Week 22 Contract: Remedies

What is the ordinary way of ending a contract?

By performance – most contracts end when obligations are fully performed to the satisfaction of both parties.

What happens if a contract is not performed according to its terms?

It results in a breach, and if serious, it may allow the innocent party to terminate the contract.

Can parties agree to end or modify a contract?

Yes, but such an agreement must be supported by consideration.

How else can a contract end apart from performance?

Through an express term in the contract or by law (e.g. frustration).

When are remedies for breach of contract due?

When the contract ends without full performance or a party is harmed during the contractual relationship.

Name examples where remedies may be due.

Misrepresentation, breach of contract.

Define "breach of contract."

Failure, refusal, or defective performance without lawful excuse (Treitel, 2011).

What are the types of breach of contract based on performance?

• What must be done (duties/obligations)

• When it must be done (timing)

• Whether it was done (standard of performance)

Are most contractual obligations strict?

Yes – liability does not depend on fault.

What is a fault-based obligation?

One requiring reasonable care and skill, without guaranteeing a specific result.

Who bears the burden of proof in breach claims?

The party claiming the breach.

What is the general rule for performance timing?

'Entire obligations' must be completely performed before the other party is obliged to perform.

Cutter v Powell (1795) outcome?

Widow not entitled to wages as the contract was not fully performed.

What does Hoenig v Isaacs (1952) show?

Courts may accept substantial performance and award damages for defects.

Name the different forms of breach.

Anticipatory, actual, renunciation, impossibility, and failure of performance.

Does a breach automatically end a contract?

No – the innocent party must elect to terminate.

What is anticipatory breach?

A party refuses to perform before performance is due.

What are the innocent party's options in anticipatory breach?

Accept repudiation and claim damages, wait and see, or perform and claim price.

Case: White & Carter v McGregor (1961)?

Innocent party could perform and claim contract price despite anticipatory breach.

What are the three types of remedies?

• Common law (damages, termination)

• Equitable (specific performance)

• Statutory (e.g. CRA 2015 remedies)

What is a condition in a contract?

An essential term; breach allows termination and/or damages.

What is a warranty?

A non-essential term; breach allows for damages only.

What are innominate terms?

Terms whose breach consequences depend on the nature of the breach.

Key case for innominate terms?

Hongkong Fir Shipping v Kawasaki Kisen (1961)

When can a party terminate a contract?

After a repudiatory breach (e.g. breach of a condition or serious breach of an innominate term).

What must the innocent party do to terminate?

Clearly and unequivocally elect to terminate.

What is the effect of termination?

It has a prospective effect (de futuro).

When is specific performance granted?

When damages are inadequate, and the contract is valid and enforceable.

Example case: Beswick v Beswick (1968)?

Widow was awarded specific performance because damages were inadequate.

CRA 2015 remedies?

• Short-term right to reject (s.20, 22)

• Repair/replacement (s.23)

• Price reduction/final right to reject (s.24)

Can consumers claim other remedies under CRA?

Yes, including damages and specific performance (s.19(11)).

What are the main types of damages?

• Expectation damages

• Reliance damages

• Restitution damages (less common)

What are the remedies for misrepresentation?

Rescission and/or damages under the Misrepresentation Act 1967.

What is the remedy for duress?

Voidable contract – rescission.

What is the remedy for undue influence?

Voidable contract – rescission.

What is the remedy for mistake?

Void contract – rectification.

What is the remedy for frustration?

Automatic discharge + recovery under Law Reform (Frustrated Contracts) Act 1943.

What happens with unfair terms in a contract?

Terms are ineffective (not binding) under UCTA 1977 & CRA 2015.

What are the remedies for breach of contract?

• Common law: damages and/or termination

• Equitable: specific performance

• Statutory: e.g. CRA 2015 remedies

What is a void contract?

A contract that never legally existed; cannot be rescinded.

What is a voidable contract?

A contract that is valid unless rescinded due to defects like misrepresentation, duress, or undue influence.

What does rescission do?

Sets aside the contract ab initio; restores parties to pre-contractual position.

What does restitutio in integrum mean?

Full restoration to original position before contract

Can rescission be partial?

No – it is all-or-nothing.

What is the difference between rescission and rectification?

• Rescission: Cancels the contract entirely.

• Rectification: Corrects drafting errors to reflect true intention.

When does rescission apply vs termination?

• Rescission: for formation defects (ab initio).

• Termination: for breach (de futuro).

What is automatic discharge?

After frustration, obligations end automatically – governed by Law Reform (Frustrated Contracts) Act 1943.

How do courts decide if a statement is a term or representation?

Based on objective intention; key factors include:

• Importance to the parties (Bannerman v White)

• Time between statement and contract (Routledge v McKay)

• Expertise of the statement-maker (Oscar Chess; Dick Bentley)

What is the aim of damages for misrepresentation?

To put the claimant in the position as if the misrepresentation had not been made (tort measure).

What is the aim of damages for breach of contract?

To place the innocent party as if the contract had been performed (expectation interest).

What are the types of damages for breach of contract?

• Expectation damages

• Reliance damages

• Restitution damages (in rare cases)

What are liquidated damages?

Pre-agreed sum payable on breach, regardless of actual loss.

Are liquidated damages always enforceable?

No – not if:

• Unfair under CRA or UCTA

• They are penalty clauses

When is a clause a penalty?

If:

• It is extravagant/unconscionable

• Not a genuine pre-estimate of loss

• Aimed at deterring breach (in terrorem)

When is a liquidated damages clause valid under ParkingEye?

• If it protects a legitimate interest

• The sum is not manifestly excessive

Can clauses deter breach and still be valid?

Yes – if legitimate interest is protected and amount is proportionate.