What remedies can the innocent party claim when a contract is broken?
Remedies for breach of contract: the aim and measure of damages (expectation loss, causation, remoteness under Hadley v Baxendale and mitigation), liquidated damages and penalties, and the equitable remedies (specific performance and injunction).
An Eduqas A-Level Law guide to the remedies for breach of contract. Explains the aim and measure of damages, causation, remoteness and mitigation, liquidated damages and the equitable remedies, with worked scenario answers and the AO2 application the paper rewards.
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What this dot point is asking
Eduqas contract requires you to know the remedies for breach: the aim and measure of damages (the expectation measure, causation, remoteness under Hadley v Baxendale and mitigation), liquidated damages and penalties, and the equitable remedies (specific performance and injunction). The skill is to identify the recoverable loss and the right remedy on a scenario (AO2) and to evaluate the remedies (AO3).
The answer
The aim and measure of damages
Causation, remoteness and mitigation
Non-pecuniary loss (distress, disappointment) is generally not recoverable in contract (Addis v Gramophone Co), but it is where a major object of the contract was to provide enjoyment, relaxation or peace of mind (Jarvis v Swan's Tours, a ruined holiday; Farley v Skinner, a surveyor who failed to report aircraft noise).
Agreed damages and the equitable remedies
The parties may agree the damages in advance. A liquidated damages clause that is a genuine pre-estimate of the likely loss (or, on the modern test, protects a legitimate interest without being extravagant) is enforceable; a penalty clause designed to punish is unenforceable (Dunlop Pneumatic Tyre v New Garage; Cavendish Square v Makdessi restated the test as whether the clause is out of all proportion to a legitimate interest). Where damages would be inadequate, the court may grant discretionary equitable remedies: specific performance (granted for unique subject matter, notably land, and the annuity in Beswick v Beswick, but refused for personal service or contracts needing constant supervision); and an injunction (restraining a breach, Warner Brothers v Nelson).
Examples in context
A strong answer applies both limbs of Hadley v Baxendale and the duty to mitigate, then considers the equitable remedies.
Try this
Q1. Explain the rules on remoteness of damage in contract. [10 marks]
- What the marker wants. Precise AO1: the two limbs of Hadley v Baxendale (losses arising naturally, and special losses within the reasonable contemplation of both parties because of known special circumstances), illustrated by Victoria Laundry and The Heron II.
Q2. A buyer contracts to purchase a unique vintage car, but the seller refuses to complete and tries to sell it elsewhere. Advise on the remedy the buyer should seek. [20 marks]
- Cue. An AO2 application: damages may be inadequate because the car is unique, so specific performance (an equitable, discretionary order to complete) is appropriate, as for land and unique goods (Beswick v Beswick by analogy); an injunction could restrain the sale to a third party.
Exam-style practice questions
Practice questions written in the style of WJEC Eduqas exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
Eduqas Component 2 2022 (scenario)20 marksA supplier fails to deliver a part on time, and the buyer claims for both the higher cost of buying a replacement and the loss of an exceptionally lucrative contract the supplier knew nothing about. Advise on the damages recoverable. [a scenario in the style of Component 2; the real paper tariff is 25, AO1 and AO2]Show worked answer →
A mainly AO2 scenario on remoteness and mitigation.
The aim and measure. Damages aim to put the buyer in the position he would have been in had the contract been performed (Robinson v Harman): the expectation measure.
Remoteness (Hadley v Baxendale). The extra cost of a replacement part arises naturally from the breach (the first limb), so it is recoverable. The loss of the exceptionally lucrative contract, of which the supplier knew nothing, is too remote (the second limb requires the special loss to be in the reasonable contemplation of both parties; Victoria Laundry; The Heron II), so it is not recoverable unless the supplier knew of the special circumstances.
Mitigation. The buyer must take reasonable steps to mitigate, for example by buying a replacement (British Westinghouse); he cannot recover losses reasonable mitigation would have avoided.
A top answer applies both limbs of Hadley v Baxendale and the duty to mitigate to the two heads of loss.
Eduqas Component 3 2021 (essay)20 marksAnalyse and evaluate the remedies available for breach of contract. [an essay in the style of Component 3; the real paper tariff is 25, AO1 and AO3]Show worked answer →
A mainly AO3 essay. Explain damages and the equitable remedies, then evaluate them.
The law. The primary remedy is compensatory damages on the expectation measure (Robinson v Harman), limited by causation, remoteness (Hadley v Baxendale) and mitigation (British Westinghouse). Liquidated damages clauses are enforceable if a genuine attempt to estimate loss, but penalties are not (Dunlop; now the legitimate-interest test in Cavendish v Makdessi). The equitable remedies (specific performance, injunction) are discretionary and granted only where damages are inadequate (Beswick v Beswick; not for personal services, contracts requiring supervision).
Evaluation. Strengths: damages are flexible and certain in principle; the equitable remedies fill gaps where money is inadequate (unique goods, land). Weaknesses: the expectation measure can under-compensate (non-financial loss is rarely recoverable, Addis; though exceptions exist, Jarvis v Swan's Tours); remoteness and mitigation can be harsh; and the discretionary nature of equity creates uncertainty.
A top answer explains the remedies and evaluates how well they compensate, then concludes.
Related dot points
- Formation of contract: offer and acceptance (including invitations to treat, the postal rule and revocation), consideration (sufficiency, adequacy and past consideration), and the intention to create legal relations.
An Eduqas A-Level Law guide to the formation of a contract. Explains offer and acceptance, the postal rule, consideration and the intention to create legal relations, with worked scenario answers and the AO2 application the paper rewards.
- The terms of a contract: express and implied terms (including statutory implied terms), the classification of terms (conditions, warranties and innominate terms), and exclusion clauses and their statutory controls.
An Eduqas A-Level Law guide to the terms of a contract. Explains express and implied terms, conditions, warranties and innominate terms, and exclusion clauses and their controls, with worked scenario answers and the AO2 application the paper rewards.
- Vitiating factors: misrepresentation (fraudulent, negligent and innocent), its requirements (a false statement of fact that induces the contract) and remedies (rescission and damages), and an outline of other vitiating factors such as duress and economic duress.
An Eduqas A-Level Law guide to the vitiating factors in contract. Explains misrepresentation (fraudulent, negligent and innocent), its requirements and remedies, and other vitiating factors, with worked scenario answers and the AO2 application the paper rewards.
- Discharge of contract: discharge by performance (and the softening doctrines), by agreement, by breach (actual and anticipatory), and by frustration (impossibility, illegality and radical change, and the consequences under the Law Reform (Frustrated Contracts) Act 1943).
An Eduqas A-Level Law guide to the discharge of a contract. Explains discharge by performance, agreement, breach and frustration, and the consequences of frustration, with worked scenario answers and the AO2 application the paper rewards.
- The evaluation essay (AO3): structuring a balanced argument, analysing strengths and weaknesses, using examples, cases and reform proposals, and reaching a reasoned conclusion.
An Eduqas A-Level Law guide to the evaluation essay (AO3). Explains how to structure a balanced argument, analyse strengths and weaknesses, use examples and reform proposals and reach a conclusion, with worked examples and the technique the Component 3 paper rewards.
Sources & how we know this
- Eduqas A Level Law (A150) specification — WJEC Eduqas (2017)