and damages in granting the specific performance. If it is possible to award the damages for the breach of contract, then court thinks before ordering the specific performance. Mostly in case of contract for sale of land, court orders specific performance.

Breach of Contract and Remedies Available

In case Nutbrown v Thornton (1805) 10 Ves 159, plaintiff made a purchase contract to acquire the machinery from respondent. The respondent had denied delivering the machines to the plaintiff. The plaintiff filed a case for breach of contract looking for specific performance of contract. It was held by the court that damages would be given for non-delivery. The damages would not adequate to give compensation to the plaintiff. The court had ordered for the specific performance (International Business Publications, 2013).

In case Cohen v Roche [1927] 1 KB 169, the claimant made a contract to acquire quantity of hepplewhite chairs to sell in his furniture shop. The defendant refused to deliver the chairs. The claimant filed a case against the defendant for breach of contract seeking specific performance. It was held by the court that chairs have no special value. The court refused to provide specific performance (Turner, 2007).

1. Injunction- The injunction is one of the types of equitable remedy. It is also available at the choice of the court. The injunctions are categorized into interim injunction, prohibitory injunction and mandatory injunction. The interim injunction considers as temporary injunction until the hearing of court. In prohibitory injunction, court gives order to a party to not to do something. In mandatory injunction, the court gives order to party to do something necessarily. There is connection between specific performance and mandatory injunction. The order of injunction will not be given by the court in the situation where order of specific performance is required to be given.

In the case page one records v Britton [1968] 1 WLR 157, the page one record company was manager of pop group, the Troggs. The Troggs decided that page one records will be sole agent or manager for the five years as per the condition of twenty percent of the profits. The Troggs decided to not to appoint others during this tenure. The relationship between claimant and larry page had been broke down. Troggs informed to the claimant to terminate the contract. The plaintiff required an injunction to stop the Troggs appointing new manager. The court denied for the injunction because the order of injunction will be same as the order of specific performance of a contract for the personal services (Burnham, 2011).

1. Rescission- The rescission is available at the option of the court. It is the type of equitable remedy. The recession is for placing the both party back in the pre-contractual position and symbolizes a separating of the contract. It is available in the circumstances where contract is voidable due to some factors such as undue influence, misrepresentation, threat and force. But right of rescission will not be available if the plaintiff sustains the contract in the situation where third party to the contract acquires rights in the goods due to delay or restitution in integrum is not available.

In the case Leaf v International Galleries [1950] 2 KB 86, the plaintiff acquired a painting from the respondent. Both plaintiff and respondent believed that painting was by painter constable. After five years the plaintiff noticed that painting was not constable. The plaintiff filed case against the respondent on the factors of mistake and misrepresentation. The plaintiff had loss the option of rescission because it was an innocent misrepresentation.  The claim on the factor of mistake was not successful because the mistake of quality and did not provide subject matter was different from which it was supposed to be (Bismuth, 2017).

Conclusion-

As per the above analyses, it is cleared that when the contract breaches by the party, the parties to the contract should find the remedies and the consequences of breach of contract. There are many reasons for breaching the legal contract. The consequences can be very serious even if the breach of contract was not avoidable. Various cases signify struggles by the magistrate to recognize and measure the level of damages which should be granted in order to reestablish the parties of the contract to the situation that they would have been in had the contract been executed. The arguments have been made in this respect that struggle is not necessary. This is required to pull numbers out of thin air to measure which is not measureable. Other remedies are also available that do not present this problem. The damage has many advantages but too has specific performance. It is a great time it was identified for advantages it has to propose. If such changes made then seller would have the security available but it would be stopped on using economic breach option in his favor. This option of security is available for both the purchaser and seller.

References

Bismuth, R. (2017) customary principles regarding public contracts concluded with foreiners. Amsterdam: Elsevier.

Burnham, S. J. (2011) Contract Law for Dummies. New Jersey: John Wiley & Sons.

Elliot, C., and Quinn, F. (2009) Contract Law. 7^th edition. Boston: Pearson.

International Business Publications (2013) Sri Lanka Business Law Handbook: Strategic Information and Laws. USA:International Business Publications.

Nihaaj, N. M. M. (2018) Critical analysis of arbitration method used in construction industry in Sri Lanka. Sri Lanka: University of Moratuwa.

Schill, S. W. (2017) The impact of international investment law on public contracts. Amsterdam: Elsevier.

Sornarajah, M. (2017) The international law on foreign investment. Cambridge: Cambridge University Press.

Stone, R. and James, D. (2017) Text, Cases and Materials on Contract Law. 4^th ed. Oxon: Routledge.

Stone, R., and James, D. (2017) The modern law of contract. Oxford: Routledge.

Turner, C. (2007) Contract law. 2^nd ed. Denmark: Hodder education group.

Weeramantry, C.G. (2015) Sri Lanka. [online] Available from: https://14.139.60.114:8080/jspui/bitstream/123456789/696/12/Sri%20Lanka.pdf [Accessed 16/06/18].

Wimalasena, N. N., and Gunatilake, S. (2018) the readiness of construction contractors and consultants to adopt e-tendering: the case of Sri Lanka. Oxford: Oxford University Press.

Wishart, M. C. (2018) Contract Law. 6^th ed. Oxford: Oxford University Press.

Zeller, B. (2017) Private international law in South Asia- A few pointers for harmonization. In private international law, 38(3), pp. 435-44