Remedies for breach of contract: damages and their assessment (the expectation measure, causation, remoteness and mitigation), and the equitable remedies of specific performance, injunction, rescission and rectification.

What this dot point is asking

This dot point covers the remedies for breach of contract. The primary remedy is damages, and you need the aim (the expectation measure), and the limiting rules of causation, remoteness (Hadley v Baxendale) and mitigation. You also need the equitable remedies: specific performance, injunction, rescission and rectification, which are discretionary and granted only where damages are inadequate. WJEC tests explanation with cases and application to scenarios.

The answer

Damages: the aim

The loss is usually the loss of bargain, measured by the cost of cure (the cost of putting the position right) or the difference in value, and may include reliance loss (wasted expenditure).

The limiting rules

Damages for non-pecuniary loss (such as distress) are generally not awarded, but are available where a major purpose of the contract was enjoyment, relaxation or peace of mind (Jarvis v Swan Tours, a disappointing holiday).

The equitable remedies

Equitable remedies are discretionary and granted only where damages are inadequate, subject to equitable principles (the claimant must come with "clean hands" and without undue delay):

• Specific performance: an order to perform the contract, used for unique subject matter such as land, but not for personal services or where it would need constant supervision (Co-operative Insurance v Argyll Stores).
• Injunction: an order to stop a breach (prohibitory) or, rarely, to do something (mandatory); used to enforce a valid restraint (Warner Brothers v Nelson).
• Rescission: setting the contract aside to restore the parties to their pre-contract positions, subject to bars.
• Rectification: correcting a written document so that it reflects the true agreement of the parties.

Examples in context

Hadley v Baxendale draws the line on what loss is recoverable. A miller whose mill was stopped because a carrier delayed a broken shaft could not recover his lost profits, because the carrier did not know the mill would stand idle, so the loss was too remote under the second limb; in Victoria Laundry the defendants knew the boiler was needed urgently for a laundry business, so ordinary lost profits were recoverable, but an exceptionally lucrative government contract the defendants knew nothing about was too remote. Mitigation then trims recovery, as British Westinghouse shows, by requiring the claimant to take reasonable steps to reduce the loss. Where money is not enough, equity steps in: land is treated as unique, so specific performance is readily ordered for a sale of land, but Co-operative Insurance v Argyll Stores shows the court will not order a business to keep trading at a loss because that would need constant supervision, and Warner Brothers v Nelson shows an injunction enforcing a reasonable restraint without compelling personal service.

Try this

Q1. What is the aim of damages for breach of contract? [2 marks]

• Cue. To put the claimant in the position they would have been in had the contract been performed (the expectation measure, Robinson v Harman).

Q2. State the two limbs of the remoteness test in Hadley v Baxendale. [2 marks]

• Cue. Losses arising naturally from the breach, and special losses within the reasonable contemplation of the parties when contracting.

Q3. Explain the remedies available for breach of contract. [12 marks]

• What the marker wants. Damages (the expectation measure, causation, remoteness and mitigation) and the discretionary equitable remedies (specific performance, injunction, rescission, rectification), with cases.