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Lecture 10 remedies for breach


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Lecture 10 remedies for breach

  1. 1. Remedies for Breach Remedies Damages Recission Restitution Specific Performance Injunction Quantum meruit Anton Piller order Common law Equitable remedies
  2. 2. Damages <ul><li>Main purpose of damages is to enable the innocent party to receive MONETARY COMPENSATION . </li></ul><ul><li>Damages are a common law remedy and awarded as of right. </li></ul><ul><li>They are calculated on the basis of looking at what the position of the plaintiff would have been if the contract had been properly performed. </li></ul><ul><li>They are assessed on a once and for all basis at the date of breach. </li></ul>
  3. 3. Damages <ul><li>Steps in determining an award of damages </li></ul>
  4. 4. Damages <ul><li>Causation </li></ul><ul><ul><li>Is there a causal connection between the breach and the loss suffered? </li></ul></ul><ul><ul><li>The plaintiff must show that the breach of contract by the defendant was the cause of the loss. </li></ul></ul><ul><ul><li>The general test used by the courts is the same as that used in assessing damages in general – the ‘but for’ test </li></ul></ul><ul><ul><ul><li>CASE: Alexander v Cambridge Credit Corporation Ltd (in rec) (1987) </li></ul></ul></ul><ul><ul><li>Note the ‘but for’ test is not an exclusive test, e.g. there is the ‘common sense’ test, which was approved in: </li></ul></ul><ul><ul><ul><li>CASE: Chappel v Hart (1998) </li></ul></ul></ul>
  5. 5. Damages <ul><li>Remoteness </li></ul><ul><ul><li>The loss or injury must not be too remote, i.e. losses must be reasonably related to the contract. </li></ul></ul><ul><ul><li>Hadley v Baxendale (1854) indicates 2 types of loss are recoverable : </li></ul></ul><ul><ul><ul><li>loss arising from the breach in the usual or normal course of things; and </li></ul></ul></ul><ul><ul><ul><li>loss arising from special or exceptional circumstances where it can be shown that the defendant had actual knowledge of the plaintiff’s needs </li></ul></ul></ul><ul><ul><ul><ul><li>CASE: Victoria Laundry v Newman Industries [1949) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>CASE: Commonwealth of Australia v Amann Aviation Pty Ltd (1991) </li></ul></ul></ul></ul>
  6. 6. Damages <ul><li>Damages </li></ul><ul><ul><li>The aim of damages is to put the injured party back as close to the position they would have been in had the breach never occurred. </li></ul></ul><ul><ul><li>Damages are recoverable for provable or economic loss as well as: </li></ul></ul><ul><ul><ul><li>expectation losses </li></ul></ul></ul><ul><ul><ul><li>reliance losses </li></ul></ul></ul><ul><ul><ul><ul><li>CASE: Commonwealth of Australia v Amann Aviation Pty Ltd (1991) </li></ul></ul></ul></ul><ul><ul><ul><li>distress and disappointment </li></ul></ul></ul><ul><ul><ul><ul><li>CASE: Jarvis v Swan Tours [1972] </li></ul></ul></ul></ul><ul><ul><ul><ul><li>CASE: Jackson v Horizon Holidays [1975] </li></ul></ul></ul></ul><ul><ul><ul><ul><li>CASE: Baltic Shipping Co Ltd v Dillon (1993) </li></ul></ul></ul></ul><ul><ul><ul><li>physical injury </li></ul></ul></ul><ul><ul><ul><ul><li>CASE: Grant v Australian Knitting Mills Ltd [1936] </li></ul></ul></ul></ul><ul><ul><li>Difficulty in calculation is not a ground for disallowing a claim </li></ul></ul><ul><ul><ul><li>CASE: Howe v Teefy (1927) </li></ul></ul></ul>
  7. 7. Damages <ul><li>Mitigation of damages </li></ul><ul><ul><li>The plaintiff must take reasonable steps to minimise or mitigate their loss . Failure to do so can result in a reduction of damages. </li></ul></ul><ul><ul><ul><li>CASE: Payzu v Saunders [1919] </li></ul></ul></ul><ul><ul><li>Mitigation is a question of fact and the onus of proof is on the defendant. </li></ul></ul>
  8. 8. Damages Damages Nominal (No actual loss suffered) Ordinary (Usual remedy) Exemplary (punitive) General Special
  9. 9. Types of Damages <ul><li>The type of damages that will be awarded will be determined by the seriousness of the breach and whether the contract has specified the amount of damages to be paid in the event of breach: </li></ul><ul><ul><li>nominal damages – plaintiff’s legal rights have been infringed but they have suffered no actual loss </li></ul></ul><ul><ul><ul><li>CASE: Charter v Sullivan [1957] </li></ul></ul></ul><ul><ul><li>ordinary damages – loss suffered by the plaintiff as a result of the breach and can be either general or special damages </li></ul></ul><ul><ul><li>exemplary damages – punitive and may be awarded for non-economic loss </li></ul></ul><ul><ul><ul><li>CASE: Jackson v Horizon Holidays [1975] </li></ul></ul></ul>
