Remedies available to an innocent party when there is a breach of contract are 1) Rescission of contract; 2) Damages; 3) Specific performance 4) Injunction 5) Quantum Meriut but for the purpose of answering the question, this slides covers on rescissions of contract and damages.

1. REMEDIES
Normaliza binti Mat Isa
2011675254
LAW 087

2. Question
Briefly explain any two (2)
remedies available to
innocent party when there
is a breach of contract.

3. REMEDIES
Rescission of
Contract
Damages
Specific
Performances
Injuction
Quantum
Meruit

4. Rescission of Contract
Section 40 of CA
When a party to a contract has refused to perform, or
disabled himself from performing, his promisee in its
entirety, the promisee may put an end to the contract, unless
he has signified, by words or conduct, is acquescence in its
continuance.
If a party breaches his promise under
a contract, the party not in breach
has the right to rescind or terminate
the contract.

5. Section 65 of CA
• When a person at whose option a contract is
voidable rescinds it, the other party thereto need
not perform any promise therein contained in which
he is promisor. The party rescinding a voidable
contract shall, if he has received any benefit
thereunder from another party to such
contract, restore the benefit, so far as may be, to
the person from whom it was received.
If the party not in default chose
to rescind the contract, any
benefit which he has received
from the defaulted party must
be restored.

6. Illustration (c) to Section 66 of CA
Sing for 2 night in every
week
Pay RM 100 for each
night
On the 6th night of performance
A is absent
AB
B rescinds
the
contract
B must pay for
the five nights
on which she
had sung.

7. Muralidhar Chatterjee v. International
Film Co. Ltd
If a party had wrongfully refused to perform his part of
the contract
The party not in default had rightly rescinded the
contract under Section 40 of Contract Act
The party not in default is bound under Section 65 of
Contract Act to restore to the party in default any
benefit received from him under the contract

8. Damages
A person who rightfully rescinds a
contract entitled to compensation
for any damage which he has
sustained through the non-
fulfilment of the contract.
Section 76 of CA explain that the
party rightfully rescinding
contract entitled to
compensation.

9. Sing for 2 night in every
week
Pay RM 100 for each
night
On the 6th night or performance
A is absent
AB
B rescinds
the
contract
Illustration to Section 76 of CA
B is entitled to claim
compensation for the
damage which he has
sustained through the non-
fulfilment of the contract.

10. Categories
of
Damages
Substantial
NominalExemplary

11. Substantial Damages
Substantial damages is pecuniary
compensation intended to put
the plaintiff in the position he
would have enjoyed, had the
contract been performed.

12. Nominal Damages
Nominal damages consists of
small token awarded when the
plaintiff has proved the breach of
contractual right but suffered no
actual loss.

13. Exemplary Damages
Exemplary damages consists of a sum awarded
which is far greater than the actual pecuniary
loss suffered by the plaintiff.
Acts as the reminder to the defendants and
public not to breach any contract in the future.

14. Types of Damages
Unliquidated
Damages –
Section 74 (1) of
CA
Arising naturally
Special damages
for any special
loss sustained
Liquidated
Damages– Section
75 of CA

15. Hadley v. Baxindale
Two parties have made a contract, which one of them has
broken, the damages which the other party ought to receive from
the party who has broken the contract should be considered either;
arising naturally, that is according to the usual course of things from
such breach of contract itself (damages arising naturally);
such as may reasonable be supposed to have been in the contemplation
of both parties at the time they made the contract as the probable result
of the breach of contract (special damages for any special loss sustained).

16. Illustration (f) to Section 74 of CA
Damages arising naturally is according to usual course of
things resulting from the breach.
• A contracts to repair B’s house in a
certain manner, and receives
payment in advance.
• A repairs the house, but not
according to contract.
• B is entitled to recover from A the
cost of making the repairs conform
to the contract.

17. Special damages for any special loss
sustained
1. It is granted whenever the plaintiff suffered some special
loss or loss of profit due to the breach of contract by the
defendant.
2. For the special damages, the plaintiff must prove to court
that the other party; defendant knew at the same time of
making the contract, special loss is likely to result from the
breach.
3. If the plaintiff failed to prove that the defendant could
foresee the loss at the time of making the contract, then
the plaintiff could not claim for this special damages.

18. Tham Cheow Toh v. Associated Metal
Smelters Ltd.
The defendant agreed to sell a metal melting furnace to the plaintiff.
Defendant promised that the furnace would have a temperature
of not lower than 2,6000F. This specification was not fulfilled.
The held stated that the defendant knew the requirement to
deliver a furnace capable of producing the specified temperature.
Therefore, the defendant were liable to pay for certain loss of profit
suffered by the plaintiff.

19. Victoria Laundry v. Newman
Victoria, launderers and dyers require another boiler to expand their dyeing
contracts. Newman agreed to sell Victoria Laundry a second-hand boiler and
to deliver on 5th June. However, the boiler was not delivered until 8th
November.
The loss of profit on laundry
business which would have
been earned if the boiler had
been delivered on time
The loss of profits on certain
dyeing contract from the
Ministry of Supply.

20. Held of the case:
• Laundry profits were recoverable
as Newman must have foreseen
their loss if there was delay.
1st claim
• Loss of profits on certain dyeing contract from the
Ministry of Supply could not have been foreseen
was not recoverable.
• This is because, Newman are not aware that
Victoria Laundry is expecting a contract from the
Ministry of Supply.
2nd claim

21. Liquidated Damages
When a contract has been broken, if a sum
is named in the contract as the amount to
be paid in case of such breach, or if the
contract contains any other stipulation by
way of penalty, the party complaining of the
breach is entitled, whether or not actual
damage or loss is proved to have been
caused thereby, to receive from the party
who has broken the contract reasonable
compensation not exceeding the amount so
named or, as the case may be, the penalty
stipulated for.
Section 75 of CA
Scholarship agreement.
• This is were the amount of
damages is stipulated or fixed by
the parties under the contract.
• If there is a breach of contract, the
party at fault must pay damages up
to the amount stipulated in the
contract.
• Such stipulated amount is the
maximum limit of compensation.

22. Conclusion
Two remedies available to an innocent party when there is a breach
of contract are 1) rescission of contract; 2) Damages
Rescission of Contract
If a party breaches his
promise under a
contract, the party not
in breach has the right
to rescind or
terminate the
contract.
Damages
1. 3 categories:
substantial, nominal, exem
plary.
2. 2 types of damages:
unliquidated (arising
naturally & special
damages for any special
loss) and liquidated
damages .