CONTRACT REMEDIES (Pg 205)

Damages (Pg 206) Monetary compensation that is the principal common law remedy for a breach of contract
Irawan Darsono & Another v Ong Soon Kiat (2002) For damages to flow, the loss must have been caused by the breach. Causation (Pg 208) APP ! "#$T%&OR' TEST((( Monarch SS Co v Karlshamns Oljefabriker (A/B) (1949) The HOL held that the effective cause of their delay was the vessel s unseaworthiness and hence it was the appellant s fault. The prohibition by the !ritish authorities was not the cause of the delay. "emoteness *imits t+e e,tent o- *oss that can be claimed. Hadley v Baxendale (1 !") the following damage may be claimed #. Firs !imb $normal loss% such damage as may fairly or reasonably be considered arising naturally, i.e. according to the usual course of things from the breach itself .im/ute0 1no2*e0ge3 &. Secon" !imb $abnormal loss% such damages as may reasonably be supposed to have been in contemplation of both parties at the time they made the contract .a4tua* 1no2*e0ge3 $sua* 4ou5se o- t+ings Loss arising from normal business activity will usually fall within the first limb. Ko#fos v C C$arniko% ! " (&'he (eron ))*) (19+9) ' The House of Lords held that (oufos must be imputed to )now the ordinary practices and e*igencies of +,arni)ow s business in particular, that prices in a commodity mar)et can fluctuate. -ccordingly, (oufos was liable under the first limb. A4tua* 6no2*e0ge o- S/e4ia* Ci54umstan4es #i$toria %a&ndry ('indsor) %td v (ew)an Ind&stries %td (1*"*) - person with actual )nowledge of special circumstances will be liable for the higher loss which may arise if the breach occurred in those circumstance. .n the absence of actual )nowledge concerning the Ministry of /upply, 0ewman .ndustries would not be liable for the substantial profits foregone because of the failure to obtain that contract. P5o7a7i*it8 o- O44u55en4e The defendant must )now that the li)ely loss is a serious possibility or a real danger. T8/e o- Damage +h&an H&, -arine %td v Se).awang /ngineering 0te %td (1**!) The defendant need not have in mind the e*act damage actually suffered as long as he is aware of the type or )ind of damage in 1uestion. British 'estingho&se /le$tri$ & -an&1a$tory +o v 2ndergro&nd /le$tri$ 3ailway +o o1 %ondon (1*12), accepted in /ingapore in +h&a Keng -ong v Hong 3ealty 0te %td (1**") The plaintiff has the duty to ta)e all reasonable steps to mitigate the loss conse1uent on the breach, and will not be able to claim any part of the damage which is due to his neglect to ta)e such steps. /i4(ets %td & Another v 5eo (ai -eng (200") The burden of proof is upon the defendant to show that a plaintiff has failed to ta)e reasonable steps to minimi,e the loss. Brace v Cal"er (1,9-) - wrongfully dismissed employee should try to obtain suitable alternative employment2 if not, he is entitled to damages less the amount he could have obtained from such alternative employment. -ela$hrino v (i$holl & Knight (1*20) - plaintiff who attempts to ta)e reasonable steps to mitigate his loss and inadvertently increases his loss can still recover the additional loss. !ecause of the principle of mitigation, the right to affirm a contract in the face of an anticipatory breach is limited. -ffirmation is only available in cases where the plaintiff has some legitimate interest to protect which cannot be compensated merely through the payment of damages.

Remoteness (Pg 20))

Mitigation (Pg 29:)

