Remedies for breach of contract 1- rescission of contract 2- damages 3- specific performance

1. Remedies for breach of contract 1- rescission of contract 2- damages 3- specific performance 4-injunction 5-quantum meruit

2. 1- Rescission of contract s 40 When a party to the contract had wrongfully refused to perform his obligation under the contract – the other party can rescind the contract The party terminating the contract – must pay for the benefit received fr the party in breach. [s 65] The party terminating the contract can also claim compensation on account of the breach. [s 76]

3. Hsu Seng v Chai Soi Fua By a deed of assignment dated 28 May 1985, one Hsu Hua, assigned to Hsu Seng all his right, share, interest and liabilities in a written agreement between himself and the defendant. The deed was executed with the def’s consent. Under that agreement Hsu Hua paid a sum of$ 72,000 to the defendant as deposit and/or part payment towards the purchase price of 2 sublots of land.

4. The Def agreed and undertook to complete the construction of the roads within 6 months from the date of the road plan approval and to obtain the document of titles in respect of the 2 sublots within 6 months of the date of completion of the road construction. The Def failed to keep to her side of the bargain and hence this action filed by the plaintiff for the refund of $ 72,000 paid to the defendant and for Damages.

5. Q- can the plf avoid the contract and claim a refund? Held- contract which may be 'put to an end' under s 40 is voidable, and s 65 applies to cases of rescission under s 40. Any person who has received any advantage under the agreement or contract that becomes void is bound to restore it to the person from whom he received it. [s 66] It would be a case of unjust enrichment at the expense of the plaintiff, an innocent party. Therefore the plaintiff should be entitled to a refund of the sum of $ 72,000 paid to the defendant.

6. 2- Damages Ss 74-76 Damages refer to financial compensation recoverable by reason of another's breach of duty Measure of damages s 74 Hadley v Baxendale Hadley, operated a mill. The mill crank shaft broke. It was the only one they had, and without it they could not run their mill. They contracted with the Def to send the shaft to the engineers. The delivery was delayed, and H sued B for lost of profits due to late delivery.

7. Held- the loss of profits here cannot reasonably be considered such a consequence of the breach of contract as could have been fairly and reasonably contemplated by both the parties when they made this contract. The decision in this case was enunciated in s 74(1) Hence, an injured party entitled to: i- damages arising naturally, that is, according to the usual course of things resulting from the Breach; and

8. ii- loss or damage which the parties knew, when they made the contract to be likely to result from the breach of it; Associated Metal Smelters Ltd v Tham Cheow Toh Appl. agreed to sell a metal melting furnace to the Resp. The furnace shall have a temperature not lower than 2,600 F°. The furnace failed to meet the specification. Resp. brought an action against the Appl for breach of condition and claimed Damages including loss of profits.

9. Normally the Appl would not be liable for loss of profits unless it can be proved that at the time of contracting the special object of the furnace had been drawn to the Appl’s attention and they contracted on the basis that they would pay the loss of profits if they failed to deliver as required by the contract. “the party may recover damages which may reasonably be supposed to have been in contemplation of both parties, at the time they made the contract”

10. The court held that based on the facts of the case the Appl knew of the requirement to deliver a furnace of specific character as required by the Resp. and the urgency of delivery. They were liable to pay for certain loss of profit suffered by the resp.

11. iii- but no damages for any remote and indirect loss or damage as a result of the breach.[s 74(2)] Haron bin Mundir v Singapore Amateur Athletic Association One must appreciate that contracts are concerned with commercial matters and that the obligations of the parties involve mainly the fulfilment and enforcement of bargains. Such non pecuniary loss as frustration, injured feelings, mental distress and loss of reputation suffered by a party as a result of a breach are therefore not generally regarded as matters that arose in the natural course of events

12. or were within the contemplation of the contracting parties when they entered into the contract. They are therefore considered remote and generally irrecoverable unless the contract is of the kind that affects his personal interest compensation if the contract is broken. Subramaniam A/L Paramasivam & Ors v Malaysian Airlines System Bhd The plfs’ baggage was re-weighted when they reached Kuala Lumpur airport. It was found to be 60 kg in excess of the permitted weight.

13. They were asked to pay excess baggage charge at the airport.They spent 2 hours in the airport due to this problem. They sued the def. for damages for mental distress, agony, humiliation, loss of reputation and injured feelings Held- the def’s act in reweighing the plfs' luggage and unlawfully imposing the excess baggage charge upon the plfs, and in the process caused the plfs to suffer the non pecuniary loss which they are now claiming –

14. clearly a happening which did not arise from the natural course of things nor within the contemplation of the parties, and was therefore irrecoverable. When the contract terms fix the sum of damages in case of breach of contract, the sum shall be treated as a mode of determining the upper limit of the compensation.

15. Mitigation of loss and damages The party claiming damages must prove that he had taken steps to mitigate the losses. If he neglected to do so, he cannot claim damages for the loss caused by his failure to act. Kabatasan Timber Extraction Co v Chong Fah Shing App had contracted to supply timber to the Resp to be delivered at the site of the sawmill. Some logs were not delivered but were dumped at a distance of more than 500 feet from the sawmill.

