Contract Law UK - Edited

Breach of Contract: Case scenarios
Introduction
In English law, the main remedies for breach of contract are damages and specific
performance to a lesser extent. The main purpose of damages is compensation, rather than
punitive, and are intended to reinstate the client to the position they would have been had the
contract been performed properly.
Breach of contract means a failure, without a legal excuse, to perform any promise that forms
all or part of the contract1. Breach also involves failure to perform in a manner that meets the
standards of the industry or the requirements of any express warranty or implied warranty. A
breach is material if, as a result of the party’s failure to perform some aspect of the contract,
the other party gets what is substantially different from what the contract specified2.
Nina
Marcus contracted with Nina to renovate three bedrooms in her house for a total price of
£15,000, payable on completion. While Marcus was able to carry out the vast majority of the
work, clearing the rooms of all previous furnishing and decoration, laying new carpets and
painting the walls, he failed to fit a custom-built wardrobe in one bedroom and has not
provided curtains and other soft furnishings in the other two. Nina has paid a rival interior
designer £1,000 to complete the work. She has refused to pay any money to Marcus.
Substantial performance and Quantum meruit
The principle of “substantial performance” potentially constitutes a general exception to

breach of contract. According to Treitel3, the doctrine of substantial performance can only
apply in severable obligation because the claim that there can be a substantial performance of
an entire obligation is self-defeating.
The claim for substantial performance has its origins in the idea that only a minor variation
from terms of the contract cannot entitle the other party o discharge the whole contract but
1 Richard Posner, “Gratuitous Promises in Law and Economics” (1977) 6 Journal of Legal Studies
411 at 412.
2 Triantis Alexander J., and George G. Triantis. “Timing Problems in Contract Breach Decisions.” The Journal of Law
& Economics, vol. 41, no. 1, 1998, pp. 163–208.
3 G.H Treitel, The Law of Contract, 15th Ed. 2015–1, p. 922.
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must rely on the action of damages for breach. This principle was clarified in Dakin v Lee4
and in Hoenig v Isaacs5.
In Dakin v Lee, the contract was for house repair. The work was not done in accordance with
the contract. Specifically, the pillar underpinning half of the contract depth; the window
support pars were 4-inch-thick solid iron, not the contractual 5-inch diameter hollow, and the
bay windows were not cleated at the angles or bolted to caps and to each other. The official
referee determined that the plaintiffs had not performed the contract and therefore could not
claim any payment thereto. The plaintiff appealed, and the Court of Appeal held that there
was a distinction between failing to complete and completing badly, a rule established before
in Sumpter v Hedges6. In this case, the contract had been performed; though badly performed,
the plaintiff was entitled to recover damages, less the deductions to the extent of non-
conformity to contractual requirements.
Similarly, in Hoenig v Isaacs it was discovered that there were defects that would cost £55 to
repair in work done to redecorate a flat for a contract price of £750. It was held that there was
substantial performance, and the plaintiff was entitled to recover the contract price less the
cost of repairs7. The obligations regarding the quantity of work done are severable but
contractual as to the quality is not. Where there is no substantial failure on the quantity of the
obligation, the plaintiff is entitled to recover.
The essence of the doctrine of substantial performance is dependent on the nature of the
contract and its unique circumstances8. The question as to whether there has been substantial
performance is dependent on the assessment of the trial judge9.
Quantum meruit
The doctrine of quantum meruit allows the plaintiff to recover the reasonable sum of price for
goods or services supplied to the defendant.10 This action is available where the plaintiff is
not recompensed for performing his obligations or supplying the goods. In Planché v
4 [1916] 1 KB 566.
5 [1952] 2 All ER 176.
6 [1898] 1 QB 673
7 Wilmot-Smith F, “RECONSIDERING ‘TOTAL’ FAILURE” (2013) 72 The Cambridge Law Journal 414
8 Stannard, John E. “SO WHAT IF TIME IS OF THE ESSENCE?” Singapore Journal of Legal Studies, 2005, pp.
114–136.
9 G. H. L. Fridman, Quantum Meruit, Alberta Law Review VOL. 37(1) 1999.
10 Kovacic-Fleischer, Candace, "A Proposal to Simplify Quantum Meruit Litigation" (2020). Articles in Law
Reviews & Other Academic Journals. 602.
Colburn11 the plaintiff was engaged in to write a book, but midway the defendant abandoned
the project. The plaintiff had commenced research and writing. The Court held that the
plaintiff could recover on a quantum meruit basis for work done.
Application
Marcus undertook substantial performance of contractual obligations with Nina. The

