#2180 - Other Remedies - Contract Law

Other Remedies

Damages are the primary remedy for breach – The following remedies are only given at the court’s discretion.

The Agreed Sum

• This is the most common claim for breach of contract

  • It is a claim for a specific agreed price specified in the contract

  • Advantages for C are:

    • Availability of summary judgement

    • C can then also seek damages if they wish

    • Avoids restrictions on damage claims (no need to show loss, not remote, duty to mitigate)

    • Avoidance of restrictions on other specific remedies

  • Advantages for D are:

    • C must have given substantial performance before this can be triggered

    • D can set off any claims for the agreed sum with what he is owed if not unjust.

• Chen Wishart:

  • This is rarely restricted as Courts are keen to show they won’t interfere with freedom to bargain

    • However, in doing so Courts over protect C’s performance interest in that they don’t deduct anything for failure to mitigate and lack of waste avoidance.

Specific Performance

• Beswick v Beswick [1968]:

  • Lord Hodson:

    • Specific Performance should be capable of being awarded when damages for breach are a clearly inadequate remedy

• When is specific performance available?

  • Requirements for C

    • C must show that just receiving damages would be an inadequate remedy

      • Damages are recognised as not always being adequate :

        • When goods are physically unique

        • When land is under contract, even if C has no unique interest in the piece of land

        • Beswick v Beswick [1960]:

          • No other substantial remedy available due to legal blackhole or lack of “loss” necessary for substantial damages.

        • Sky Petroleum Ltd v VIP Petroleum Ltd [1974]:

          • When C will be unable reasonably to find alternative suppliers for similar goods/services

        • Sale of Goods Act 1979 s.45A-E

          • Seller must repair or replace goods unless:

            • Impossible

            • Remedy sought is disproportionate

            • 48C: Price reduction/rescission of contract is more appropriate

    • C must have clean hands

      • If C wants equity, he needs to be equitable himself:

        • Webster v Cecil

          • Can’t have taken advantage of D’s mistake when making contract

        • Chappell v Times Newspapers

          • Want specific performance but unwilling to fill own obligations = not going to get specific performance

        • C has acted in an unfair or underhanded way

    • C must not unduly delay in claiming for specific performance

      • Although if just, C can still recover despite substantial delay.

  • Contract may not be granted specific performance though if...

    • The contract involves the carrying on of personal service

      • CH Giles & Co Ltd v Morris

        • Megarry J:

          • Some contracts of personal service are unenforceable b/c their adequate performance will be subjective and nearly impossible to adjudicate on

            • However, not all contracts are such – element of personal or continuous service, w/o more, will not bar specific performance.

    • This will lead to Impossibility and Hardship on the part of D

      • Co-operative Insurance v Argyll Stores [1998]: C leased a shopping centre unit to D for 35 years to build a supermarket. With 19 years to go on the lease, D closed the supermarket. C attempted to get D to stick around with re-negotiation, but D made no reply and merely closed the supermarket, taking out all the fixtures and fittings.

        • Lord Hoffmann:

          • If D made to perform personal service contract such as carry on business

            • C can become unjustly enriched at D’s expense

          • Purpose of contract is not to punish wrongdoer but to compensate loss

            • And what D suffers could be far worse than damage C suffers from breach in first place

    • What should be performed is uncertain

      • D can’t be compelled to perform where it is uncertain exactly what he has to perform from the contract

      • Chen Wishart: increases the chance of further litigation.

    • Enforcing the contract would require “constant supervision” of D by the court

      • Co-operative Insurance v Argyll Stores [1998]:

        • Lord Hoffmann:

          • With requiring people to do an activity for indeterminate time

            • Court will continue to have to check whether activity is being carried out

            • Means litigation becomes very expensive – contempt of court proceedings very heavy handed.

              • Damages on other hand simply give some immediate closure.

          • Specific Performance often only suitable when court requires a result to be achieved (e.g. pay money)

            • All the court has to do is to make an enquiry whether this has been done or not

Injunctions

• Mandatory Injunctions

  • These compel D to undo the effects of his breach of contract

    • But will only be awarded where D has “trodden roughshod over C’s rights”

• Prohibitive Injunctions

  • When an injunction “not to do something” will be ordered

    • Lumely v Wagner [1852]: W contracted with X to sing in theatre for three months. W a diva, so threw a strop and refused to sing. X attempted to get court to order specific performance.

      • Lord Chancellor:

        • Can’t force W to sing so can’t grant specific performance.

          • But can force her not to perform at any other theatre

        • This is essentially an injunction

          • Her contract states she must perform for three months at X’s theatre

            • Therefore, not unjust to issue injunction making her do what she herself has bound herself to do – not to perform elsewhere.

        • Burrows: time length – only 2 months to go – probably a factor in decision that not unjust.

    • Arguments for granting:

      • Interferes less with D’s liberty than mandatory injunction

      • More appropriate in circumstances - Damages less likely to be adequate since loss from breach will be difficult to assess.

      • Less likely to run into problems of duty to mitigate and problem of constant supervision.

  • When courts will avoid granting

    • When a prohibitive injunction will lead to specific performance by the back door

      • Warner Bros v Nelson [1937]: D contracted to C to only make movies for C. D signed contract with other movie maker.

        • Branson J:

          • Courts cannot enforce positive covenant of public service

            • Nor will they enforce negative covenants which have impact of forcing D to perform positive covenants instead or else starve.

          • However, in this case, granting of injunction for 3 yrs preventing D from acting for other film companies

            • Means that D need not perform for C – she can go and get a different job instead.

      • Warren v Mendy [1989]: C attempted to get injunction against third party (D) from managing B, who’d breached contract. C said he’d do this to any third party who attempted to manage B.

        • Nourse LJ:

          • Court should not grant injunction against third party in lieu of damages if effect of that would be to compel second party (X) to perform the actual contract.

            • In previous cases to Warner Bros likely only reason injunctions allowed was b/c of relative shortness of injunction = less than 20 weeks

              • Long term injunctions, on other hand, effectively compel X to perform the contract through the backdoor

                • These should therefore not be granted if specific performance itself = barred.

      • Lady Navigation Inc v LauritzenCool AB [2005]: D chartered 2 ships to C under time charter to run to 2010. D then withdrew ships. Pending arbitration, C wanted injunction on D to stop withdrawal.

        • Mance LJ:

          • Specific can’t be ordered for a time charter – this would be specific performance of a contract for personal service

            • However, this isn’t a case of specific performance – it is one of injunction

          • Although practically they may have the same effect as if specific performance was ordered

            • No authority that if the two are juristically distinct, the court will not assist in cases of contracts for personal service.

        • Burrows: this is unpersuasive

          • If practically the injunction will lead to a compulsion to perform

            • Then the fact it does not juristically order this is irrelevant

              • It should be subject to the same considerations as whether to grant specific performance or not.

Should specific performance be more available?

• Upholds what is contracted

  • Means that in absence of any other agreement, what had been contracted is actually performed – contracts are permanent....