REMEDIES FOR BREACH OF CONTRACT 1   

REMEDIES FOR BREACH OF CONTRACT

A contract is an agreement or promise made between two or more parties that the courts

will enforce. In some cases, the agreements and promises made in a contract are not kept by a party

or more parties. Therefore, this situation called breach of contract which means failure to keep the

promises or agreements of a contract. Breach of contract is a legal cause of action in which a

binding agreement is not honored by one or another more of the parties.

Breach of contract may occur in two ways:

● Anticipatory Breach of Contract: A party declares his intention of not performing the

contract before the performance is due.

● Actual Breach of Contract: A party declares his intention of not performing the contract

on due date of performance or during the course of performance.

A contract, being a fountainhead of a correlative set of rights and obligations for the parties, would

be of no value, if there were no remedies to enforce the rights arising thereunder.

The party committing breach of contract is called the “guilt party” and the other party is called the

“injured” or “aggrieved party”.

The Latin maxim Ubi jus, ibi remedium denotes “where there is a right, there is a remedy”.

So, in case of breach of contract, the aggrieved party would have one or more, remedies against the

guilty party.

i. Suit for rescission

ii. Suit for damages

iii. Suit for specific performance

iv. Suit for injunction

v. Suit for quantum meruit

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SUIT FOR RESCISSION

In contract law, the term rescission refers to the undoing, or unmaking of a contract

between parties.

The breach of contract no doubt discharges the contract, but the aggrieved party may

sometimes need to approach the court to grant him a formal rescission, i.e. cancellation, of the

contract. This will enable him to be free from his own obligations under the contract.

The basic reasons for rescission can be stated as follows:-

1) Innocent or Fraudulent representation; or

2) Mutual mistake; or

3) Lack of capacity to contract; or

4) An impossibility to perform a contract not contemplated by the parties; or

5) Duress; or

6) Undue influence.

A party can rescind a contract because of a breach by another party, but the breach must be so

substantial that it defeats the purpose of the contract. One can also rescind a contract by agreement.

If all parties to a contract agree to cancel it, they can do so.

Example: A promises B to deliver 50 bags of cement on a certain day. B agrees to pay the amount

on receipt of the goods. A failed to deliver the cement on the appointed day. B is discharged from

his liability to pay the price.

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Long v Lloyd [1958] 1 WLR 753

Facts: The claimant purchased a lorry from the defendant. The lorry was advertised in a

newspaper which described the lorry as being in exceptional condition. The claimant phoned the

defendant to arrange a viewing and was told it was in first class condition. He went to view it the

following day and was told it was capable of doing 40 mph and 11 miles to the gallon. The

claimant test drove it and found that the speedometer was not working and he had to pull a wire for

the accelerator as this was not working also. The claimant still decided to purchase the lorry. On

the first journey the claimant noted certain faults with the lorry and contacted the defendant who

offered to pay half the repairs. The claimant accepted this. However, on a further journey the lorry

broke down completely and the claimant wished to rescind the contract and brought an action

against the defendant for innocent misrepresentation.

Issue: Would the contract rescind?

Held: By accepting the offer of payment for half the repairs when he became aware of the defects,

the defendant had lost his right to rescind as he had affirmed the contract.

Car & Universal Credit v Caldwell [1964] 2 WLR 600

Facts: Mr Caldwell sold his Jaguar car on 12th Jan to a rogue, Norris, who had paid £10 cash

deposit and left another car as security and gave a cheque for £965. The following day Mr

Caldwell went to cash the cheque and discovered it was fraudulent and the car left as deposit

turned out to be stolen. Mr Caldwell reported the incident to the police and used his best

endeavours to cooperate with the police to find Norris in order to rescind the contract of sale. He

also contacted the Automobile Association to try to locate the car. Norris had acquired a voidable
REMEDIES FOR BREACH OF CONTRACT 4   

title to the car as the contract was induced by fraudulent misrepresentation. Norris sold the car on to

a third party on 15th Jan.

Issue: The question for the court was whether the actions taken by Mr Caldwell were sufficient to

avoid the contract.

Held: Mr Caldwell had successfully rescinded the contract. He had taken all steps possible to

demonstrate that he no longer wished to be bound by the contract. He should not be prejudiced by

the fact that his endeavours failed to locate Norris.

SUIT FOR DAMAGES

Remedy by way of damages is the most common remedy available to the injured party. This

entitles the injured party to recover compensation for the loss suffered by it due to the breach of

contract, from the party who causes the breach.

In Addis v. Gramophone Co Ltd 1909, Lord Atkinson said: “I have always understood that

damages for breach of contract were in the nature of compensation, not punishment.”

The damages which may be awarded to the injured party may be of the following kinds.

