Remedies – Contracts Act 1950

REMEDIES • method by which an injured party enforces a right or corrects a loss. It will depend on the nature of breach and the result will be differ between parties. The remedies available for breach of contract are: 1) RESCISSION • An equitable remedy available at the discretion of the judge. It is available where a contract is voidable as a result of a vitiating factor such as misrepresentation, undue influence or duress. It will not cover damages. Car &Universal Credit v Cadwell Norris had paid ? 10 cash deposit and left another car as security and gave a cheque for ? 65 to Cadwell for Jaguar car purchased. The next day, Caldwell went to cash the cheque and discovered it was fraudulent and the car left as deposit turned out to be stolen. The court held that Mr Caldwell had successfully rescinded the contract. He had taken all steps possible to demonstrate that he no longer wished to be bound by the contract. He should not be prejudiced by the fact that his endeavours failed to locate Norris. 2) RESTITUTION • It is not contractual and does not rely on plaintiff damages (quasi-contract). One party knowingly has received a benefit to which party is not entitled.

An arrangement imposed by judge to rectify an occurrence of unjust enrichment. Sinclair v Brougham The society became insolvent, and the question arose how to divide up assets. By the time of the action, the only live issue was between some of the “B” shareholders and the depositors in the bank, the position of the “A” shareholders and trade creditors having been settled by agreement. The court held that the bank’s actions had been ultra vires and void, and that there was no possibility for the depositors to recover under quasi-contract. 3) DAMAGES It is a legal remedy available for breach of contract. Damages are an award of money to compensate the innocent party. The primary purpose of damages is to place the injured party in the position they would have been in had the contract been performed. • Types of Damages: There are basically four broad categories of damages: ? Compensatory (to cover direct losses and costs). ? Consequential (to cover indirect and foreseeable losses). ? Punitive (to punish and deter wrongdoing). ? Nominal (to recognize wrongdoing when no monetary loss is shown) An award of damages is subject to the application of the rules on causation, remoteness and a duty to mitigate loss. • Provision : Section 74 & 75 CA Heng Hang Khim v Sineo Enterprise Sdn Bhd The court held that where the defendant failed to deliver vacant possession of a condo unit before the 36-month period as stipulated in the S&P agreement. The plaintiff was entitled to a refund of the sum paid which was compensation for loss & damage caused by breach of contract. Selva Kumar a/l Murugiah v Thiagarajah a/l Retnasamy The court held that there is no distinction between liquidated damage and penalties.

In view of section 75 which provides that in every case the court must determine what is the reasonable compensation. Any failure to prove the damages will result in refusal to award such damages. • Remoteness A claimant may only recover losses which may reasonably be considered as arising naturally from the breach or those which may reasonably be supposed to be in the contemplation of the parties at the time the contract was made. Hadley v Baxendale Due to neglect of the Defendant, the crankshaft was returned 7 days late to the plaintiff.

The plaintiff unable to use the mill during this time and claimed for loss of profit. The Defendant argued that he was unaware that the mill would have to be closed during the delay and therefore the loss of profit was too remote. The court held that Hadley would have been entitled to recover lost profits from the five extra days the mill was inoperable. However, the rule should be that the damages were those fairly and reasonably considered to have arisen naturally from the breach itself, or such as may be reasonably supposed to have been in the contemplation of both parties at the time the contract was made. Mitigation of Loss The law imposes a duty upon the person claiming damages to take all reasonable steps to reduce or mitigate their loss. If the plaintiff is able to avoid loss, damages will not be recoverable for the potential loss that the plaintiff may have suffered. Payzu v Sauders The court held that the claimant was not entitled to damages. He was given the opportunity to purchase at the discounted price but rejected this. He was under a duty to take reasonable steps to mitigate his loss. The offer was a reasonable one and one which the claimant could easily have complied with. ) SPECIFIC PERFORMANCE It is a discretionary order granted by the courts directing a person to carry out their obligations under contract. It is not generally used in breach of contract actions unless damages prove to be inadequate. When the court cannot supervise the implementation of contract, it will not generally grant specific performance. Ryan v Mutual Tontine Westminster Chamber Association The lessor agreed to provide porter who would be ‘constantly in attendance’ but the porter also works as a chef. In his absence while working as chef, other person will perform his duties.

