Solicitors in Leeds

COMMERCIAL DISPUTES ANSWERS TO FREQUENTLY ASKED QUESTIONS – LEEDS SOLICITORS

Remedies for breach of contract

A contract normally specifies when a breach of contract is deemed to have occurred. There are a number of possible remedies that the party who breached the terms can use. The aim of having remedies in place is so that the breaching party can put the injured party back in the position they were in before the breach took place. Where a breach is so minor that it causes no obvious change to the outcome of a term of the contract this will likely be classed as a minor breach and will not need to be remedied. An example of this is using first class post instead of recorded delivery which does not result in a slower delivery service and cannot therefore show any loss has been incurred as a result.

A serious breach is considered going to the very root of the contract and is likely to result in the ending of the contractual relationship or substantial costs needing to be paid by one party.

Remedies for breach of contract

The most typical remedy for a breach of contract is damages. These can either be paid in liquidated or unliquidated form. There are also a number of equitable remedies which can be asserted.

Liquidated Damages

In almost all cases remedies will be awarded in the form of damages. If the damages are liquidated this means that the parties have agreed in advance what the cost of damages will be. Usually damages are calculated on a daily basis for as long as an outstanding amount is due. The most common example is overdrawing on credit where a bank charges £5 for each day overdrawn. The courts will be careful to only award an accurate estimate of costs and not anything considered retributive. Banks have recently been rebuked for charging excessive charges in relation to credit card fees.

Unliquidated Damages

There are damages that have not been calculated by the parties beforehand and has instead been considered a suitable compensation amount by the court.

Where actual loss has not been proved by the relevant party they will only be entitled to a nominal amount.

The court make it clear that unliquidated damages are not intended to be retributive but as there are various ways to calculate loss the sum required may be slightly less or more than expected.

Loss can be calculated in three ways:

1)    Loss of bargain. The aim of this is to put the claimant back in the position they were in before the breach of contract happened. The court will take a number of factors into consideration including whether the damage was too remote to be linked with the defendant’s breach, whether the breach itself was the cause of the loss incurred, and whether the claimant acted appropriately in mitigating the loss once a breach had occurred.

2)  if the claimant has to pay expenses as a result of the defendant’s partial performance the  Defendant will pay the difference.

3)  In the case where the claimant has granted the defendant some kind of consideration or             ‘benefit’ and wants to claim it back as a result of breach of contract they will be able to do               this under the doctrine of Restitution.

Equitable Remedies

These remedies are not automatically granted as of right and are instead awarded by court orders. They are remedies which aim to put the parties into the position they would have been had the contract been fulfilled.

The two types of equitable remedies are: specific performance and injunction.

Specific performance is where a court orders a party to fulfil the obligations under the contract.

Injunctions are orders designed to make defendants either not do something (prohibitory injunctions) or to do something (mandatory injunction). Mandatory injunctions are different from specific performance in the sense that this injunction does not need to follow requirements of the original contract.

If needing to grant an injunction is urgent then the court can order an interlocutory injunction which can preserve the instinctual decision to order an injunction until the trial has taken place