1. Contracts & Common Law:
Breach Remedies & Claims Defence
prepared by Natalia Perestyuk to be presented on May-14’16
Managing Partner at Network Partners
Attorney at Law, MBA

2. Common Law & Equity
Common law – body of law developed through court judgement
Common law - system of “rigid rules laid down by royal courts
following the Norman conquest”
Remedies under common law are of monetary nature
and this may be not always applicable/enough
Equity was developed as a system to resolve disputes
where damages are not a suitable remedy and
“to introduce fairness into the legal system”
Equity operates when there is a recognizable right but no remedy
under the common law – to insure that justice is met

3. Equitable Maxims/Doctrines
Delay defeats equity - Doctrine of Laches
(to prevent any inequitable results)
Will not be awarded if the injured party has not acted fairly
(clean hands – not bad faith)
Equity considers done that which ought to be done
Equity follows the law (not replace statute or common law)
Those who seek equity must do equity (to act fairly)
Will not be awarded if the contract has been affirmed
Will not be awarded if some innocent third party would be
adversely affected

4. Remedies for Breach of Duty
Common law Remedies:
Damages (the key tool to compensate harm, but not to punish)
Action for price (to recover agreed sum)
Quantum meruit (“how much it is worth” – restitutory award)
Equitable Remedies: (to ask court for help “on court’s discretion”)
Specific performance (“just do it”)
Injunction (“don’t do it”, “stop it”)
Mareva injunction (including “freezing order”)
Rescission
(to put parties back into position before contract started)
Rectification (to correct)

5. Contract Discharge Causes
Causes resulting into the contract termination (discharge)
agreement of the parties
frustration (external event, force-majeure)
performance
breach (unless injured party elects to let contract continue):
breach of a condition in the contract (as fundamental term)
renunciation (refusal to perform)
incapacitation (where a party prevents himself from performing
his contractual obligation: sale of thing to the third party,
financial state)
other repudiatory breach (including anticipatory)

6. Contract Breaches & Consequences
Person in breach of contract term (defaulter) has obligation:
1) to pay damages and
2) to continue perform the contract, unless it is discharged by
injured party (to get free from its contract obligations)
in response to:
o defaulter’s fundamental breach (of condition, not warranty)
o contract repudiation by defaulter
(anticipatory breach)
Breach of contract term is not the same as breach of
representation
(remedy for misrepresentation may be applied)
Contract terms may be express or implied (by statute or by
court):
1) business efficacy test (would there be a business sense without

7. Damages as Remedy for Breach
Damages are primary intended to restore the party who has suffered
loss to the same position they would have been in if the contract had
been performed. Loss mitigation (as far as reasonably possible) shall
be cared for by injured party
2 items for the court to consider:
1)measure of damages (not to profit from a claim)
o expectation interest
(to put into position had the contract been performed)
o reliance interest (to compensate for wasted expenditure caused due
to reliance on contract)
remoteness of damages (only awarded if the loss have been
reasonably foreseeable for both parties at the time contract made)

8. Liquidated Damages & Predicted Loss
Calculation of damages can be complicated, however their
size may be pre-calculated to save time/efforts to further
settlement in case of breach
Liquidated damages are as fixed or ascertainable sum
They must be a genuine pre-estimate of loss and may not
serve as punishment (not a penalty clause)
Clause on damages of punitive nature shall not be
enforceable

9. Other Common Law Remedies
Action for price is an action by one party
(who performed the contract) to recover the sum due from
the other party (that has breached it)
Quantum meruit (“how much is it worth”)
is a restitutory award to measure the value of the work
that has been completed
may be sought when one party has already performed
part of the contract for the moment of its redudiation by
the other
is available as an alternative to damages

10. Equitable Remedies
Specific performance - order to perform contract, enforcing
where damages are inadequate compensation and
where the actual consideration has passed
Injunction – to enforce restraints agreed in contracts
“Freezing order” – to restrict defendant dealing with assets (if
the claimant can convince the court that he has a good case
and that there is a danger of the defendant’s assets being
exported or dissipated)
Rescission – right of an injured party to treat the contract as
never having existed
(not only remedy for breach)

11. Lawful Excuse as Remedies Defence
Lawful excuse not to perform contractual obligations:
performance is impossible due to unforseeable event
performance has been tendered, but it was rejected
the other party has made it impossible for him to perform
the contract has been discharged through frustration
the parties have by agreement permitted non-performance
As far as there is no contract breach (due to the lawful excuse)
there is no reason to have the remedies applied

12. Exemption under Common Law
Rules
Exclusion clause is a term that seeks to exclude a party’s
liability for breach of contract
Exemption validity test (common law rules):
1 it must be incorporated into the contract
o by signature (unless effect of the term was misrepresented)
o by notice (not later that the contract is made)
o by previous parties dealings (consistent course of dealings)
1 its wording must cover the loss
(courts interpret the words narrowly against the
interests of the person seeking to rely on the clause)

13. Exemption under UK Statutory Rules
After passing common law test exemption clause should comply
with UK statutory rules contained in:
Unfair Contract Terms Act (UCTA 1977)
Unfair Terms in Consumer Contract Regulations (UTCCR 1999)
UCTA 1977: exempting liability due to negligence
for loss is void (unless be recognised as reasonable)
– in any case is void (where death or personal injury caused)
• UTCCR 1999: exempting consumer’s liability for breach of
– term that is not expressed in plain, intelligible language
– ther which (contrary to the requirements of the good faith) causes
significant imbalance in the parties’ rights and obligations and this
is to the detriment of the consumer