1. Ordinary damages:

When a contract has been broken, the party who suffers by such breach is entitled to receive, from

the party who has broken the contract, compensation for any loss or damage cause to him thereby,

which naturally arose in the usual course of things from such breach, or which the parties know,

when they made the contract, to be likely to result from the breach of it: Such compensation is not

to be given for any remote and indirect loss or damage sustained by reasons of the breach.
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Hadley vs. Baxendale:-

Facts: The crankshaft broke in the Claimant’s mill. He engaged the services of the Defendant to

deliver the crankshaft to the place where it was to be repaired and to subsequently return it after it

had been repaired. Due to neglect of the Defendant, the crankshaft was returned 7 days late. The

Claimant was unable to use the mill during this time and claimed for loss of profit. The Defendant

argued that he was unaware that the mill would have to be closed during the delay and therefore

the loss of profit was too remote.

Held: The court held that claimant was entitled only to ordinary damages and defendant was not

liable for the loss of profits because the only information given by Claimant to Defendant was that

the article to be carried was the broken shaft of a mill and it was not made known to them that the

delay would result in loss of profits.

2. Special damages:

Where a party to a contract receives a notice of special circumstances affecting the contract, he will

be liable not only for damages arising naturally and directly from the breach but also for special

damages.

In the case of Simpson v. London & North Western Railway Company, Plaintiff, a

manufacturer, used to exhibit his samples of his equipment at agricultural exhibitions. He delivered

his samples to railway company to be exhibited at New Castle. On the occasion he wrote “must

reach at New Castle on Monday certain”. On the account of negligence on the part of railway

company, the samples reached only after the exhibition was over. Plaintiff, claimed damages from

railway company for his loss of profits from the exhibition.

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Held: The court held that the railway company was liable to pay these damages as it had the

knowledge of special circumstances, and must have contemplated that a delay in delivery might

result in such loss.

3. Vindictive or Exemplary damages

At time breach of contract by one party not only results in monetary loss to the injured party but

also subjects him to disappointment and mental agony. In such cases monetary compensation alone

cannot provide an appropriate remedy to the sufferings of the injured party. Thus there is a need for

vindictive damages.

These may be taken as an exception to the general principle that damages are awarded only for the

financial loss caused by breach of contract.

In a case Addies vs Gramophone Co. Ltd., the court stated that in three cases mental suffering

and pain of the aggrieved party can also be taken into account:

■ Unjustified dishonour of a cheque,

■ Breach of promise of marriage, and

■ Failure of vendor of real estate to make title.

In Gibbons vs. Westminster Bank Ltd., (1939), for wrongful dishonour by a banker of his

customer’s cheque because in this case the injury due to wrongful dishonour to the drawer of

cheque is so heavy that it causes loss of credit and reputation to him. A businessman whose credit

has suffered will get exemplary damages even if he has sustained no pecuniary loss. But a

non-trader cannot get heavy damages in the like circumstances, unless the damages are alleged and

proved as special damages.

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4. Nominal damages:

Nominal damages are awarded where the plaintiff has proved that there has been a breach of

contract but he has not in fact suffered any real damage. It is awarded just to establish the right to

decree for the breach of contract. The amount may be a rupee or even less.

Charter v Sullivan (1957)

The defendant bought a Hillman Minx car from the plaintiff but refused to accept it. The plaintiff's

profit would have been £97. However, only nominal damages were awarded because he could

only sell as many cars as he could get from the makers.

5. Damage for inconvenience:-

If party has suffered physical inconvenience, discomfort for mental agony as result of breach of

contract, party can recover the damage for such inconvenience.

In Farley v Skinner [2001], Farley contracted with Skinner for Skinner to survey a potential

house for aircraft noise. Skinner concluded that aircraft noise was unlikely. After moving in,

Farley discovered that the house was directly under Gatwick airport’s circuit Farley sued Skinner

for breach of contract.

In this case, court decided that Farley would entitled to damages for her injured feelings.

6. Pre-fixed damages:

Sometimes, parties to a contract stipulate at the time of its formation that on a breach of contract by

any of them, a certain amount will be payable as damage. It may amount to;

i. Liquidated damages or

ii. Penalty
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Liquidated damages are specific damages that were previously identified by the parties in the

contract itself, in the event that the contract is breached. Liquidated damages should be a

reasonable estimate of actual damages that might result from a breach. But if specified sum is

disapprotionate to the damages, it is called penalty.

Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1914]

The claimant, Dunlop, manufactured tyres and distributed them to retailers for resale. The

contract between Dunlop and New Garage contained a clause preventing New garage from selling

the tyres below list price.The agreement said that, in the event of such a dispute arising, New

Garage would pay ‘by way of liquidated damages and not as a penalty’, a sum of £5 per tyre.

The defendants sold some tyres below the list price and the claimant brought an action for damages

based on the amount specified in the contract. The defendant argued that the relevant clause was a

penalty clause and thus unenforceable.

