Breach Of Contract - Remedial Work

You've performed all your obligations under the contract, but the other party hasn't. What damages are you entitled to? Are there any other remedies which might serve your purposes? Lawrence Graham goes once more 'unto the breach'.

The main remedy for breach of contract is damages - but, generally speaking, these are only to compensate the victim, not punish the party in breach. A court may award substantial damages where an innocent party has suffered a real loss, but it will make only a nominal award where there is no loss at all. So, to be entitled to substantial damages you must first establish that you have suffered a suitable loss, and even then it will be recoverable only if it is not too 'remote' - in other words, if:

the loss was a natural consequence of the breach, the type and extent of which a reasonable person would accept in the circumstances; or,

at the time the contract was entered into the loss was fairly and reasonably contemplated by both parties as the probable result of a breach - this would cover the more unusual types of loss due to special circumstances known to the parties from the start.

Measurement of damages

If a loss fits one of these categories, the court will determine whether the innocent party is entitled to damages, usually with the objective of returning the claimant to the position they would have occupied had the contractual responsibilities been properly performed (in so far as any award of money can do this). This is known as the expectation measure of damages; the loss suffered is derived from the gap between what was 'expected' to happen had the contract been performed satisfactorily and what actually happened when it was not. For instance, if you engaged a sub-contractor who did not complete his part of the project, then the measure of damages would be the cost of another contractor completing the undischarged responsibilities in a reasonable manner.

A second measure of damages is the reliance measure. This is used where loss of expectation is difficult to prove or where the damages assessment would be too speculative. It seeks to restore you to the position you were in before the breach occurred, and so enables you to claim expenditure wasted as a consequence of relying on the contract.

In exceptional cases you may be entitled to a restitutionary award of damages. These arise when the party in breach has been unjustly enriched by their actions; they are then forced to pay you a sum of money in...

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