substantial work performed on the three bedrooms only fell short of building a custom
wardrobe in one bedroom, provision of curtains and soft furnishings for two other bedrooms.
When Nina contracts another interior designer, it only took £1,000 to complete the work. This
means that the substantial performance of £14,000 was undertaken by Marcus; hence he is
entitled to recover this sum from Nina.
Olivia
Olivia paid Marcus £10,000 for the conversion of a garage into a suitable art studio. Marcus
agreed to design and install a special roof window to allow in the most possible amount of
light. However, the window was not properly installed; hence there is no amount of light
Olivia desires. It cost her an additional £15,000 to remove the window and reinstall it.
Performance must be precise and exact
As a general rule in classical law of contract, performance must be exact and precise. This
principle has been applied consistently in precedents, for instance, in Re Moore & Co and
Landauer & Co12 the defendant agreed to buy canned fruits packed in cases of 30 tins.
However, when the plaintiff delivered the goods, a bulk of them were packed in cases of 24
cans. The court held that the delivery did not constitute a satisfactory performance, and the
defendants were entitled to reject the consignment in toto.
Similarly, in Arcos Ltd v EA Ronaasen & Son13 the buyer ordered timber to make whose
contract description was ½ inch thick. The supplier supplied a consignment whose
measurements was 9/16 inch thick. Although the delivered consignment would still be fit for
the intended purpose, it was held that the delivery was not a satisfactory performance, and the
buyer was entitled to reject the whole consignment.
11 (1831)
12 [1921] 2 KB 519.
13 [1933] AC 470.
In both precedents, the supplier of goods had not performed satisfactorily as per the terms of
the contract; therefore, the contractual obligations had not been discharged. One of the
reasons suggested for this rule is that the courts consider a strict approach as there may be
cases where the goods were bought for resale, and the exact description could be important
for other buyers down the supply chain.14.
The precedents were, in part, touching on the construction of s 13 of the Sale of Goods Act
1893. This provision has a strict obligation on the supplier to ensure that the goods supplied
to match the description encapsulated in the contract. However, s 15A of the 1979 is a safety
valve provision that tames purchasers from unreasonably rejecting goods that are only
slightly different from the contract description. The House of Lords adopted this provision in
This provision has previously been adopted Reardon Smith Line Ltd v Hansen-Tangen15
where a tanker was built at a different yard to that specified in the contract, but all other
requirements desired by the purchaser were made. The House of Lords rejected the s 13 of
the SGA 1979 analogy, holding that the tanker could be rejected for non-compliance with its
contractual description. This rule appears too technical, and as Lord Wilberforce noted, it was
due for re-examination16. He referred to Re Moore & Co and Landauer & Co, pointing out
the principle that generally, each party is expected to perform to the letter of their agreement.
Application
Olivia contracted Marcus to deliver a window roof set up that would allow in the most
possible light. However, Marcus did not deliver in accordance with this agreement as the roof
window did not allow in as much light as expected. Marcus had failed to discharge to the
precise expectation under the contract. He is thus in breach of his contractual obligation. He
risks a claim of damages amounting to £10,000 being the contractual price and a further
£15,000 being the damages occasioned by the removal of that window and its reinstallation.
The court is likely to award damages against Marcus. Contractual damages are meant to the
innocent party, so far as money can, into the position they would have been had the contract
been performed. This is a trite principle that has been affirmed in several cases, including
Robinson v Harman17 and more recently in Farley v Skinner18. The Court is likely to award
14 H G Beale, W D Bishop, and M P Furmston, Contract, Fifth Edition (2007) at p. 429.

15 [1976] 3 All ER 570.
16 Ibid, p 576.
17 (1848) 1 Exch 850, p 855.
18 [2001] UKHL 49, [76]; [2001] 4 All ER 801, pp 826–27.
Olivia damages totalling £25,000 to reinstate her financial position as though the contract had
been properly performed as anticipated. The sum of £25,000 is the total expenses incurred by
the innocent party, Olivia, owing to a breach of contract by Marcus. Contract damages are
geared to compensation, not punishment. In Ruxley Electronics and Construction Ltd v
Forsyth19 the Court held that ‘It is first necessary to ascertain the loss the plaintiff has
suffered by reason of the breach. If he suffered no loss, as sometimes happens, he could
recover no more than nominal damages. This rule has been affirmed by the Supreme Court in
Morris-Garner v One Step (Support)20, although the Court opened a window for tolerance
where the loss cannot be precisely measured.
Paul
Paul contracted to renovate Paul’s apartment for £20,000, paid upfront. They agreed that if
Marcus finished the work late, there would be a “late completion fee” of £10,000 back to
Paul. Marcus was two days late in completing the renovation.
Time is of the essence
In Union Eagle Ltd v Golden Achievement Ltd21 the Privy Council deliberated on the case for
the sale of a flat. The performance schedule was ‘of the essence’, and under the contract, the
purchase price was to be tendered by 5 p.m. on the specified date. However, it was tendered
at 5.10 p.m. The Privy Council held that this delay entitled the seller to repudiate the contract
and retain any deposit that had been paid.
In the interests of certainty in commercial transactions, the courts strictly enforce what the
parties have agreed upon in the contract.22 This point of view makes it imperative for parties
to be careful when entering into a contract to ensure that they give themselves the flexibility
to cater for unlikely problems that could arise23. The courts often decline to grant relief for
change of circumstances making the contract more onerous, a strict liability rule incentivises
the contracting parties to factor in their contingencies and risks24.
19 [1996] AC 344, p 365; [1995] 3 All ER 268, p 282