The £5 sum was held by the judge to be enforceable, however, the Court of Appeal held that it

was a penalty. Dunlop appealed this decision. The House of Lords held that Dunlop were entitled

to enforce the agreement as it was a “genuine pre-estimate” of their potential loss as opposed to

being a penalty.

The court held that if the sum is not genuine, or of an unconscionable amount, it may be

considered a penalty by the courts and so will be unenforceable.

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SUIT FOR SPECIFIC PERFORMANCE

Specific performance is an equitable remedy which is provided by the court to enforce the duty of

doing what the plaintiff agreed by contract to do, against a defendant. This remedy is granted by

way of exception. Thus, this remedy is in contrast with the remedy by way of damages for breach

of contract, which gives rise to pecuniary compensation for failure to carry out the terms of the

contract. Both the remedies, Damages and specific performance, are available upon breach of

obligations by a party to the contract

This is an equitable remedy which is granted at the discretion of the court. So, specific performance

is a decree granted by the court to compel a party to perform his contractual obligations. This

remedy is usually available where damages are not an adequate relief, e.g., where the subject

matter of the contract is unique in nature like Chinese vases in Falcke’s case.

Falcke vs. Gray [1851]

A lady sold a pair of Chinese vases to an antique dealer for £20 each. Before delivery, she began to

have her doubts about the real value of the vasesso she asked another dealer for a valuation. He

offered £200 for the vases. The lady accepted the offer and the second dealer be ordered to hand

the Chinese vases over to him.

It was held that the claimant was only entitled to damages. In fact, despite damages not being an

adequate remedy, the claimant was not entitled to specific performance because he had not

behaved fairly, as he knew that the price of £20 for each vase was grossly inadequate. The lady

was not an expert, so the two parties were not on equal footing.
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Nutbrown v Thornton (1805)

The claimant entered a contract to purchase some machinery from the defendant. The defendant, in

breach of contract, refused to deliver the machines. The defendant was the only manufacturer of

this type of machinery. The claimant bought an action for breach of contract seeking specific

performance of the contract.

Held: Specific performance of the contract was granted. Whilst an award of damages would

ordinarily be given for non-delivery of goods, damages would be inadequate to compensate the

claimant because he would not be able to buy the machines elsewhere.

The court has wide discretionary power to award specific performance and in exercising this

discretion, the following factors are taken into account:

i. Delay in asking for the order.

ii. Whether the person seeking performance is ready to perform his part of the Contract.

iii. The difference between the benefit (the order would give to one party) and the cost of

performance to the other.

iv. Whether the person against whom the order is sought would suffer hardship in performing.

v. Whether any third party rights would be affected.

vi. Whether the contract lacks adequate consideration (the rule “equity will not assist a

volunteer” applies so that specific performance will not be ordered if the contract is for

nominal consideration even if it is under seal).

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SUIT FOR INJUNCTION

Injunction is an order of a court restraining a person from doing particular act. It is a mode

of securing the specific performance of the negative terms of the contract. To put it differently,

where a party is in breach of negative terms of the contract i.e where he is doing something which

he promised not to do, the court may, by issuing an injunction, restrain him from doing, what he

promised not to do. Thus, injunction is a preventive relief. It is particularly appropriate in case of

anticipatory breach of contract where damages would not be an adequate relief.

Like specific performance, an injunction is an equitable remedy and therefore only granted

at the discretion of the court. There are three types:

1. Interlocutory or interim (temporary injunction until a court hearing)

2. Prohibitory (a court order that a party must not do something)

3. Mandatory (an order that a party must do something)

Injunction relief is appropriate to prevent an action, to put a stop on the conduct that

violates a person's rights or causes injury. It is important that when you file a lawsuit you may

request both money damages and injunctive relief if both are necessary for an appropriate legal

remedy.

Lumley v Wagner (1852) 42 ER 687

The defendant Johanna Wagner, an opera singer, was engaged by the claimant to perform

in his theatre for a period of three months. There was a term in the contract preventing her from

singing for anyone else for the duration of the contract. She was then approached by the manager

of Covent Garden Theatre, Frederick Gye, who offered her more money to sing for him. The
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claimant sought an injunction preventing her from singing at Covent Garden Theatre. The

defendant argued that to allow an injunction would in effect amount to specific performance of the

contract in circumstances where specific performance would not be available.

Held: The injunction was granted despite it having the effect of forcing the defendant to sing for

the claimant.

Injunction usually not granted if its effect is to compel a party to a contract to do something

which could not have been made subject to order of specific performance, for example:

In case, Page One Records v Britton [1968] 1 WLR 157, The Troggs, a pop group,

contracted to appoint the plaintiff as their sole agent and manager for five years, and agreed not to

act themselves in such capacity and not to appoint any other person for that time. They fell out with

the manager and wanted to replace him. The plaintiff sought an injunction. It was held that an

injunction must be refused because to grant it would, in effect, compel The Troggs to continue to

employ the plaintiff, and thus would amount to enforcing the performance of a contract for

personal services.