  10. 10. Types of Damages <ul><li>Liquidated damages </li></ul><ul><ul><li>Awarded where a plaintiff is able to sue for a specified sum, which must be a genuine or bona fide pre-estimate of the actual loss that will flow from the breach. </li></ul></ul><ul><li>Unliquidated damages </li></ul><ul><ul><li>Awarded where an injured party has no fixed sum in mind and leaves the court to decide the amount. </li></ul></ul><ul><li>Penalty </li></ul><ul><ul><li>A threat to ensure performance and not enforceable because they are not a genuine pre-estimate of the damage that will result from the breach </li></ul></ul><ul><ul><ul><li>CASE: Dunlop Pneumatic Tyre Co v New Garage and Motor Co Ltd [1915] </li></ul></ul></ul>
  11. 11. Equitable Remedies Equitable Remedies Recission Restitution Specific Performance Injunction Quantum meruit Anton Piller Order <ul><li>These are discretionary remedies at equity and are only granted where damages are not an adequate remedy. </li></ul>
  12. 12. Equitable Remedies <ul><li>Rescission </li></ul><ul><ul><li>A right available to an injured party. </li></ul></ul><ul><ul><li>Does not require the intervention of the court. </li></ul></ul><ul><ul><li>Entitles the injured party to set the contract aside and is only available for breach of a condition. </li></ul></ul><ul><ul><li>Substantial restoration must be possible as the injured party is restored to their pre-contractual position. </li></ul></ul><ul><ul><li>The right to rescission is lost if the injured party: </li></ul></ul><ul><ul><ul><li>continues with the transaction; </li></ul></ul></ul><ul><ul><ul><li>fails to act or act within a reasonable time; or </li></ul></ul></ul><ul><ul><ul><li>if an innocent third party acquires an interest in the subject matter. </li></ul></ul></ul>
  13. 13. Equitable Remedies <ul><li>Restitution </li></ul><ul><ul><li>Is based on the concept of unjust enrichment and sometimes referred to as quasi-contract. </li></ul></ul><ul><ul><li>The plaintiff must establish: </li></ul></ul><ul><ul><ul><li>the benefit was at the plaintiff’s expense; </li></ul></ul></ul><ul><ul><ul><li>it would be unjust to allow the defendant to keep that benefit or enrichment; and </li></ul></ul></ul><ul><ul><ul><ul><li>CASE: Pavey & Matthews Pty Ltd v Paul (1987) </li></ul></ul></ul></ul><ul><ul><ul><li>the defendant must obtain a benefit or enrichment; </li></ul></ul></ul><ul><ul><ul><li>the defendant has no defences to rely upon. </li></ul></ul></ul>
  14. 14. Equitable Remedies <ul><li>Restitution can be used if: </li></ul><ul><ul><li>the defendant has received a sum of money from the plaintiff and there has been a total failure of consideration or a mistake of fact; </li></ul></ul><ul><ul><ul><li>CASE: McCormack v Commonwealth (1984) </li></ul></ul></ul><ul><ul><li>under a mistake of law; </li></ul></ul><ul><ul><ul><li>CASE: David Securities Pty Ltd v Commonwealth Bank (1992) </li></ul></ul></ul><ul><ul><li>under duress or compulsion. </li></ul></ul><ul><li>Restitution makes use of the doctrine of quantum meruit </li></ul><ul><ul><li>CASE: Pavey & Matthews Pty Ltd v Paul (1987) </li></ul></ul><ul><ul><li>CASE: Planche v Colburn (1831) </li></ul></ul><ul><ul><li>CASE: Sumpter v Hedges [1898] </li></ul></ul>
  15. 15. Equitable Remedies <ul><li>Specific Performance </li></ul><ul><ul><li>A remedy compelling performance. </li></ul></ul><ul><ul><li>It is only granted at the court’s discretion where the court can supervise the implementation of the contract. </li></ul></ul><ul><ul><li>It is not available in contracts involving personal services because the court is unable to adequately supervise the task CASE: Ryan v Mutual Tontine Westminster Chambers Assoc [1893] </li></ul></ul>
  16. 16. Equitable Remedies <ul><li>Injunction </li></ul><ul><ul><li>It is a restraining order which prevents a person from breaking a contract. </li></ul></ul><ul><ul><li>It is a discretionary remedy and aims at enforcing negative promises. </li></ul></ul><ul><ul><li>It normally cannot be used where it would achieve the same result as specific performance. </li></ul></ul><ul><ul><ul><li>CASE: Lumley v Wagner (1852) </li></ul></ul></ul>
  17. 17. Equitable Remedies <ul><li>Mareva Injunction </li></ul><ul><ul><li>Prevents the defendant from removing assets from the court’s jurisdiction. </li></ul></ul><ul><ul><ul><li>CASE: Mareva Compania Naviera SA v International Bulk Carriers SA, The Mareva [1975] </li></ul></ul></ul><ul><li>Anton Piller Order </li></ul><ul><ul><li>Prevents a defendant from disposing of any evidence before trial. </li></ul></ul><ul><ul><ul><li>CASE: Anton Piller KG v Manufacturing Processes Ltd [1976] </li></ul></ul></ul><ul><li>Quantum Meruit </li></ul><ul><ul><li>Arises where there has been part-performance, and only where it can be implied that payment would be made. </li></ul></ul>
  18. 18. Statutes of Limitations <ul><li>An injured party can loose their right to an action unless they act within a certain time period. </li></ul><ul><li>The statutes of limitations of the States and Territories determine the time limits within which an injured party must take action. </li></ul><ul><li>Prevents actions remaining open indefinitely. </li></ul>