MBA 600: Legal and Ethical Environment for Business
Read and summarize chapter 25 of Biz Law in at least 300 words.
25.1 Award of Damages
The law on remedies for breach of contract is contained in both the common law and under Statute
to provide the particular remedy of damages and determining the award of damages. Irrespective of
whether the plaintiff seeks some remedy or redress under the common law, or any of the jurisdictions
company protection, and trade legislation it depends on whether the contract is regulated under the
common law or under statute. Any claim that involves a breach of contract will generally be dealt with
under the rules of common law for a breach of either a condition, warranty or an act of repudiation.
If the innocent party is to be awarded damages as well as a right to terminate the contract is normally
dependant on the serious of the breach. Also, in respect to claims involving vitiating factors, such as
misrepresentation, duress and undue influence the common law will apply in this instance and the normal
remedy is the equitable remedy of rescission. In respect to contracts that involve the sale of goods or
services they are normally regulated under statute, and they will provide a remedy under the relevant
statute, based on the type of contract and the nature of the dispute, the parties to the dispute and the
nature of the dispute. By looking at these three factors it will be determined whether the contract will be
regulated under any provisions in respect to trade and fair trade, sales of goods or consumer protection
legislation in providing a remedy to the injured or innocent party under the contract.
25.2 Remedy of Damages
In respect to remedies for breach of contract, the general rule is that damages are compensatory. An
award of damages is a sum of money that is paid to the innocent party who has suffered a loss as a direct
consequence of a breach. Damages are compensatory in that as far as is possible, the money awarded
seeks or aims to put the innocent party in the same position that they would have been if the breach
had not occurred and is fundamentally main aim or objective of an award of damages.
In contrast to the equitable remedy of rescission, damages are assessed and awarded at the time of the
actual breach and do not provide any form of compensation for the services that have been consumed
or used. Therefore, it is in this sense that damages are viewed as looking to the future because what they
are aiming to do or want to actually achieve by an award of damages is to attempt to compensate the
innocent party with a sum of money for the loss of the bargain under the contract that was entered into
with the other defaulting party and must be reasonable and not too remote (remoteness of damage).
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Read and summarize chapter 26 of Biz Law in at least 300 words.
26.1 Equitable Remedies
There are two main equitable remedies for breach of contract:
• Specific Performance; and
Unlike the common law remedies which lie as of right to the injured party, both of these remedies are
discretionary; and the court is not obliged to award them even where breach is established. Equitable
damages may also be available in some specific cases.
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Types of Remedies
26.1.2 Specific Performance
Specific performance is an order directing the breaching party to perform the contract in the way specified
by the court. It will only be ordered if damages will not provide adequate compensation and will not be
awarded in relation to contracts of personal service as the courts cannot determine whether the agreed
promise had been properly performed, or any other situation where the contract would require constant
supervision by the court. Specific performance is also not available where a contract has actually come
to an end but where there were obligations under the contract that should have been performed during
the term of the contract. In cases where common law damages are not an adequate remedy, especially
in respect to contracts of land and contracts where the subject matter is valuable and unique, such as
a rare piece of artwork, then the equitable remedy of specific performance would be the more suitable
remedy as the Court holds that damages would be inadequate compensation in this situation.
An injunction is based on equity and is a discretionary court order which has the power to restrain
a person from doing a certain act such as breaching a contract and consist of a number of types of
injunction. An injunction is a direction to a party not to do something, such as to not to persist with
a contractual breach. In this context, an injunction is an order that restrains, that is, prohibits a party
from breaching its contractual obligations and duties.
An injunction is not given in all situations, and is not given where, for example, the plaintiff has been
guilty of delay, or the plaintiff is in breach of his or her legal obligations under the valid and legally
enforceable contract. Sometimes, when a court does grant an Injunction, it is often criticized for having
indirectly forced the party who is breaching the contract to specifically perform the contract even though
the court had made no order with respect to specific performance.
However, where damages or specific performance is not an appropriate remedy, the court will grant an
injunction and it may be:
• Prohibitory – preventing the contract from being actually breached;
• Mandatory – requiring the person who attempted to breach the contract to perform some
contractual obligation under the contract;
• Interlocutory – where it freezes or puts a ‘temporary hold’ on the status quo between the parties
until the dispute can be heard by the Court.