1.

In relation to the law of contract, explain the various equitable remedies

available for breach of contract. Cite relevant case law. [25]

Every breach of contract will give the injured party the common law right to recover
damages. Other remedies, such as specific performance, cancellation and restitution
and injunction, may be granted at the discretion of the court as part of its equitable
jurisdiction. It is against this background that this discussion seeks to explain these
and other various remedies available for breach of contract. Examples will be cited
as the essay progresses and where relevant, Case laws will be used to support the
discussion.

In the business world it is quite common for the parties to agree in advance the
damages that will be payable in the event of a breach of contract. These are known
as liquidated damages. If there is no prior agreement as to the sum to be paid, the
amount of damages is said to be liquidated (Keltner and Burke1985).When a breach
of contract happens or when a breach of contract is alleged, one or both of the
parties may wish to have the contract enforced on its terms, or may try to recover
any financial harm caused by the alleged breach. No matter what avenue is chosen
to remedy the breach of contract, the non- breaching party will most likely be entitled
to some kind of remedy under the law unlike the breaching party which will have to
face negative consequences.

The remedy that is most often used for a breach of contract is the remedy of
damages which is payment in one form or another, made by the breaching party to
the non- breaching party (Madhuku 2010). Damages can be awarded to the innocent
party if a court upholds that a contract has been breached. Damages will be used to
compensate the innocent party for their loss due to the breach. These damages are
usually remuneration that will reflect the loss. For example if an employer dismissed
an employee unfairly then the employee could claim damages for loss of earnings
under the breach of contract. There are many kinds of damages and damages may
be very specific to the kind of breach that has occurred. Some of the types of
damages may include compensatory damages.

Compensatory damages aim to put the non- breaching party in the position that
they had been if the breach had not occurred. A case of Maris v Commercial General
Agency Ltd 1922 TPD 440, explains the concept. The facts of the matter were that
(Seed merchant) supplied seed other than the stipulated contract. The ruling
awarded to Marais damages based on the differential between the value of the
warranted crop and the actual crop. The purpose of the compensatory damages
arising from the breach of contract is to put the injured party into the position he
would have occupied had the contract been properly performed (Harris et al 2002).

Punitive damages which are another form of damages, are payments that the
breaching party must make, above and beyond the point that would fully compensate
the non breaching party. Punitive damages are meant to punish wrongful party for
particularly wrong acts, and are rarely awarded in a business contract setting
(Denemark 2002).The third type of damages is the Nominal damages and are token
damages awarded when a breach occurred, but though no actual money loss to the
non-breaching party was proven. The last type is liquidated damages. Liquidated
damages are specific damages that were previously identified by the parties in the
contract itself, in the event that the contract is breached. Liquidated damages should
be reasonable estimate of actual damages that might result from the breach (Harris
et al 2002).

Cancellation and Restitution is a remedy that can be used when there is a breach
of contract. A nonbreaching party may cancel the contract and sue for restitution if
the nonbreaching party has given a benefit to the breaching party (Denemark
2002). Restitution as a contract remedy means that the non- breaching party is put
back in the position it was in prior to the breach, while the cancellation of the contract
voids the contract and relieves all parties of any obligation under the agreement.
This was the case for Hoets v Wolf 1927 CPD. The facts of the case were that the
architect drew up plans for a house which exceeded the maximum amount specified
by his client, who mean while employed and paid a quantity surveyor to take out
quantities. The ruling of the court was that the client was entitled to cancel the
contract and receive damages equivalent to the surveyors fees. The principle in this
matter is to simply restore the injured party to the position he occupied prior to
contracting. According to Ayres and Madison (1999) the law of restitution may
provide a claimant with a remedy in situations where the defendant has obtained an
unjust benefit. The requirement to repay money does not arise because of a breach
of a legal duty, such as a breach of contract or a tort, but because the defendant has
been unjustly enriched. The liability is said to be quasi-contractual as if from a
contract although in reality there is no liability in contract.

