TOPIC 6: REMEDIES

Contract Law
( DIL1232)
Remedies for Breach of Contract

What are the remedies @ What you can claim

in court if the other party did not perform their
responsible part?
1. DAMAGES
2. SPECIFIC PERFORMANCE
3. INJUNCTIONS
Breach of contract occurs when :
1) Any party to the contract fails to perform his part
of the contract.
2) Any party to the contract makes it impossible for
the other party to perform his obligation under
the contract
 6.1 Damages
Damages is a type of remedy for breach of contract by way of
financial compensation.
In awarding damages, the court aims to place the party who has
suffered the loss as a result of breach as nearly as possible in the
same position as he/she would have been in if the breach has not
occurred.
E.g. contractual damages is compensation for a loss suffered as a
result of breach of contract. It is not intended as a punishment for the
party who failed to perform obligations under the contract.
It is possible for a plaintiff to claim against two or more persons
jointly or severally for damages where they are closely connected
breaches of duty.
E.g: from company’s shareholders/directors
Damages is granted to a party as compensation for the damage,
loss or injury he has suffered through breach of contract.
 Section 74 of CA 1950, the party may recover damages for
1 other expenses incurred as a result of the breach for the loss
of profits arising as a result of breach, and for the difference
2
between the price of goods as contracted for and the actual
price the goods were sold as a result of the breach.

Section 75 of CA 1950, the plaintiff is only allowed to recover

3 a reasonable sum for breach of contract. If a sum is stipulated
in the contract, the amount of damages recoverable by the
plaintiff must not exceed the sum stipulated in the contract.
In assessing the measure of damages, the court will
Impossible
not award compensation for any loss which is too / doubtful/
small
remote. amount

The party seeking damages is under the duty to mitigate

the loss

How to estimate loss @ damage from breach of contract?

Explanation to section 74:
In estimating the loss or damage arising from a breach of
contract, the means which existed of remedying the
inconvenience caused by the non-performance of the
contract must be taken into account.
Mitigating the loss is illustrated in the case of:

Kabatasan Timber Extraction Co v Chong Fah Shing [1969] 2 MLJ 6

Facts: The appellants had contracted to supply timber to the respondent
to be delivered at the site of the sawmill to be erected by the respondent.
 The timber was delivered in three lots. The second lot of 198 logs and
four of the 22 logs in the third lot were not delivered to the sawmill
but were dumped at a distance of more than 500 feet from the sawmill.
Held: It is the duty of the respondent to take reasonable steps to mitigate
the damage.
 There was no need for the respondent to have gone to the expense of
buying logs from elsewhere when the logs were lying a few hundred
feet away from the sawmill and all that required was the additional
expense for hauling them up to the sawmill.
 The appropriate damages to be awarded to the counter-claim was the
approximate cost of hauling the logs to the sawmill, amounted to
RM1000.
 Kabatasan Timber Extraction Co v Chong Fah Shing [1969] 2 MLJ 6

Appellant
Lot 1

Responden
t
500ft
away

Lot
2
Undelivere
d&
Lot dumped
3
Held: Respondent need to
mitigate the damage.
All that required was the
additional expense for
hauling the logs to the
sawmill.

The appropriate damages

to be awarded to the 500ft
away
counter-claim was the
approximate cost of hauling
the logs to the sawmill,
amounted to RM1000.
 6.2 Specific Performance
It is a court order requiring the defendant to perform the act promised
in the contract.
The Specific Relief Act 1950 provides for the remedy of specific
performance, which is a discretionary remedy.
Section 20(1)(a) of SRA provides that the court will exercise its
discretion not to decree specific performance where damages will
provide an adequate remedy.
Section 20(1)(c) of SRA provides that specific performance will be
refused where the terms of the contract are uncertain.
Section 21 of SRA provides that the court has a discretion to refuse
specific performance where the granting of it would cause undue
hardship to the defendant.
Specific performance may also be granted in respect of executory
contracts and in cases where actual damage cannot be
ascertained/determine.
Example : A agress to buy and B agrees to sell a
picture and two china vases. A may compell B
specifically to perform the contract, for there is no
standard for ascertaining the actual damage which
would be caused by its non performance.

Example : Mr. Tipu agrees to sell his house to Mr.

Amin, who agrees to purchase. But due to same
reasons, Mr. Tipu commits breach. At the suit of Mr.
Amir, court may ask Mr. Tipu to carry out the
contract.
Specific Performance will also be refused or not be
granted where:
1) Damages are an adequate remedy
2) The terms of the contract are uncertain
3) The contract is in its nature revocable
4) The contract is made by trustees in breach of
their trust
5) The contract is of a personal nature, e.g. contract
to marry.
6.3 Injunctions
Injunction is an order of a court restraining a
person from doing a particular act.
It is made of securing the specific performance of
the negative terms of the contract.
To put it differently, where a party is in breach of
negative term of the contract (i.e. where he is
doing something which he promised not to do ),
the court may, by issuing an injunction, restrain
him from doing what he promised not to do.
Example 1 : A, a singer contracts with B, the manager of a
theatre to sing at his theatre for one year and to abstain from
singing at other theatres during the theatre. She absents
herself, B cannot compel A to sing at his theatre, but he may
sue her for an injunction restraining her from singing at
other theatres.

Example 2 : G agreed to take the whole of his supply of

electricity from a certain company. The agreement was held
to import a negative promise that he would take none from
elsewhere. He was, therefore, restrained by an injunction
from buying electricity from any other company.
 Types of injunctions:

• A court order apply by a party to maintain the status quo of the

subject matter in pending suit.
• eg: Samuel and Harry entered a SPA. However Samuel decides to
Interlocutory breach the contract and has the intention to sell the land to a third
Injunction party.
• in this case, Harry should file an interlocutory injunction in order
to maintain the status quo of the land while pending the court
judgment, in his claim for specific performance.

Mandatory • A court order requiring something to be done.

• eg: injunction requiring the landlord to keep the water supply open
Injunction for his tenants

Prohibitory • Restraining order @ stopping something from being done.

• Eg: to prevent someone using confidential information; prevent a breach
Injunction of restrictive covenant; or prevent the sale of property

 *An injunction is an equitable remedy. Thus, it can be varied @ dissolved if the

court discovers that the application for injunction was made on suppressed facts
@ that the facts upon which the order was granted no longer exist.
 !!! REMINDER:
The only remedy you can apply to court is Damages.
If damage is not enough as remedies, then you may
claim for additional remedies, which are specific
performance and injunctions.
It is not an option to choose either damages or specific
performance or injunctions.
Damages must comes first for remedies.