This chapter focusses on remedies agreed by the parties for breach of contract. Parties may wish to include a term in the contract which dictates what should happen in the event of breach of contract. If the term states that a certain amount of money should be paid upon breach, that term might be valid as a liquidated damages clause or unenforceable as a penalty. If the amount chosen is a genuine pre-estimate of loss, or is ‘commercially justified’, then it is likely to be valid. If the defaulting party had already paid money to the innocent party as a deposit, the innocent party may be able to forfeit that deposit. A term stipulating that specific performance or an injunction will be granted upon breach will not bind the court. However, the court may take into account such a term when deciding whether to exercise its equitable discretion.
Chapter
28. Agreed remedies
Chapter
11. Damages
Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter examines the principles by which contractual damages are assessed. The discussions cover the aim of contractual damages, the difference between damages in contract and in tort; the relationship between the expectation interest and the reliance interest; cost of cure and difference in value; remoteness of damage; foreseeability and assumption of risk; non-pecuniary losses; mitigation; contributory negligence; and penalties, liquidated damages and forfeiture.
Chapter
17. Remedies II: specific remedies
Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter examines specific remedies for breach of contract. It explains that unlike compensatory remedies, specific remedies actually require the defendant to perform his side of the bargain. This chapter discusses the principles of the different types of specific remedies including the action for an agreed sum, liquidated damages and the penalty clause jurisdiction, injunctions, specific performance, and damages in substitution for a specific remedy.
Chapter
17. Remedies II: specific remedies
Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter examines specific remedies for breach of contract. It explains that unlike compensatory remedies, specific remedies actually require the defendant to perform his side of the bargain. This chapter discusses the principles of the different types of specific remedies including the action for an agreed sum, liquidated damages and the penalty clause jurisdiction, injunctions, specific performance, and damages in substitution for a specific remedy.
Chapter
13. Breach of contract
Robert Merkin KC, Séverine Saintier, and Jill Poole
Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas of the law curriculum. Where there is breach of contract, the aggrieved party is entitled to the remedy of damages as of right. Contractual damages aim to compensate the claimant for losses suffered, rather than punish the defendant. To achieve compensation the claimant is put in the position he would have been in if the contract had been properly performed and the breach had not occurred. In other words, the aim is to protect the expectation of performance (known as the ‘expectation interest’ or the ‘performance interest’). This may involve any difference in value between the promised and the actual performance, loss of profits, or reimbursing the claimant for any expenditure that had been wasted due to the breach. A claimant may not be fully compensated for his losses as a result of the remoteness rule, which limits recovery of losses and/or the duty to mitigate (minimize) loss. Damages may also be apportioned, in some circumstances, for the claimant’s own contributory negligence in contributing to his own loss. In general, non-pecuniary losses are not recoverable in a claim for breach of contract, but there are cases where a modest sum may be awarded for the disappointment resulting from not receiving the promised performance. The parties may include an agreed damages clause in their contract but in the event of breach only a liquidated damages clause will be enforceable; a penalty clause will not be enforceable beyond the claimant’s actual loss.
Chapter
14. Damages for breach of contract
Robert Merkin KC, Séverine Saintier, and Jill Poole
Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas of the law curriculum. Where there is breach of contract, the aggrieved party is entitled to the remedy of damages as of right. Contractual damages aim to compensate the claimant for losses suffered rather than punish the defendant. To achieve compensation the claimant is put in the position he would have been in if the contract had been properly performed and the breach had not occurred. In other words, the aim is to protect the expectation of performance (known as the ‘expectation interest’ or the ‘performance interest’). This may involve any difference in value between the promised and the actual performance, loss of profits, or reimbursing the claimant for any expenditure that had been wasted due to the breach. A claimant may not be fully compensated for his losses as a result of the remoteness rule, which limits recovery of losses and/or the duty to mitigate (minimize) loss. Damages may also be apportioned, in some circumstances, for the claimant’s own contributory negligence in contributing to his own loss. In general, non-pecuniary losses are not recoverable in a claim for breach of contract, but there are cases where a modest sum may be awarded for the disappointment resulting from not receiving the promised performance. The parties may include an agreed damages clause in their contract but in the event of breach only a liquidated damages clause will be enforceable; a penalty clause will not be enforceable beyond the claimant’s actual loss.
Chapter
20. Damages
This chapter deals with the primary remedy for breach of contract: damages. It looks at the basic test, which allows for the recovery of expectation loss, and also considers recovery of reliance loss and a restitutionary sum. The assessment for, and availability of, negotiating damages as recently affirmed by the Supreme Court in One Step (Support) LTD v Morris-Garner and Another (2019) is explored. The further limitations on recovery such as remoteness and the ‘duty’ to mitigate are considered, as is the distinction between liquidated damages and penalty clauses. The problem of recovering for non-financial losses—mental distress and the consumer surplus—is also addressed. Finally, the chapter looks at how the rules on penalties have been relaxed with the landmark judgments in Cavendish and ParkingEye (2015).
Chapter
13. Controlling contract terms
Exclusion clauses, penalties, and consumer protection
This chapter examines how the law regulates contract terms, with particular emphasis on rules that are intended to protect weaker parties. It begins with a discussion of the limits of freedom of contract and proceeds by assessing the role played by formal requirements, such as the requirement that contracts be in writing. It then considers how the law regulates contract terms which seek to alter the liability that one party will have in the event of breach. More specifically, it looks at exclusion clauses in the common law and the statutory regulation of such clauses, along with liquidated damages, contractual remedies, and the rule against penalties. It also explores the extent to which consumer protection law restricts the terms that can be included in consumer contracts, especially when dealing with the problem of unfair terms.