The other consequence to the breaching party that can be used when there is a
breach of contract is specific performance. Specific performance is an equitable
remedy. If damages are inadequate as a legal remedy, the non breaching party may
seek an alternative called specific performance. Specific performance is best
described as the breaching partys court ordered performance of duty under contract.
Specific performance may be used as a remedy for a breach of contract if the
subject matter is of the agreement is rare or unique and damages would not suffice
to place the non- breaching party in as good position as they would have been had
the breach not occurred. This was in the case of Farmers Cooperative society (Reg)
v Berry 1912 AD343. The facts of the matter were that Berry obligated as a member
of Farmers Cooperation Society was to deliver his whole crop to the society, never
the less refused to deliver 1200 bags of the mealies as agreed. Consequently the
society sued for specific performance in order for the society to also fulfil their own
contractual obligations to deliver to various merchants. The court ruled in favour of
the society and a grant of specific performance because basically every party to a
binding agreement whose ready to carry own obligation under it, has a right to
demand from other party, so far it is possible a specific performance of his
undertaking in terms of the contract. According to Ayres and Madison (1999) a
decree of specific performance is an order of the court requiring the party in breach
to carry out his contractual obligations. Failure to comply with the directions of the
court lays the defendant open to the imposition of penalties for contempt of court. An
order for specific performance will not be made if damages would be an adequate
remedy.
Another equitable remedy is injunction, which is a remedy that prohibits a party
from a particular act. Specific performance and injunctions remedies are similar, but
the key difference is that the specific performance orders a party to do something,
and injunction orders a party not to do something. According to Ayres and Madison
(1999) injunction is an order of the court requiring the party at fault not to break the
contract. Its main use is to enforce the negative promises that can occasionally be
found in employment contracts. The employee may agree, for example, not to work
in a similar capacity for a rival employer during the period of his contract. Injunction
can be issued as a remedy at the conclusion of a lawsuit, such as a breach of a
contract claim. This type of injunction is a permanent injunction. Warner Brothers v
Nelson (1936) The film actress, Bette Davis, had agreed not to work as an actress
for anyone else during the period of her contract with Warner Bros. In breach of this
agreement, she left the USA and entered into a contract with a third party in the UK.
The court held that Warner Bros were entitled to an injunction to prevent the star
from breaking the negative provision in the contract. It should be noted that an
injunction cannot be used as a back-door method of enforcing a contract of
employment for which specific performance is not available. Warner Bros could
prevent Miss Davis from working as an actress for anyone else. They could not have
obtained a decree of specific performance to force her to return to their studio.

Rescissions of the contract is a remedy that allows the non breaching party to
cancel his or her responsibilities under the contract. This remedy might be available
when the contract was based on fraud or a mistake by one or both of the parties. It is
also available if both prefer to cancel the contract and return any money that had
been advanced as party of the contract. In cases of breach of contract rescission is a
remedy that the non-breaching party uses against the breaching party. If a contract is
rescinded, it is set aside and treated as though it had never existed. The court will
seek to restore the parties to the position they would have been if they had never
signed a contract. For example if a seller made false representations about his
goods and the contract was rescinded as a result, the seller would be compelled to
take back the goods and refund the purchase price to the buyer. If the buyer had
incurred additional costs in relation to the contract, such as warehousing costs, then
he would also be entitled to reimbursement of these, to ensure that he was not
adversely impacted by having entered into a contract.

Reformation allows two parties to modify a contract so that it more accurately

reflects what the two parties intend (Craswell1987). This remedy requires that the
contract be valid. It may also be available when one of the parties had a mistaken
understanding about a material term of the contract. Reformation when used in
discussion of contract law, is considered one of the legal remedies available for use
when a breach of a contract or contract problem occurs. In a situation where two or
more parties have entered into a contract and not all of the written contract matches
what the parties understood the agreement to be, a court of law may use reformation
to settle the dispute. During this process, the contract is officially and legally modified
or revised in order to match the actual agreement as understood by the parties in the
original situation. In some cases reformation is required simply because a mistake
was made and some or all the written contract was misunderstood.

Conclusion

Where there is a right there is a remedy, the law of contracts requires parties who
enter into agreements to stick to them. When a contract is breached the innocent
party has three remedies, to terminate, claim damages, or can seek mandatory relief
such as a specific performance or an injunction to hold the breaching party to the
bargain. Termination frees the innocent party of the need to further perform the
contract, and also entitles it to damages but it is also available for serious breaches.
The remedies for the non breaching party acts as a penalty or punishment to the
breaching party. The essay sought to describe when a breach of a contract occur
and what the consequences of a breach of a contract are.
Reference list

Craswell, R., 1987. Contract remedies, renegotiation, and the theory of efficient
breach. S. Cal. L. Rev., 61, p.629.

Leonard Gering (1994) Leading Cases in Insolvency Butterworths

Madhuku L,(2010) An Introduction to Zimbabwean Law, Weaver Press

Harris, D., Campbell, D. and Halson, R., 2002. Remedies in contract and tort.
Cambridge University Press.

Denemark, H.A., 2002. Seeking Greater Fairness When Awarding Multiple Plaintiffs
Punitive Damages for a Single Act by a Defendant. Ohio St. LJ, 63, p.931.

Ayres, I. and Madison, K., 1999. Threatening inefficient performance of injunctions

and contracts. University of Pennsylvania Law Review, 148(1), pp.45-108.