;ene5a* P5in4i/*e The in3ured party is to be placed in the same financial position he would be in if the contract had been properly performed. The award of damages is calculated on the benefit which would accrue to the in3ured party and not on the cost of performing the obligation by the defaulting party. AS .or"lan"sbanken v .e"erkoorn (/001) 4amages will be awarded on the basis of minimum legal obligation that is to say the method least onerous to the defendant and least beneficial to the plaintiff will be preferred. E,/e4tation oss (*oss o- /5o-it) an0 Re*ian4e oss (2aste0 e,/en0itu5e) Timing o- E,/en0itu5e i55e*e<ant An1lia 'elevision ! " v 2ee" (1930) The court held that -nglia Television was entitled to recover damages representing its wasted e*penditure, regardless of whether the e*penditure was incurred before or after the contract was entered into with "eed. C*aim o- Net P5o-it C#llinane v Bri ish &2ema* Man#fac #rin1 Co ! " (19-4) +ullinane sought damages for capital cost as well as loss of profits for lost production. The 5nglish +ourt of -ppeal held that he could claim either but not both, as to claim both would amount to double'recovery. S/e4u*ati<e osses Cha4lin v (icks (1911) The 5nglish +ourt of -ppeal held that, although there was no certainty that +haplin would be among the #& chosen for employment, she should still be allowed the damages awarded by the 3ury. Non%/e4unia58 osses +ourts are generally reluctant to award damages for non'pecuniary $non'monetary% loss. !ut there are some e*ceptions6 9= >o*i0a8?En@o8ment Cases 7here the very aim of a contract is to provide en3oyment or security, damages can be claimed for the loss goes to the 8root of the contract9. 6arvis v Swan 7o&rs %td (1*89) The 5nglish +ourt of -ppeal held that :arvis was entitled to damages comprising the cost and the disappointment he suffered for the /wiss holiday that went badly wrong. :arley v S;inner (2001) The House of Lords held that damages for mental distress resulting from breach of contract could be awarded in e*ceptional cases6 where a ma@o5 o5 im/o5tant o7@e4t o- t+e 4ont5a4t $need not be the ob3ect of the entire contract% had been to give pleasure, rela*ation and peace of mind, and where physical inconvenience and discomfort had been caused by the breach. 2= On4e in a *i-etime Cases 7eddings, ;hotos of memorable events, etc. := P+8si4a* Dis4om-o5t?In4on<enien4e Baile5 v B#llock (19-0) The plaintiff was able to claim damages for having to trudge in the snow for miles following the brea)down of a train. A= oss o- Re/utationB >umi*iation #usiness oss o- 5e/utation generally claimable. So4ia* /5estige?5e/utation *oss generally not claimable unless there is a monetary value attached to the reputation. Lord Hoffman in 6ohnson v 7nis5s (/001) 8. see no reason why in an appropriate case it should not include compensation for distress, humiliation, damage to reputation in the community or to family life.9

Assessment (Pg 295)

No oss .f ;laintiff cannot prove that he had suffered loss, the court will award him nominal damages $<&%.

iCui0ate0 Damages an0 Pena*ties =enerally, the courts will enforce a li1uidated damage clause as long as it is a genuine pre' estimate of loss. However, if such a clause was imposed to cause fear to the other party, it may not be enforceable. The case of D&nlo, 0ne&)ati$ 7yres +o %td v (ew <arage & -otor +o %td (1*1!) established the guidelines. - if the li1uidated damages are e*travagant and unconscionable in comparison with the greatest conceivable loss, then it is li)ely to be a penalty - if a single lump sum is payable on the occurrence of one or more breaches, some of which are serious and others trifling, then it is li)ely to be a penalty - the description of the clause as a >penalty or >li1uidated damages clause is relevant but not conclusive. ;enalty $=enerally not enforceable% - higher than actual loss L4+ not enfc. can claim only actual loss :ord -otor +o v Ar)strong (1*1!) - lower than actual loss +an claim either actual loss or as per L4+ B&lsing %td v 6oo Seng & +o (1*82) =enuine ;re'estimate of loss $=enerally enforceable% - higher than actual loss L4+ enfc. D&nlo, 0ne&)ati$ 7yres +o %td v (ew <arage & -otor +o %td (1*1!) - lower than actual loss L4+ enfc. +ellulose -cetate /il) +o Ltd v 7idnes Foundry Ltd $#?&@% Ta,ation D Inte5est The court will deduct an amount representing the plaintiff s ta* liability (7eo Sing Keng v Si) Ban Kiat (1**"))= .nterest will only be awarded if it is a contract provided for payment of interest, $but not a debt% or parties have impliedly agreed to pay interest under the contract or if the court e*ercises its discretion under paragraph A of the :irst S$hed&le> S&,re)e +o&rt o1 6&di$at&re A$t. De/osits an0 Pa8ments .f the advance payment is re1uired as a guarantee for performance, it will generally be forfeited unless the contract states otherwise or unless the amount of the deposit is e*cessive. This is so even if the innocent party has suffered no loss. .f the payment is a deposit, the innocent party who suffers damage over and above the amount of the deposit, may ma)e a claim for those damages as well. 7riangle A&to 0te %td v ?heng ?i +onstr&$tion 0te %td (2001) .f the part payment is refundable, though a refund has to be made, the innocent party can still sue for the damages. .f the person who has collected the part payment or deposit breaches the contract, the innocent party can claim for the damage he has suffered, the part payment or deposit paid. .f the part payment is refundable, though a refund has to be made, the innocent party can still sue for the damages. .f the person who has collected the part payment or deposit breaches the contract, the innocent party can claim for the damage he has suffered, the part payment or deposit paid.