20 Ltd [2018] UKSC 20
21 [1997] AC 514; [1997] 2 All ER 215.
22 Schwartz, Alan, and Robert E. Scott. “Contract Theory and the Limits of Contract Law.” The Yale Law Journal, vol.
113, no. 3, 2003, pp. 541–619.
23 Richard Stone, James Devenney, The Modern Law of Contract, Routledge Publishers 12th Ed. at 447
24 Collins Hugh, The Law of Contract, 6th Ed. LexisNexis Butterworths: London, at 293.
Under the common law, time was of the essence unless the parties expressed intentions on the
contrary25. On the other hand, the law of equity took a different approach, that is, time was
not of the essence unless the parties specifically made it so. The equitable rule found its way
into s 41 of the Law of Property Act 1925. This provision adopted the position that under
equity, time is not of the essence, and contractual obligations on time should be interpreted in
line with the doctrines of the common law. Unless parties show a different intention in their
contractual terms, stipulations as to the time of payment are not of the essence of a contract of
sale. In United Scientific Holdings Ltd v Burnley Borough Council26, the House of Lords
refused to be bound by equitable rules and common law prior to 1873, preferring to look at
the nature of the contract itself.
Generally, time will not be considered of the essence unless the contracting parties stipulate
that conditions as to time must be strictly complied with; or the nature of the subject matter of
the contract or the surrounding circumstances show that time should be considered to be of
the essence. Whereas the first limb is straightforward, the second part is unclear as to whether
commercial contracts should always be deemed as falling within this scope. In Bunge
Corp v Tradax SA27, the Court of Appeal and the House of Lords affirmed that in commercial
contracts, stipulations as to time are usually to be treated as of the essence. Similarly, the
Court of Appeal in Behzadi v Shaftesbury Hotels Ltd28 dealt with the land contract. The court
concluded that if the contract contained a specific date for performance, even if the same
were not of the essence, there would be a breach as soon as that date had passed, and the
party not in the breach was entitled to serve notice immediately making time of the essence.
Application
Parties are bound by the terms of their contract.29 In this case, Paul and Marcus agreed on a
“late completion fee” of £10,000 if Marcus did not perform his contractual obligations on
time. This unequivocally means that time was of the essence in the contract, and as soon as
Marcus did not complete the renovation on time, then he was in breach of contract.
Completing the renovation two days amounted to a breach of contractual terms, and Paul is
25Tony Lim (Doyles Construction Lawyers, Australia), Essence of Time in Construction Contracts The
Australasian Journal of Construction Economics and Building [Vol 9, No 2].
26 [1978] AC 904; [1977] 2 All ER 62.
27 [1981] 2 All ER 540.
28 [1992] Ch 1; [1991] 2 All ER 477.
29 Oxford Journal of Legal Studies, Vol 29, No. 4 (2009), pp. 675-704.
entitled to the quantum of damages as agreed by the parties, that is Marcus to pay Paul
£10,000 as per terms of the contract. However, Paul may not demand more than the
contractual amount of "late completion fee" as there is no other form of a material breach of
the contract.
Quentin
Marcus agreed to redesign Quentin's kitchen personally. However, he failed to carry out the
work and instead offered Quentin a full refund. Quentin is adamant that the only thing that
will satisfy him is for Marcus to carry out the work as agreed.
Case for Specific Performance
Remedies for breach of contract are meant to place the disappointed promisee in a good
position they would have been had the promisor performed the contract.30. The law of
contract achieves this through compensation, requiring the breaching party to pay damages to
enable the promisee to purchase substitute performance or replace the gains that would have
flown from the proper performance of the contract.31.
Although the current legal regime guarantees damages to an aggrieved party in contract, the
remedy of specific performance is only available at the discretion of the court. Courts would
rarely enforce a contractual clause that demands for specific performance in the event of a
breach. As stated in Public Water Supply Dist. v. Fowlkes, courts will only grant specific
performance when it is perceived that damages will be inadequate compensation. Specific
performance is deemed an extraordinary remedy, awarded at the courts' discretion. The court
will exercise its sound judicial discretion in granting this remedy. The plaintiff is required to
show good faith and equities of its own position, whereupon the court will weigh the equities
and assess whether a decree of specific performance would work an unconscionable
advantage to the plaintiff or result in an injustice.
Specific performance is arguably the most accurate method to achieve the compensation goal
of contract remedies as the promisee gets the precise performance they purchased32. Specific
30 Alan Schwartz, The Case for Specific Performance The Yale Law Journal, Dec., 1979, Vol. 89, No. 2 (Dec.,
1979), pp. 271-306