16. Because of some problems with the location of the mill, it was determined that a distance of 500 feet from the sawmill was the limit within which the logs should have been delivered to constitute delivery at the site. The breach of contract in this occurred when the Def. had failed to deliver one consignment within 500 feet of the mill, owing to want of space. The contract provides that the measure of damages should be the difference between the agreed price and the prevailing market price to the extent of the

17. amount in short supply plus transport expenses. The law, however, imposes a duty on every person who suffers damages on account of breach of contract to take reasonable steps to mitigate the damage. The Resp. to have gone to the expense and trouble of buying logs from elsewhere. H/ever, it was said that when the logs were lying a few hundred feet away from the sawmill for the mere taking and all that was required was additional expense for hauling them up to the sawmill, wh the

18. Resp did not do, there was a failure of the Resp part to mitigate his losses. Held- the appropriate damages to be awarded in this case should be the approximate cost of hauling the lodge to the sawmill and not the cost of buying timbers from other sources. Types of damages • Substantial damages - pecuniary compensation to put the plf in the position he would have enjoyed had the def performed his contract;

19. b) Nominal damages – small award where the plf had proved breach of contract but suffered no actual loss; and c) Exemplary damages – sum greater than the actual pecuniary loss suffered by the plf. Exceptional circumstances. Also known as punitive damages, combines punishment and the setting of public example. Their purpose is to punish defendants for reprehensible conduct and deter them from engaging in such conduct in the future

20. 3 specific performance Court decree ordering that the contract shall be performed, according to its terms. S 11 of the Specific Relief Act 1950 (SRA) specific performance may be granted by the court when the act to be performed is wholly or partly involving trust. e.g. A holds certain stocks in trust for B. A wrongfully disposes the stock. The law create an obligation on A to restore the stocks to B. B may enforce specific performance on A.

21. S 11(1)(c) SRA provides that the act agreed to be performed must be such that its non-performance would not afford adequate relief. Pamaron Holdings Sdn Bhd vGanda Holdings Bhd The plf and the def entered into a written agreement dated 1/2/1986 by which the plf agreed to sell and the def agreed to purchase 1,108,000 fully paid-up shares of $1 each in a private limited company called Seasian Hotel Sdn Bhd for $845,970.91. The terms provide that the purchase price is to be paid to the plf on 28/2/ 1986 whereupon the plf was obliged to deliver to the def the relevant share

22. certificates together with the relevant memorandum of transfer duly executed by the plf as vendor. Def delayed in making payment. Plf applied for specific performance to order the def to pay the purchase price. Held- this is an example of a contract for the sale of shares that will be enforced by specific performance based on the facts of the case.

23. Dunduft v Albrecht Specific performance was ordered for the performance of an agreement for the sale of railway shares wh were limited in numbers and not always trade in the open market. S 12(2) SRA Where the breach involve immovable property it is presumed that it cannot be adequately compensated in money. h/ever, this can be rebutted.

24. Zaibun Sa Binti Syed Ahmad v Loh Koon Moy & Anor Appl contracted to transfer land to Resp. App. breached the contract. Resp claimed specific performance. Held- the respondents were entitled to specific performance. On appeal the Privy Council affirmed the decision of the Federal Court

25. S 20 contract cannot be specifically enforced: i- money consideration is an adequate relief; ii- contract wh depends on personal qualification and skill of individual; iii- contract requiring supervision of the court such as building contract; iv – contract the terms of wh the court cannot find with reasonable certainty v- contract wh in its nature is revocable; vi- contract made by trustees in breach of trust or in excess of their power;

26. vii- contract by or on behalf of a company in excess of its power; viii- contract the performance of wh involves long term continuous duty extending over a period longer than 3 years; ix- contract of wh a material part of the subject matter has ceased to exist before the contract was made while the parties supposed that its exists. S 21(2) SRA court shall not order specific performance if: i- where the c/stances under wh the contract was made gives the plf unfair advantage over the def.

27. ii- where the performance of the contract would involve some hardship on the def wh he did not Foresee while its non-performance would not involve hardship on the plf. 4 Injunction S 50 SRA – i- temporary injunction - it will continue until specific time or until further order of court; and ii- perpetual injunction – made at the hearing, upon the merit of the case, perpetually enjoined the def. fr asserting a right or fr committing an act, wh contradicts the plf’s rights

28. Where the contract cannot be enforced by specific performance, it also cannot be subjected to Injunction. S 54 SRA – contract of employment cannot be specifically enforced. Technically, it cannot be subjected an injunction. h/ever, when the contract contains affirmative agreement and also negative agreement, the plf can apply for an injunction to stop the def fr violating the negative agreement.

29. e.g. A agreed to sing at B’s hall for 12 months and not to sing elsewhere. B cannot specifically enforced A to sing at his hall. h/ever, B may obtain an injunction to restrain A fr singing at any other place. Similarly, if there is a contract of service with agreement that the employee will not work with other employer w/in a reasonable period and locality – can only restrain from working with other party but not to enforced the employee to work with the employer.

30. 5. Quantum meruit Literally means - as much as he has deserved the plaintiff sues for a quantum meruit or the value of so much as he has done e.g A contractor is contracted to work on a school. The contractor does some work but messes up part of the work (breach of contract). The school suspends the construction work because of the problem. The contractor is entitled to be paid for the services he has already done for the school on the basis of quantum meruit.

31. See [http://quantummeruit.blogspot.com/] See also http://www.aar.com.au/pubs/pdf/const/pap23jun06.pdf