Assessment (Pg 222)

ECuita7*e Reme0ies (Pg 22A) -warded when monetary compensation is not an ade1uate remedy.
/pecific performance is an order of the court re1uiring the /a5t8 in 75ea4+ to /e5-o5m t+e 4ont5a4tua* o7*igations. .f the order is disregarded, the defendant could face charges for contempt of court. The following would be considered before specific performance is awarded6 9= Damages a5e a0eCuate Beswi$; v Beswi$; (1*@8) 7here damages are ade1uate, specific performance may not be available. 2= Su/e5<ision 5eCui5e0 7here an order of specific performance would re1uire the court to supervise the performance of obligations on an ongoing basis, e.g. contract for construction of a building, specific performance is not available. := Mutua*it8 7here one of the parties is a minor, specific performance is not available because the contract lac)s mutuality. Mutuality means that the contract must be specifically enforceable by both parties. A= Cont5a4ts o- Pe5sona* Se5<i4es +ontracts for personal services are not enforceable by specific performance because the law recogni,es that, as a matter of policy, it is not feasible nor desirable for a person to be forced into personal relations with others against his will. 5= Cont5a4ts to en0 Mone8 +ontracts to lend money are not enforceable by specific performance. 6= Sa*e o- ;oo0s 2+e5e 4+atte*s /ossess "s/e4ia* 7eaut8B 5a5it8 o5 inte5est' :al$;e v <ray (1 !*) 7here the sub3ect matter is an item of 8special beauty, rarity or interest9, specific performance is li)ely to be enforced, because the buyer would probably not be satisfied with monetary compensation. .n this case, specific performance was enforced and the sale of the ugly Ming vases was concluded. .The measure of beauty, rarity or interest is from the buyer s point of view at the time the contract was formed. Bsually, land or houses are also generally considered uni1ue. .n3unction is a court order re1uiring the other party to abide by a negative covenant in the contract. However, it cannot be used to indirectly enforce specific performance. 3e :ine,las Holdings 0te %tdA Sitra 'ood 0rod&$ts 0te %td v :ine,las Holdings 0te %td (2001) -n in3unction will not be granted where damages would be an ade1uate remedy. 'arner Brothers 0i$t&res In$ v (elson (1*9@) The court refused to grant an in3unction to enforce her negative covenant 8not to engage in any other occupation9 as this would be tantamount to an order of specific performance for her to wor) with 7arner !ros. However, the court ordered an in3unction to stop her from wor)ing as an actress for any other party during the contract period. - B&ant&) )er&it claim arises where goods are supplied or services are rendered by one to another in circumstances which entitle him to be recompensed by that other by receiving a reasonable price or remuneration. Euantum Me5uit (Pg 226) Cont5a4tua* #asis 7here parties contract but somehow forgot to agree on remuneration, the court will infer a promise to pay a reasonable amount. s,(/) Sale of 8oo"s Ac provides for the right to claim on a 9#an #m mer#i basis in the case of contracts for the sale of goods. Restitutiona58 #asis The obligation is imposed on the parties by the law without reference to any promise or agreement, because the law considers it un3ust to find otherwise. imitation oA4tion (Pg 2:0) s@ %i)itation A$t ' For contractual actions, the claim has to be made within si* years from the date of the breach.

S/e4i-i4 Pe5-o5ma n4e (Pg 22A)

In@un4tion (Pg 226)