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
• Injunction.
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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Business Law – Now!  
Part I317
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.
26.1.3 Injunction
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.


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