RAC LAW BLOG™ - Available Remedies for Breach of Contract

  This article focuses on the remedies available in English Courts where a breach of contract occurs. 

A breach of contract occurs when a party fails to fulfill the terms of a contract to which they previously agreed without lawful excuse. 

In order to access the remedies available the affected party must satisfy the following :

• There is a valid existing contract
• Failure of performance of the contract 
• The innocent party has sustained injuries as a result of the breach 

Remedies for Breach of Contract

The primary remedies for breach of contract are: 

1. Damages;
2. Specific Performance;
3. Rescission

1. Damages

Where a contract has been breached, the 'innocent' party ( innocent party meaning the person who has been negatively affected by the breach) has a right to damages as a form of remedy. 
In instances where loss cannot be proved, nominal damages may be claimed. 

The court is particularly interested in seeing that the claimant is compensated for his losses, rather than measuring damages by the amount of gain derived by the defendant.  

Under the umbrella of damages, there are three basic methods of calculating 'loss':

1.  Expectation ( or loss of bargain ) basis; - damages are intended to put the claimant into the position in which he would have been if the contract had been performed. 
2. Reliance - this loss occurs where the claimant has expended money which is then wasted in preparation for the contract.
3. Restitution - this loss occurs where the claimant, in performing his obligations under the contract, has conferred a benefit on the defendant and wishes to reclaim the benefit given.  For example, the claimant has paid in advance for a product and the defendant failed to deliver the goods.

2. Specific Performance

There are instances where the 'innocent' party wants the offending party to still fulfill his obligation of the contract. Where appropriate, the court has the power to order/ compel the defendant / the offending party to honour the contract. This is seen more commonly in real-estate related matters, where the contract involves buying a property, and the purchaser is only interested in that property which was the subject of the contract, the court can order that the sale of the property is completed.  

To explore this further, see the case of :  

Wolverhampton Corp v Emmons [1901] 1KB 515.  This case invovles the acquisition of land. The plaintiff acquired land for an improvement scheme and sold part of it to the defendant, who agreed to demolish houses on it and build new ones. The demolition was carried out and plans for new houses were approved.  The defendant then refused to continue. Romer LJ held that specific performance would be ordered since the defendant's obligations were precisely defined by the plans and damages would be inadequate because the defendant had possession of the site, and the plaintiff could not complete work by employing another contractor. 

Two main features arise from that case, where monetary compensation is not adequate to mend the breach and there is no other alternative to fix the breach but to enforce performance then specific performance would be applicable. 

3. Rescission

This is arguably the most used form of remedy for breach of contract. As a result of a breach the innocent party rescinds or cancels the contract; and the return of the parties to the positions they would have had if the contract had not been made.  

Rescission -vs- Termination

This is clear and distinct from a strict termination of a contract. The main difference between termination and rescission of a contract is that a terminated contract becomes unenforceable commencing from the date of the termination; in contrast, in a rescinded contract, the parties are restored as if there had never been a contract at all. 

In short, once there is a breach of contract the innocent party has a right to terminate the contract and seek the appropriate remedy based on the particular circumstances of his case. 

Next Article:

Now that we are aware of the general remedies available in English Courts for a breach of contract, the next article will focus on void and voidable contracts.