The issue was whether tenant could seek an order of specific performance against the porter that he carries out his obligations. The court was not prepared to order specific performance because it would have had to constantly supervise the porter’s attendance. Lamare v Dixon The plaintiff induced the defendant to agree to take a lease of cellars by orally promising they would be made dry. The promise had no effect as a misrepresentation as it related to the future. The court refused the plaintiff specific performance since he had made no attempt to perform his promise.

Cohen v Roche The court refused the specific performance to a buyer of a set of Hepplewhite chairs saying that they were ‘ordinary articles of commerce and of no special value or interest’. The buyer was contracting with a view to resale and for personal use. 5) INJUNCTION • It is a discretionary court order. Unlike specific performance, this is a court order restraining a party from breaking their contract or from committing a wrongful act and will not be awarded if damages are an adequate remedy. An injunction may be: ? Prohibitory – preventing the breach of contract. ? Mandatory – requiring a person to perform some contractual obligation. ? Interlocutory – where it freezes the status quo between the parties until the dispute can be heard by court. Neoh Siew Eng & Anor v Too Chee Kwang (mandatory example) The landlord had cut the water supply. An injunction was granted requiring the landlord to keep all communication pipes in proper repair so that water supply to the premises would not be disconnected.

Broome (Selangor) Rubber Plantations v R H Whitley (prohibitory example) An injunction was granted restraining an employee from entering into employment as a manager or assistant of any plantation in the States of Selangor and Negeri Sembilan other than the estate of his employers until the expiry of his contract of service. This is equivalent to “the specific performance by the court of that negative bargain which the parties have made”. • Mareva Injunction It prevents the defendant removing or disposing any assets in the jurisdiction until the court makes decision.

Mareva Compania Naviera SA v International Bulk Carriers SA, The Mareva. The shipowner hired out their ship (Mareva) to the defendant with half-monthly in advance. The defendant were only able to meet the first two installments, Mareva sued for damages and unpaid hire. They also sought an injunction to stop hirer removing any monies received from the voyage. The issue whether an injunction was obtainable to prevent the removal before judgment. The court held that an injunction was granted to continue until the dispute came to trial to prevent the defendants from disposing any assets. ) ANTON PILLER ORDER May be made available in exceptional circumstances. It is a court order that provides the right to search premises and seize evidence without prior warning. This prevents destruction of relevant evidence, particularly in cases of alleged trademark, copyright or patent infringements. Anton Piller v Manufacturing Processes Ltd The plaintiff was under the belief that one of its agents was supplying confidential information to one of their competitors. However, they are concerned that subpoena would give ample time for the agent to destroy evidence.

The issue was whether the company could obtain an order enabling them to enter the agent’s premises to inspect the documents. The court granted the order as there was strong prima facie case of infringement which could cause damage to applicant and clear evidence that the defendants had incriminating the material in their possession which they could destroy. 7) QUANTUM MERUIT Quantum meruit means “as much as he deserved”. It is the determination of value of the services extended based on the amount of work and the rate of work existing there for similar work, when an agreement or contract is not existing between the parties.

The contract may be discharge by breach but where the contract is for goods & services, there is a new implied contract imposed by law on the party taking benefit that they will pay reasonable amount of quantum. • Can arise where: ? A defendant has prevented a plaintiff from carrying out their contractual duties. ? The parties cannot agree on payment ? The parties agree on payment for the part-performance but not the actual amount. Sumpter v Hedges The claimant agreed to build two houses and was agreed that ? 565 would be payable on completion.

The claimant done a little more than half job and then ran out of money and was unable to complete. Then defendant completed the work himself. The issue was whether the claimant could recover payment for work done. The contract was entire and not divisible. So, the claimant could not recover under it. Furthermore, it is not defendants fault he could not complete the job and so there was no entitlement for quantum meruit. While the defendant obtained the benefit, it did not constitute acceptance of partial performance in this case.