31 Charlie Webb, Performance and Compensation: An Analysis of Contract Damages and Contractual
Obligation, Oxford Journal of Legal Studies, Vo. 26 No. 1 (2006), pp. 41-71.
32 Lucas Iliquini-Cinelli &Andrew Hutchison, Constitutionalism, good faith and the doctrine of specific
performance: rights, duties and equitable discretion; in South African Law Journal Vol. 133, No. 1 ( 29 Jan
2016)
performance is not routinely available for a number of reasons; first, the law is committed to
compensation goal and granting specific performance is one way of furthering the exercise of
compensation as a remedy. Secondly, damages may be fully compensatory in the
circumstances, and in that event, expanding the availability of specific performance may open
unnecessary loopholes for aggrieved parties to threaten to compel or actually compel those
who breach contract with specific performance without actually furthering the goal of
compensation. Thirdly, there are concerns of liberty and efficiency that may justify restricting
specific performance, despite its greater accuracy. Specific performance may not make
economic sense since it generates higher transaction costs than the damage remedy or
negatively interferes with the liberty interests of the promisors.33.
Specific performance may not be issued in instances even where the court cannot calculate
damages with even a high degree of certainty. If there are precedents in a class of cases where
there were difficulties in calculating the quantum of damages that corresponds even closely
with the class of cases in which specific performance is granted, then expanding the
availability of specific performance is held as unnecessary.
Where a contract is breached, and the promisee can make a suitable substitution for the
performance breached by the promisor, the promisor is regarded as fully compensated if they
receive an additional amount necessary to procure substitute goods or service, including the
cost of making the additional transaction.
Where the court concludes that specific performance is the appropriate remedy, it would do
so on three grounds. First, in cases where damages would be inadequate.34. Although the
promisee may be entitled to incidental damages, such damages are difficult to quantify. These
incidental damages could be the costs of making the second deal, which generally include
expenses of time rather than cash. As held in Jankowski vs Mazzotta35 breach that causes
anger and frustrations, especially in consumer contexts, are neither available nor recoverable.
Application
33 Lei Chen and Larry A. DiMatteo, Inefficiency of Specific Performance as a Contractual Remedy in Chinese
Courts: An Empirical and Normative Analysis, 40 Northwestern Journal of International Law & Business. 275
(2020).
34 William Bishop. The Choice of Remedy for Breach of Contract, 14 Journal of Legal Studies 299, 302 (1985).
35 7 Mich. App. 483, 486, 152 N.W. 2d 49, 50-51
Marcus fails to work in Quentin's kitchen personally; instead, he offers a full refund.
However, Quentin demands a specific performance of the work. As a general rule, specific
performance is almost always never issued in contracts of personal services.36. The court
would likely shift the burden of proof to Quentin to show that damages in this instance would
not be an adequate remedy. The claim for specific performance in this instance may not
succeed as courts are reluctant to issue what appears to be constraining personal liberty,
whereas monetary remedies would suffice. At best, Quentin may only recover incidental
damages required to look for alternative service to undertake the work in his kitchen.
Conclusion
The main remedy for breach of contract damages, though courts would occasionally award
specific performance or injunctions. The main purpose of damages is to compensate the
aggrieved party and put them in a position they would have been had the contract been
performed properly. The damages are quantified in different methods and formula to capture
lost profits or lost expenditure that arise naturally as a result of a breach of contract.
Consequential damages can generally be recovered.
In other instances, the court may require the defendant to return money or property to prevent
“unjust enrichment”. This can be seen in instances where the courts make a declaration that
there was substantial performance' or there is an entitlement on a quantum meruit basis.
Generally, specific performance will only be issued where damages would be an inadequate
remedy.
36 Jones, Gareth. "Specific Performance of a Contract of Services?" The Cambridge Law Journal 46, no. 1 (1987): 21-
23.
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Breach of Contract: Case scenarios

Substantial performance and Quantum meruit

The principle of “substantial performance” potentially constitutes a general exception to

Marcus undertook substantial performance of contractual obligations with Nina. The

Performance must be precise and exact

14 H G Beale, W D Bishop, and M P Furmston, Contract, Fifth Edition (2007) at p. 429.

Time is of the essence

19 [1996] AC 344, p 365; [1995] 3 All ER 268, p 282

Case for Specific Performance

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