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- Remedies for Breach of Contract: One Principle or Two? by Stephen Smith :: SSRN
- Breach of Contract - Essay Example
- Remedies For Breach Of Contract Essay
Is it a reward or a penalty? Breach of contract, slide 2. On the next slide, Nominal Damage was discussed. Breach of contract, slide 4. Injunction was presented on the following slide, but no proper introduction was given because this slide started to cover the non-monetary remedies. The summary part of the slide was very brief and disorganized.
It should summarize the monetary remedies first, then the non-monetary. Punitive and restitution had been specially mentioned, but the others were not. There should be a balanced, equal discussion of all the damages, if the presenter had to define just two among them. Breach of contract, slide 8. What is the main point of this presentation? The presentation focused on the different types of remedies that can be monetary or non-monetary to settle the parties involved in the breach of contract.
Compare and contrast this topic with the topic you presented. The promising party and the promisee enter into a mutual agreement under a contract. The promisee is entitled to press for damages toward the promising party.
Thus, different remedies to settle the breach have been made. What did you learn most about this topic that was unclear or unknown before? The defendant did not deliver the item for a period of seven days which was a breach of contract. The plaintiff sought damages for loss of profit and payment of wages that had been suffered as a direct result of the delay.
In finding for the defendant the court applied the following rule stating that damages will not be available in situations where it is so remote that it could not "have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it". This is an equitable remedy that may be available in certain instances of the buyer breaching the contract.
Essentially the court could order that one party to the contract carry out their obligations.
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Failure to do so results in contempt of court in which fines and imprisonment can be levied as punishment. The basic equitable principle or maxim being that "he who seeks equity must come with clean hands" continues to underpin the equitable rules. Falcke v Gray, is an example where the court decided that whilst the contract was of a nature that specific performance could assist as damages would not have been adequate in the circumstances , such order was declined as the claimant had substantially undervalued the items of which he had full knowledge of their market value and the defendant did not.
As such contracts for ordinary chattels will not be protected but those for rare items or antiques will have the benefit of this remedy. Indeed McInnes raises the issues that Canadian courts have encountered, since their reversal of this rule and highlights the uncertainties and potential injustice that this has caused. If the Draft Common Frame of Reference is adopted then the remedy of specific performance will be more readily available and therefore the exceptional element will no longer be a requirement.
Mulcahy suggests that there has been a relaxation of the specific performance rules in any event and as such the remedy has become more widely used. The reasons for which is the difficulty encountered when compelling a party to undertake their obligation. Injunctions can be granted in situations of illegality or public policy as was the case in Attorney General V Blake.
He was convicted for spying and incarcerated however, he managed to escape and flee to Russia. The auto-biography contained details of his work with Intelligence and was in breach of his contract of employment. The injunction was granted by the House of Lords who held that in certain circumstances a claimant would be successful in seeking an account of profits in an action for breach of contract.
Remedies for Breach of Contract: One Principle or Two? by Stephen Smith :: SSRN
Such action was deemed only to be available in exceptional circumstances. The defendant in this case had broken the law and this was sufficiently exceptional. Since this case there has been the introduction of the Proceeds of Crime Act which underpins the principle that the criminal should not be able to benefit from his crime. In theory injunctions can also be granted in respect of preventing or restraining a person from action that will amount to a breach. Again this is a discretionary remedy available through equity and is granted in cases of exceptional circumstances.
Notable examples are seen with contracts for performing artists as was the case in Lumley v Wagner, where the singer was prevented from singing in other theatres. The slightly more contentious Warner Bros v Nelson, Bette Davies was restrained from working in films or theatre for any other company.
Real remedies are actions available to the seller in respect that they are attached to the goods. A fairly typical contract is the provision of goods for a defined price. If the buyer reneges on this payment he will be in breach of contract. It should be noted that a bounced cheque also constitutes non payment and is specifically provided in the Sale of Goods Act A lien has been described as a type of security that can exist in property. The second lien is known as a particular lien and is a right over property, which gives the person in possession, the right to retain said property until such time as the debt in respect of those goods is repaid.
Liens operate as an effective method of seeking payment but they do not automatically give the holder the right to sell or otherwise transfer the property. Section 48 SGA provides that the seller must first give the buyer notice of his intention to sell. Section 44 SGA gives the seller the right to stop the goods in transit should the buyer become insolvent and thereby retain possession. If the goods are with a courier, then the seller needs to instruct the courier to return them although the cost of this will be borne by the seller.
Goods are deemed to be "in transit" from the moment the seller delivers the item to an independent courier for the purpose of transferring it to the buyer. Section 45 5 provides that is the goods are delivered to a ship that has been chartered by the buyer then "it is a question depending on the circumstances of the particular case [as to] whether they are in the possession of the This again highlights that the stoppage in transit right of the seller is not sufficient in itself to protect the seller from complete loss should the buyer become insolvent. This remedy is perhaps best used as an additional precaution as opposed to a standalone protection.
