1 1 © oxford university press, 2007. all rights reserved. 9 remedies for breach of contract and...

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© Oxford University Press, 2007. All rights reserved.

9

Remedies for Breach of Contract and Statutory

Implied Terms

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PART A Common Law Remedies 1) Discharge for breach/repudiation of contract

• There are two main types of breaches. One type of breach entitles the innocent party to treat the contract as terminated and is termed repudiation of the contract. This occurs where the other party to the contract breaches a condition (essential term).

• If a condition of the contract is breached the innocent party has an option to either accept the breach and keep the contract alive (on foot) or treat the contract as discharged. In either case the innocent party is entitled to sue for damages for the breach.

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PART A Common Law Remedies cont…2) Remedy of Damages

• General RuleThe general rule for the award of damages is that they are compensatory. An award of damages is a sum of money paid to the innocent party who suffers a breach. Damages are compensatory in the sense that, as far as money can do it, the innocent party is to be put back in the same position as he/she would be in had the breach not occurred: Robinson v Harman

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PART A Common Law Remedies cont…

• Rules Relating to the Award of Damages: Remoteness of DamagesThe rule is often stated that damages must not be too remote. In other words, for damages to be awarded the consequences or loss resulting from the party’s breach must have been reasonably foreseeable. If the loss suffered is not considered to be reasonably foreseeable then it is said that damages are too remote.

It follows that only losses which are reasonable foreseeable will be recovered. Losses that are not reasonable foreseeable are considered to be too remote.

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• Rules Relating to the Award of Damages (cont):

What is a reasonably foreseeable loss?

Losses which arise naturally from the breach and as well as losses in the reasonable contemplation of the parties at the time the breach occurred

See : Hadley v Baxendale

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• Rules Relating to the Award of Damages (cont):Causation of DamagesOnly losses which are caused by the breach are recoverable. Losses which are not caused by the breach are not recoverable. The courts use a but for test to determine causation. In applying the test the courts ask:

But for the breach would the loss have occurred?If the answer is yes then the loss is recoverable as damages.

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PART A Common Law Remedies cont…• Rules Relating to the Award of Damages (cont):

Duty to Mitigate Loss

The law imposes a duty on the innocent party to take all reasonable steps to mitigate (lessen) his/her loss. If the innocent party fails to mitigate his/her loss then the award of damages will be reduced: Payzu v Saunders

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3) Measure/Types of Damages• Ordinary, Nominal and Exemplary Damages

Ordinary – Compensatory

Nominal – Awarded but not significant

Explemplary – Defendant is punished

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4) Penalties and Liquidated Damages

• Penalties are not recoverable.

• Liquidated Damages: Damages that are provided for in the contract.

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PART BStatute Law Remedies: Goods Act and TPA1) Sale of Goods Act – States & Territories

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PART BStatute Law Remedies: Goods Act and TPA cont…2) Trade Practices Act (TPA)

• Remedies for breach of implied terms under Part V of the TPA - TPA ss 75(1) & (3), 75ARemedies for breach of implied terms under the TPAS.75A of the TPA provides that where a corporation supplies goods to a consumer and there has been a breach of the implied terms then the consumer is entitled to rescind the contract and sue for damages. This can be done by serving notice to the seller or returning the goods.

• Breaches of implied terms under TPA treated as breach of contract. Plaintiff entitled to damages and/or rescission

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PART BStatute Law Remedies: Goods Act and TPA cont…

• These Remedies are available for S.52 and S.51 AA, AB and AC Actions under the TPA:

• S. 80 TPA: FOR INJUNCTIONS

• S.87 FOR OTHER ORDERS

• S.82 TPA: ACTION FOR DAMAGES

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Overview Chart

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