Answer of Remedies

Q1
Issue: whether damages are always an adequate remedy for breach of contract and what other
remedies might be available when damages are insufficient.

Rules: There are several remedies for breach of contract under the Contracts Act 1950. The first
is damages, which is monetary compensation awarded to the injured party. Next is specific
performance, which is a court order requiring the breaching party to perform its contractual
obligations. Another is injunction, which is a court order preventing a party from doing
something. The next is rescission, which is when the contract is cancelled, and the parties are
restored to the position they were in before the contract. The last is damages, which restores the
injured party to the position they were in before the contract was signed.

Analysis: There are several types of damages in this case. Compensatory damages are intended
to put the injured party in the position it would have been in if the contract had been performed.
However, they may not always be sufficient, especially if the subject matter of the contract is
unique. Next are nominal damages, which are awarded when a breach of contract occurs but the
injured party has not suffered any actual loss. Consequential damages are intended to cover
indirect and foreseeable losses caused by the breach of contract. They may not be sufficient if the
losses are too speculative or unforeseeable. For specific performance, this remedy is often
granted in contracts involving unique goods or property (such as real estate or rare items) when
damages are insufficient to compensate for the breach of contract. For example, if a contract to
sell a unique painting is breached, the injured party may seek specific performance to force the
breaching party to complete the sale.

Next is an injunction, which can be granted to stop a party from doing something that would
harm the injured party. For example, in a non-compete agreement, an injunction may prevent a
former employee from working with a competitor. Injunctions are often used when the breach of
contract involves a negative obligation (something the breaching party agreed not to do). For
rescission, rescission is used when the contract was made under duress, fraud, misrepresentation,
or mistake. This remedy cancels the contract and puts the parties back to the position they were
in before the contract. For example, if a buyer was induced to enter a contract through fraudulent
misrepresentation, they may seek rescission to make the contract void. Damages of last resort are
designed to protect against unjust enrichment. It is used to put the aggrieved party back to the
position they were in before the contract was signed. For example, if a party paid a deposit under
a contract that they later breached, they may seek damages to recover the deposit.

Conclusion: While damages are a common remedy for breach of contract, they are not always
adequate or appropriate. Other remedies, such as specific performance, injunctions, rescission,
and restitution, offer alternatives depending on the circumstances of the breach. Specific
performance is likely to be used when the subject matter is unique, injunctions are suitable for
preventing harmful actions, rescission is appropriate in cases of fraud or mistake, and restitution
is used to prevent unjust enrichment. The choice of remedy depends on the nature of the breach
and the adequacy of damages in addressing the harm caused.

Q2
The third 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 reason-able 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). For example, Planche v Colburn
(1831). The plaintiff was contracted to write a book, but the project was abandoned by the
defendant. The court awarded the plaintiff a quantum meruit payment for the work done before
the project was abandoned.
Q3
1. Adequacy of Monetary Damages: Specific performance is usually not granted if monetary
damages would adequately compensate the non-breaching party. This is common in contracts
involving standard goods or services where the product or service can be easily substituted or
valued financially.

2. Impracticality or Impossibility: Specific performance cannot be granted if it is impractical or

impossible for the court to enforce. This could be due to the nature of the contract (e.g., personal
services that cannot be compelled) or if constant supervision or monitoring would be required to
ensure performance.

3. Unfair or Inequitable Terms: Courts may refuse specific performance if the terms of the
contract are unfair, unreasonable, or inequitable to either party. This includes situations where the
specific terms of the contract create undue hardship or are against public policy.

4. Difficulty in Enforcement: If the court cannot effectively monitor or enforce specific

performance, it may decline to grant this remedy. This could arise in situations where the
performance is ongoing and complex, making it difficult for the court to oversee compliance.

Q4
1. Compensatory damages

Purpose: To compensate the non-breaching party for actual losses suffered as a direct result of
the breach.

Calculation: These damages are calculated based on the difference between the value of the
performance promised and the value of the performance received.
Example: If a contractor fails to complete a building as agreed, compensatory damages would
cover the cost of hiring another contractor to finish the work.

2. Consequential Damages

Purpose: To cover indirect losses that result from the breach and were foreseeable at the time of
contract formation.

Foreseeability: These damages must have been foreseeable to both parties at the time the
contract was made, as established in Hadley v. Baxendale.

Example: If a seller fails to deliver machinery to a manufacturer, causing the manufacturer to

lose a lucrative contract, the lost profits could be claimed as consequential damages if they were
foreseeable.

3. Liquidated Damages

Purpose: To provide a predetermined number of damages agreed upon by the parties in the
contract in the event of a breach.

Enforceability: Liquidated damages clauses are enforceable if the amount is a reasonable

estimate of the probable loss and not a penalty.

Example: In a construction contract, parties may agree that the contractor will pay $1,000 for
each day the project is delayed beyond the completion date.

4. Punitive Damages

Purpose: To punish the breaching party for egregious behavior and deter future misconduct.

Rarity in Contract Law: Punitive damages are rare in contract law and are typically not awarded
unless the breach involves tortious conduct, such as fraud or bad faith.

Example: If a party breaches a contract through fraudulent misrepresentation, punitive damages

might be awarded in addition to compensatory damages.
5. Mitigation

Duty to Mitigate: The non-breaching party has a duty to take reasonable steps to minimize the
losses caused by the breach.

Effect on Recovery: If the non-breaching party fails to mitigate damages, the recoverable amount
may be reduced.

Example: If an employee is wrongfully terminated, they must seek new employment to mitigate
their damages. Any income earned from new employment will offset the damages claimed.

6. Certainty

Reasonable Certainty: Damages must be reasonably certain and calculable. Speculative damages
are not recoverable.

Proof Requirement: The injured party must provide clear evidence of the amount of loss.

Example: Lost profits must be proven with reasonable certainty, such as through historical
financial data or expert testimony.

7. Foreseeability

Reasonable Foreseeability: Damages must be foreseeable at the time of contract formation.

Unforeseeable losses are not recoverable.

Foreseeability Test: The losses must have been a probable result of the breach and known to both
parties.

Example: If a supplier fails to deliver raw materials to a manufacturer, resulting in production

stoppages, the lost profits from halted production would be foreseeable and recoverable.