Remedies for Breach of Contract

1. REMEDIES FOR
BREACH OF
CONTRACT
BY:
Liew wei zhean 0331225
Loh mun tong 0323680

2. Remedies available to the innocent party
2
Damages
Specific
Performance
Injunction Quantum Merit
BREACH OF CONTRACT

3. 1.
DAMAGES
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4. Contracts Act 1950 - Section 74 (1)
Compensation for loss or damage caused by breach of contract
Hadley v. Baxendale
Direct loss + Indirect loss
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❏ Arises from the natural
course of events
❏ Consequential damages
❏ Contemplated by the
parties

5. Contracts Act 1950 - Section 74, 75 & 76
A remedy providing money compensation for a civil wrong with the aim
to restore the injured party to the position he would have enjoyed had the
contract been performed as agreed.
▣ Injured party is entitled to damages arising naturally
▣ If the injured party claims for special damages, he must made known
to the other party, at the time of making the contract, that the special
loss is likely to result from the breach (Must not be too remote)5

6. Agnes contracts to repair Becky’s toilet in a certain manner and receives payment in
advance. Agnes repairs the toilet but not according to contract. Becky is entitled to
recover from Agnes the cost of making the repairs conform to the contract.
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Expectation:
contract Reality: work done

7. 7
Breach of contract in construction
▣ When one party fails to perform the complete performance of the
contract conditions and he has no legal excuse for the non-performance.
▣ Innocent party may decide to continue with the contract or treat the
contract as discharged
▣ If the contract is not discharged (innocent party choose to continue or
breach is one that cannot discharge the contract), innocent party may
recover damages (subject to some rules on recoverable monetary loss)

8. 8
A contract provides maintenance works to a building for 2 years at
RM10,000 a month. After 10 months, the sum owing to contractor is
RM50,000.
Option A Option B
example
Keep the
contract alive
End the
contract

9. 9
example
Option a option b
Sues for RM 50,000
Sues for RM 50,000
+
Loss of profits from
remaining months

10. 10
a. Bringing contract to an end (repudiation of
contract)
1. Where one party refuses to continue with his contractual
obligations
▣ Contractor removes all his plants, materials and labour from the site
before completion and show no intention to return to complete the work.

11. 11
2. Where the breach committed by one party goes 'of the root' of
the contract.
▣ Employer repeatedly fails to pay on the interim certificates properly
issued by the Architect.
Brani Readymixed Pte Ltd v. Yee Hong Pte Ltd (1995)
C Norman Peterson Co v. Container Corporation of America (1985)

12. 12
B. Breach which does not discharge a contract
▣ Employer delays in giving the contractor site possession or reasonable
access to the Works
Carr v. JA Berriman Pty Ltd (1953)
▣ Employer fail to issue timely instructions for the execution of Works
Roberts v. Bury Commissioners (1870)

13. 13
B. Breach which does not discharge a contract
▣ Employer fails to nominate specialist sub-contractors in a timely manner.
▣ Ar and QS fails to evaluate claims submitted by the contractor within the
specified time or the employer fails to pay in accordance with the terms
of contract
▣ Disruptions caused by other contractors employed directly by the
Employer.

14. 14
Computation of damages
▣ Actual monetary loss.
▣ Innocent party should be restored to the position he would have been in
had the other party performed his obligation.
▣ Additional damages such as loss of profits and rents will depend on the
rules of remoteness.

15. 15
Remoteness and causation
▣ Party claiming for damages for breach of contract must prove that
damage was caused by breach.
Popular Industries Ltd v Eastern Garment Manufacturing Sdn Bhd (1990)

16. 16
Remoteness and causation
Contracts Act 1950 - Section 74:
Compensation for loss or damage caused by breach of contract
1. When a contract has been broken, the party who suffers by the breach is entitled to
receive, from the party who has broken the contract, compensation for any loss or
damage caused to him thereby, which naturally arose in the usual course of things
from the breach, or which the parties knew, when they made the contract, to be likely
to results from the breach of it

