Remedies

Question 1

Penalty clauses

Answer 1

Clause will be struck out if seen to penalise one of the parties.

Deemed penalty if it imposes a detriment out of proportion to the obligation of the breach

Party relying on it will have to rely on nromal unliquidated damages.

Any clause that is extravagant, exorbitant, or unconscionable in relation to the legitimate interests of the party

Eg - Loss for delay is £20,000 but contract says that if delay, will pay £40,000. The clause is penalising and disproportionate.

Question 2

Promissory Estoppel

Answer 2

prevents a party from going back on a promise to accept a lesser sum of money where the other party has altered their position as a result of the promise.

aka - detrimental reliance

Question 3

When is restitution available to a party?

Answer 3

Where one party (usually the party in breach) has been unjustly enriched by their wrongdoing, that is, the breach of contract, the law may make an order for restitution to the innocent party.

To take advantage of this, the innocent party is required to show that they have a legitimate interest in preventing the party in breach from retaining the benefit they have received.

Restitution aims to return to the innocent party the gain that the party in breach has made, either in the form of money or property.

Restitution usually applies where other remedies such as specific performance, damages, injunctions, or rescission are seen as inadequate.

Question 4

In cases on non-fraudulent misrepresentation, what must the party who made the misrepresention prove to avoid liability?

Answer 4

In cases of non-fraudulent misrepresentation, the innocent party can recover damages arising from the misrepresentation unless the party who made the misrepresentation can prove that they had reasonable grounds for believing, and did believe, that it was true. The burden of disproving negligence is, therefore, on the person who made the misrepresentation.

Question 5

In what circumstances is specific performance NOT available for a breach of contract

Answer 5

For a contract for services AND where damages would be adequate

contract to provide personal services is not specifically enforceable: you cannot compel someone to work for you.

A court will not order one party to work for another because of the difficulty of enforcement. Another requirement for specific performance is that enforcement must be feasible. Enforcing a services contract generally would create complicated and time-consuming supervision problems, which the courts are reluctant to undertake. Another reason (perhaps less relevant in this case) is that the courts are reluctant to enforce a contract where personal relationships are involved. A further reason why specific performance is not available in this case is that damages would be an adequate remedy. The services to be performed by the friend were not unique or capable of being performed solely by her. The woman can be adequately compensated by recovering the additional cost of having someone else perform the required work.

Question 6

What is the test for remoteness of loss for breach of contract?

Answer 6

To be recoverable the loss must be:

1. Fairly and reasonable considered to arise naturally from the breach; AND
2. Be in the reasonable contemplation of both parties to the contract (at the time the contract was entered into) as a probable result of the breach

Question 7

What does a defendant need to establish to avoid liability for damages for misrepresentation?

Answer 7

The Defendant needs to prove that they had reasonable grounds for believing, and did believe, that the statement was true.

In those circs the misrepresentation would be innocent rather than negligent.

No damages are available for innocent misrep.

NB - rescission still possible unless damages in lieu of rescission more approp.