These remedies can be written into the contract or exist as equitable remedies, and come from the historical idea of equity or fairness.
Remedies available for breach of contract
Damages
Mitigating Loss Rejection Lien |
Resale
Reservation of Title Injunction Specific Performance |
The main remedy available is usually damages, which can be split into two types: Liquidated and unliquidated damages.
Liquidated DamagesIn the business world, it is quite common for parties to agree in advance the amount of damages that will be paid in the event of a breach of contract. These are known as liquidated damages - an example of agreed damages can be seen in most holiday booking confirmation forms.
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Unliquidated DamagesThese are damages awarded for breach of contract where there is no prior agreement between the parties as to the amount of damages to be awarded.
The aim of these is to put the person in the position they would have been in had the contract been carried out correctly. The damages are designed to compensate only for the loss suffered. Courts use the following guidelines when awarding damages:
Courts have to decide how much in way of damages is payable, provided that the loss is not too distant. |
Mitigation of LossOnce a breach of contract has occurred, the innocent party is under a duty to mitigate or lessen their loss as soon as possible. A victim cannot simply stand back and allow their losses to get worse.
Mitigation is the idea that a person will try to regain as much of their loss as possible if the contract is in breach - e.g. a seller whose goods or services have been rejected must attempt to get the best price for them elsewhere. LienThe owner of goods may be able to exercise a lien, which is a right to retain possession of the goods until the contract fee has been paid.
E.g. a person leaves a television set to be repaired. A contract is formed that the set will be repaired and the owner will pay for the services. The repair man now how a lien over the television and can retain possession until the bill is paid. |
RejectionA party who is the victim of a breach of contract may reject the entire contract.
This could happen in circumstances where the contract fails because of inability to deliver on time, delivering the wrong quantity or delivering goods of poor quality. Even if they reject the goods, the injured party will still be allowed to claim damages. |
ResaleResale can be a remedy that occurs when a seller has goods that remain unpaid. Reselling of the goods will be allowed:
This resale will not affect the seller's right to claim damages. |
Reservation of TitleA remedy that is often expressly written into the contract is the right of the seller to reserve title until the contract price has been paid. This will enable the seller to recover the goods in the event of liquidation or bankruptcy of the buyer. The seller's goods therefore are not lost to the buyer's creditors.
InjunctionsAn injunction is an order by the court requiring the party at fault to keep to the contract. Injunctions are mainly used to enforce promises in certain contracts - e.g. an employment contract which restricts employees from working in a similar capacity for rival employers.
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Specific Performance
This is an equitable remedy granted as an alternative to damages in cases in which damages are not considered an adequate solution. Specific performance requires the party in breach of contract to carry out their contractual promises. This remedy might occur when a person is compelled to perform a contractual obligation, such as a DJ who breaches his contract for a personal performance at a nightclub.
Application of Remedies
Time Limits
All breaches of contract will allow parties to claim remedies. These remedies may have to be claimed via a court case. However, the right to claim for breach of contract does not last forever. The Limitation Act 1980 imposes time limits to bringing an action.
Simple contract dispute must be brought within six years of the breach and for disputes for contracts made under deed, such as the sale of land, the time limit is within 12 years of the breach. This time limit can be extended where fraud is involved, or where the person making the claim is suffering from a disability or lacks capacity.
Simple contract dispute must be brought within six years of the breach and for disputes for contracts made under deed, such as the sale of land, the time limit is within 12 years of the breach. This time limit can be extended where fraud is involved, or where the person making the claim is suffering from a disability or lacks capacity.
Courts
In the event of a contractual dispute, it may be necessary to resort to apply to the civil courts to have a claim heard and hopefully be resolved to a satisfactory conclusion.
Small Claims Court
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County Court
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High Court
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