17. 17
Remoteness and causation
Contracts Act 1950 - Section 74:
Compensation for loss or damage caused by breach of contract
1. Such compensation is not to be given for any remote and indirect loss or damage
sustained by reason of the breach

18. 18
Mitigation for damages
▣ Innocent party must take all reasonable steps to mitigate his loss -
DUTY OF MITIGATION
Kabatasan Timber Extraction Co v. Chong Fah Shing [1969]

19. 2.
SPECIFIC PERFORMANCE
EQUITABLE REMEDY
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20. SPECIFIC PERFORMANCE
▣ A court order directing a party to perform the terms of contract. (to do exactly what the
party has promised in contract)
▣ Under Section 11 of the Specific Relief Act,1950
▣ Specific performance is a discretionary remedy. Court will refuse specific performance
where the granting will cause undue hardship to the defendant.
Section 11(1): Specific performance may be granted by the court in the following situations
❏ When the act agreed to be done is in the performance, wholly or partly of a trust
❏ When there is no standard for determining the actual damage caused by the
non-performance of the act agreed to be done
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21. Example:
An art collector promised to sell one piece of art collection as shown to
MR.BLUE and them two make a legal sales contract. However, the collector
then decides that he’d rather keep the piece for now. The collector breaches
his contract with MR.BLUE. The Court decides that the piece of art is truly
priceless and MR.BLUE can’t acquire another comparable piece no matter
how much money the court awards her. Instead the court decides that the
collector should comply with the terms of contract and sell the piece to
MR.BLUE for the price he already agreed in the contract.
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SPECIFIC PERFORMANCE
BuyerSeller

22. 3.
INJUNCTION
EQUITABLE REMEDY
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23. INJUNCTION
❏ court order instructing a defendant not to commit some act.
❏ Interlocutory injunction is granted at the discretion of the court to preserve the status quo
pending the resolution of a legal action..
Type of Injunction
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For Specific Purpose03
● To enter into defendant's premises to search
and seize article with relevenance case
Mandatory Injunction(Must Do)02
● To prevent someone to do something which
he ordinary has no obligation to do
Prohibitory Injunction(Not to do)01
● Prevent someone from doing something
which he ordinary has the right to do

24. 4.
QUANTUM MERUIT
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25. QUANTUM MERUIT
❏ Quantum meruit is a claim for payment for work executed where no
price has been agreed or quantified, and usually a being assessed in a
❏ ‘reasonable sum’,
❏ ‘reasonable remuneration’,
❏ ‘fair market rates’,
❏ ‘fair commercial rates’ or on similar terms.
❏ Quantum meruit means ‘the amount of deserves’ or ‘what the job is
worth’
❏ Found under Section 71 of the Contract Act 1950
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26. QUANTUM MERUIT
Arise under 6 circumstances: -
1. Where the contract is silent on how completed work is to be paid. For example contractor
incurred additional expenses due to a major change in the quantity of the work which
suppose to be carried out and paid but not existing in the contract.
Case law: Parkinson v Commissioners of Works (1949)
The contractor had agreed to carried out certain work on a cost plus profits basis subject
to the total profit recoverable limit. And the commissioners of the work was entitled to
instruct works up to 5 million under the contract but the instruced actual work up to
6.6million, thus exceeding the contract value. The court of appeal found that the
additional work was outside the contract and thus the contractor was entitled to be
paid on a quantum meruit basis, which is beyond the total fixed profit under the
contract. 26