SUIT FOR QUANTUM MERUIT

Remedy for a breach of contract available to an injured party against the guilty party is to

file a suit upon quantum meruit. The phrase quantum meruit literally means “as much as is

earned” or “in proportion to the work done.”

A right to use upon quantum meruit usually arises where after part performance of the

contract by one party, there is a breach of contract, or the contract is discovered void or becomes

void. This remedy may be availed of either without claiming damages (i. e., claiming reasonable
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compensation only for the work done) or in addition to claiming damages for breach (i.e., claiming

reasonable compensation for part performance and damages for the remaining unperformed part).

Claim for quantum meruit

The aggrieved party may file a suit upon quantum meruit and may claim payment in proportion to

work done or goods supplied in the following cases:

I. Where work has been done in pursuance of a contract, which has been discharged by the

default of the defendant.

For example, in case, Planche v Colburn [1831], Planche agreed to write a volume on ancient

armour to be published, in a magazine owned by Colburn. For this, he was to receive $100 on

completion.The claimant commenced writing and had completed a great deal of it when the

defendant cancelled the series. The defendant refused to pay the claimant despite his undertaking

and the fact that the claimant was still willing to complete. The claimant brought an action to

enforce payment.

Held: The claimant was entitled to recover £50 because the defendant had prevented the

performance.

II. Where work has been done in pursuance of a contract which is discovered void’ or

‘becomes void,’ provided the contract is divisible.

For example, in case Craven-Ellis v Canons Ltd. , the company accepted the services rendered

by the plaintiff. It was found that if the plaintiff did not perform the services, the company certainly

would have hired some agent to perform those services. Hence, the plaintiff, on the basis of
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quantum meruit, succeeded in claiming the remuneration from the company for the work done

regardless of the fact that he failed to obtain his qualification share within two months.

III. When something is done without any intention to do so gratuitously although there exists

no express agreement between the parties.

For example, in indian case, Ram Krishna vs Rangoobed , where A ploughed the field of B

with a tractor to the satisfaction of B in B’s presence, it was held that A was entitled to payment as

the work was not intended to be gratuitous and the other party has enjoyed the benefit of the same.

IV. A party who is guilty of breach of contract may also sue on a quantum meruit provided

both the following conditions are fulfilled:

a. The contract must be divisible, and

b. The other party must have enjoyed the benefit of the part which has been performed,

although he had an option of declining it.

For example, in case, Sumpter v Hedges (1898) 1 QB 673, the claimant agreed to build two

houses and stables for the defendant. It was agreed that £565 would be payable on completion.

The claimant commenced performance and then ran out of money and was unable to complete. He

had performed just over half of the contract. The defendant completed the work himself. The

claimant sought to recover £333 representing the value of the work he had completed. He argued

that in completing the work himself, the defendant had thereby accepted partial performance and

prevented the claimant from completing the contract.

Held: The claimant's action failed. The court held that the defendant had no choice but to accept

partial performance as he was left with a half completed house on his land.
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Conclusion

Breach means violation of law. A breach of contract occurs when a party thereto renounces his

liability under it, or by his own act makes it impossible that he should perform his obligations under

it or totally or partially fails to perform such obligations. The person injured by a breach of

contract can claim damages from the other party for compensating the loss suffered. When a there

is breach of contract, the injured party has one or more of remedies including, suit for rescission,

damages, injunction, specific performance, and quantum meruit. Mostly, breach of contract is cause

by the terms which are not clear in the contract. It is vital to make sure that the parties are clear with

the terms and regulations in the contract so that there will not have a breach of contract.
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References

Addis V. Gramophone Co. Notes. (n.d.). Retrieved from

https://www.oxbridgenotes.co.uk/revision_notes/bcl-law-oxford-commercial-remedies-bcl/sa

mples/addis-v-dot-gramophone-co

Mitchell, C. (2016). Landmark cases in the law of contract. Hart Publishing.

Poole, J., Devenney, J., & Shaw-Mellors, A. (2017, 09). 7. Remedies for breach of contract. Law

Trove. doi:10.1093/he/9780198803850.003.0007

Poole, J. (2003). Casebook on contract law. Oxford University Press.

Quantum Meruit - Definition, Examples, Cases, Processes. (2015, October 05). Retrieved from

https://legaldictionary.net/quantum-meruit/

Remedies in contract law. (n.d.). Retrieved from http://e-lawresources.co.uk/Contract-remedies.php

Walt, S. (n.d.). Penalty Clauses and Liquidated Damages. Contract Law and Economics.

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