Uniserve Ltd v Croxen, highlights the successful use of stoppage in transit by the courier. On the sellers insolvency the courier exercised it stoppage in transit rights. Although this was contested by the Administrator, the courier was successful in their claim and was thereby given priority over the Administrator. The right of resale can be exercised by the seller after giving notice of intention to sell to the buyer. If the seller did not exercise his right in the correct manner i. As such, if he is able to ascertain a higher price for the goods then he is entitled to keep the increase in profit.
Clearly the seller has a great number of potential remedies each with its respective benefits. Damages appear to far outweigh the other options available but there are certain limitations imposed. Although it is acknowledged that there are situations where a sum is awarded where the loss is not quantifiable, the general context is that damages cannot be made available if they are in any way punitive in nature.
These remedies available to the seller are not mutually exclusive and therefore can be combined. A seller could potentially stop goods in transit, resell the goods at the best price available and then seek damages against the defendant for loss of profit. The research conducted for this report was based solely on secondary data as is common for research of a legal nature.
Using secondary data has benefits in respects of reduced cost and time, it is considered to be the only appropriate method of collecting and analysing legal data which is not quantitative in nature. The initial starting point for the research was to assess the contribution of learned authors by way of academic texts. Following on from this, a separate analysis of cases was conducted as an appropriate checking mechanism to ensure that the results concurred with the view purported in the texts. Statute law was also given appropriate exploration. Before any conclusions could be drawn in the literature review further research was conducted by way of learned articles.
Such articles often promote healthy discussions on certain aspects of the law and often recommend areas where improvements could be made. They also promote peer review which offers some element of quality control. Previously this area was divided between two law subjects, namely contract law and commercial law.
As such this created difficulties in establishing all of the available rights that a seller could impose and which would be the most optimum route of redress for the seller if the buyer should breach the contract. In addition, it appeared of vital importance to assess how these respective rights could operate together to enable the seller the maximum potential benefit.
As this research was purely secondary in nature the ethical consideration is limited to ensuring that proper credit was given by virtue of correct citation to the originator of any theory or statement. Whilst the seller has a number of remedies available to him in terms of the buyer breaching the contract, there are certain limitations to the contractual as opposed to the commercial elements of these remedies. In respect of damages, there were issues in relation to attaining contract certainty by virtue of pre-defined penalty clauses or liquidated damage clauses.
Breach of Contract - Essay Example
The issues raised are in relation to punitive damages not being enforced by the courts; this in addition to the exception rule, in regards to specific performance and injunctions. The leading law books, journals and case law all appear at pains to state that the law of contract does not allow for any aspect of punitive damages. This concept can be found in early cases such as Addis v. Gramophone Co Ltd, where the Law Lords were at pains to state that these punitive damages were never an acceptable aspect of contract law and were best left to the remedies available in tort.
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By not allowing damages of this nature, contracting parties find it difficult to ascertain certainty in the contract, at the outset and this in itself has had the effect of increasing costs in the event of a breach. This is particularly important in contracts of a construction nature where delays from one contractor have the potential to delay the whole contract, thereby increasing the construction costs considerably.
Whilst liquidated damages appear to be an acceptable element of a valid contract, it is left open for the party in breach to claim that the damages were punitive as opposed to reflecting a true loss. Ltd, in which a clause claiming to be a liquidated damages clause was challenged all the way to the House of Lords.
Remedies For Breach Of Contract Essay
Breach of this contractual term was subject to a penalty of "5l" for each and every item sold. Both the Court in first instance and the House of Lords found this to be a valid liquidated damages clause. The Court of Appeal held the opposing view and believed this to be a penalty clause. At first sight such a clause does resemble a penalty clause as it is difficult to envisage the company occurring losses of that scale per tyre sold.
If however, the non quantifiable loss in respects of reputation is added to the equation then it is easier to suppose that the clause is merely seeking compensation for loss. Whilst the House of Lords in reaching judgement on this case, have issued guidelines which appear to have somewhat relaxed the rules as to what will be considered a penalty. Although the issue in relation to certainty of contract remains, in that a defendant said to be in breach of such a term could argue its validity despite the fact that the parties agreed to the term prior to entering into the contract.
Protracted legal battles are costly and this in itself is likely to be a deterrent to a company wishing to enforce such a clause. In seeing that the plaintiff was unlikely to meet the contractual obligations the contractor offered additional incentives by way of a bonus. When this bonus payment was not forthcoming the plaintiff sued. Whilst it was argued that there was no fresh consideration for the bonus payment and as such it was not valid, this argument was rejected in that the consideration was by way of the main contractor not incurring the penalty.
This result, whilst finding a positive in a negative, does appear to suggest that the courts are willing to endorse the concept of liquidated damages clauses.