27. QUANTUM MERUIT
2. Where parties to a contract proceed on the mistake basis that there is an
enforceable contract, but later found out that there is no valid contract.
Case Law: Ayer Itam Tin Dredging Malaysia Bhd v YC Chin Enterprise Sdn
Bhd (1994)
The parties are still negotiating and didnt intend to bound until a formal
contract was made. The letter of intent did not form a bound contract at law
but was only to record terms agreed by the parties as a basis for contract
negotiation. As on the question of compensation for the work done prior to the
dispute, the judge held that a claim on a quantum meruit basis for the
preliminary work carried out on the site was successful but was subject to max
limit RM300,000
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28. QUANTUM MERUIT
3.Where one party requested the other for services which are not provided or
governed by any contract.
Case Law: Constain Civil Engineering Ltd v Zanen Dredging & Contracting Co
(1997)
The instruction given did not constitute authorized variations of the subcontract
works because they required the works to be work which are outside the scope
of the subcontract which entitling the subcontractor to payment on a
quantum meruit basis.
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29. QUANTUM MERUIT
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4. Where the contract has been discharged by the operation of the doctrine of
frustration.
Case law: BP EXploration Co ( Libya) v Hunt (No 2) (1982)
BP entered an agreement with Hunt, under which BP would explore and
develop his oil concession in Libya at their own expense. This expenditure
would be recoverable from Hunt’s share of the profits when the field
produced oil. After oil production began, the parties would share both
production and development costs. Oil came on stream in 1967 but in 1971
the Libyan government capture BP’s interest. BP had not received all its initial
expenditure from Hunt’s share, and claimed a just sum under s1 Law Reform
(Frustrated Contracts) Act 1943.
(Change of Government ‘Politic’)

30. QUANTUM MERUIT
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5. Where the contract has been repudiated by the Employer and the Contractor
choose to claim for damages for breach of contract or quantum meruit in restitution
for the work performed.
Case Law: Renard Construction Ltd v Minister of Public Works (1992)
The court held that a claim in quantum meruit following a wrongful
termination should be quantified on reasonable remuneration basis, not
value of work done basis.

31. QUANTUM MERUIT
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6. Where the contract contains an expressed agreement to pay reasonable sum or
on similar term.. For example, Clause 11 - Variation, Clause 11.7 - Additional
expenses or loss and/or expense cause by variation, Clause 24.0 - Loss and Expense.
Case Law: Laserbore Ltd v Morrison Biggs Wall Ltd (1993)
The learned Judge in deciding the meaning of the term ‘fair and reasonable
payments for all works executed’, considered that the cost-plus-profits basis
was wrong principle however sometimes it may produce right result. The
Judge held that in assessing quantum meruit claim the appropriate approach
was to adopt general market rates or fair commercial rate.

32. Q & A

33. What are the 2 limbs mentioned by the case of
hadley V. BAXENDALE?
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34. WHAT ARE THE REMEDIES AVAILABLE TO THE CONTRACTOR IF
ISSUE OF NON-PAYMENT BY EMPLOYER ARISE ?
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▣ The contractor can suspend execution of works until such time payment is made
(Clause 30.7)
▣ The contractor can claim interest on unpaid amount (Clause 30.17)
▣ If non-payment persists, the contractor can terminate his own employment (Clause
26.1(a))
▣ Construction Industry Payment and Adjudication Act (CIPAA)

35. WHAT IS A DIFFERENCES BETWEEN NORMAL
CONTRACT AND QUASI CONTRACT?
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CONTRACT QUASI CONTRACT
A legally enforceable agreement made
between two parties
An unintended contractual relationship
between two parties created and enforced
by the court
BREACH OF CONTRACT UNJUST ENRICHMENT
DAMAGES QUANTUM MERUIT

36. Any legal rule need to be follow when assessing reasonable sum?
Based on guidance is given in the fifth edition of Keating on Construction Contracts, at page
80:
▣ The courts have laid down no rules limiting the way in which a reasonable sum is to
be assessed.
▣ The contractor should be paid at a fair commercial rate for the work done.
▣ Useful evidence in any particular case may include abortive negotiations as to
price, a calculation based on the net cost of labour and materials used
plus a sum for overheads and profit, measurements of work done and
materials supplied, and the opinion of quantity surveyors, experienced
builders or other experts as to a reasonable sum.36

37. Any legal rule need to be follow when assessing reasonable sum?
▣ Case Law: Laserbore Ltd v Morrison Biggs Wall Ltd (1993)
▣ The Judge say that cost-plus-profits basis wrong approach, and the
appropriate approach was to adopt general market rates or fair commercial
rates.
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38. THANK YOU
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