公司法和商法(双语)讲义 第11章Corporate and Business Law Chapter11

公司法和商法（双语）讲义 第11章Corporate and Business Law Chapter 11

11 Discharge, breach of contract and remedies

1 Discharge

Overview

DISCHARGE

Agreement Performance Breach

1.1 A contract can be discharged in a number of ways. The method of discharge may amount to a

breach of contract and hence give rise to a claim for damages. However, there are other methods of

discharging a contract that will not give rise to a breach of contract claim namely discharge by

(a) Agreement

(b) Performance.

1.2 Agreement

(a) Agreement means that both parties agree that the contract be discharged. Some contracts

provide for discharge by agreement for example by expressly stating that the contract can be

discharged by notice.

Alternatively:

(b) The contract can be discharged by a completely new agreement e.g. where one party agrees

to accept a change in the other's performance (a 'variation' agreement). To be binding such

agreements themselves must be supported by consideration.

1.3 Performance

(a) This is the most common way in which a contract is discharged. It is important that

performance occurs as without it there will be a breach of contract. It would also be

inequitable to allow one party to sue another for breach if he himself has not performed the

terms of the contract exactly and completely. This is known as the rule in Cutter v Powell. 公司法和商法（双语）讲义 第11章Corporate and Business Law Chapter 11

(b) Sometimes the rule is Cutter v Powell can act harshly and hence some exceptions to the rule

have developed for example where non-performance has been caused by the other party.

1.4 Breach

(a) Contracts can be discharged by fundamental breaches of contract.

(b) Breach of condition:

(i) Straightforward breach is easy enough to understand. One or both parties are not

complying with the conditions of the contract. Remember the injured party may only

bring the contract to an end if there has been a breach of condition.

(ii) Anticipatory breach is where one party indicates that he does not intend to complete

his part of the contract. The innocent party (the claimant) can sue on notice.

But claimant can elect to ignore the breach, complete his part of the contract and

then sue: White and Carter (Councils) Ltd v McGregor

If the claimant so elects he must complete his part properly or he himself will be liable

for breach.

Actions for anticipatory breach should be started at once otherwise factors may

intervene which mean the contract is automatically discharged (e.g. on outbreak of

war that would render the contract illegal).

2 Remedies

2.1 (a) The remedies for breach of contract you need to be aware of are:

(i) damages

(ii) action for price

(iii) quantum meruit

(iv) specific performance

(v) injunction

(vi) rescission

3 DAMAGES – Available only if the injured party has

completed his contractual obligations

Overview

DAMAGES

公司法和商法（双语）讲义 第11章Corporate and Business Law Chapter 11

Doctrine of Remoteness of Measure of

restitution damages damages

Doctrine of restitution

3.1 Aim is to place the innocent party (or claimant) in the same position as if the contract had been

performed.

3.2 The intention is not punishment, but compensation. This reflects the fact that a breach of

contract claim is on the basis that something should have been done, but wasn’t.

Remoteness of damages

3.3 (a) Damages are awarded to compensate for loss of bargain or to extent of contractual

expectations. Some limit is placed on the nature and scope of loss recoverable.

Rule in Hadley v Baxendale make losses compensatable if:

(i) they arise naturally; and

(ii) they are within the reasonable contemplation of the parties at time of contract.

(b) See also: Victoria Laundry v Newman Industries

Measure of damages

3.4 (a) Assessed with reference to doctrine of restitution.

(b) One can only claim for actual loss suffered. Note however that nominal damages can be

available.

(c) Non financial loss may be recoverable where contract is one for provision of enjoyment or

peace of mind: Jarvis v Swan Tours. Also the courts may award damages for distress and

loss of amenity where the cost of curing a defect is excessive: Ruxley Electronics v Forsyth.

(d) Claimant must take reasonable steps to mitigate loss: Payzu v Sanders.

(e) Penalty clauses in contract will not be upheld. The exception is where the clause is a

genuine pre-estimate of loss: Dunlop v New Garage: Liquidated damages clauses.

4 Action for the price

4.1 Where the breach of contract is non-payment of the price the seller can sue for the price. This is an

action for a specified sum. No question of remoteness will arise and there will be no duty to