Type: Process Essays
Sample donated: Lorena Vega
Last updated: March 21, 2019
Breach of contract is meant failure to keep thepromises or agreements of a contract.Breach of contract is a legal cause ofaction in which a binding agreement is not honored by one or another more ofthe parties.The three most important of remedies available for breach ofcontract includes damages, specific performance and injunction.
Damages mean losses or costs incurred due to anotherwrongful act.Damages are granted to a party as compensation for the damage,loss or injury he or she suffered through the breach of contract.The two mainpurpose of damages are to place the party who has suffered the loss as a resultof breach as nearly as possible in same position as he or she would have beenin if the breach has not occurred and it is not intended as a punishment forthe party who failed to perform obligation under the contract.Damagecan be classified into two categories which are unliquidated and liquidated damages.Whenthe plaintiff is in an action sued for predetermined and inelasic sum of moneythen he or she is claiming for liquidated damages whereas if he or she isseeking to recover such an amount as the court,in its discretion,is at libertyto award then he or she is claiming for an unliquidated damages.
Accordingto the Section 74 of Contract Act states that when a contract have beenbroken,the party who suffers by the breach is entitled to receive, from theparty who has broken the contract, compensation for any loss or damages causedto him.Based on the cases of Kebatasan Timber Extraction Co. v. Chong Fah Sing1969 states that the appellant had contracted to supply the timber torespondent to be delivered at the side of the sawmill to be erected by therespondent. The timber was just delivered in three lots but the second lot of198 logs and 4 of the 2 logs in third were not delivered to sawmill but it weredumped at a distance of more than 500 feet from sawmill.
This cases was heldwhere it is the duty of the respondents who have to take reasonable steps tomitigate the damage.There was no need for the respondent to buy the logs fromelsewhere as the logs were lying a few hundred feet away from sawmill and allthat was required was the additional expenses up to RM 1000 for hauling them upto sawmill..In the recent cases of Heng Hang Khim v Sineo Enterprise Sdn Bhd ,the High Court held where the defendant failed to deliver the vacant possessionof a condominium unit before the 36-month period as stipulated in purchase andsale agreement, the plaintiff was entitled to a refund of sum paid as part ofpurchase payment which was compensation for loss or damage caused by contractbreach.Besidesthat, liquidated damages was according to Section 75 of Contract Act, plaintiffis only allowed to recover a reasonable sum of breach of contract and theamount of the damage recoverable cannot exceed the sum that have beenstipulated in contract.
This may refer to the cases of Hadley v. Baxendale (1854) has stated that the plaintiff, Hadley owned and operate a mill. Hadleyengaged Baxendale who acts as defendant to transport the crankshaft to W.Joyce& Co in order to have a new part created with the same pattern of thebroken part.The mill machinery could not be operated until the new shaft wasdelivered because the defendant did not informed earlier to plaintiff of thisexceptional circumstance.Hence, mill have to remain closed longer than expecteddue to the delayed delivered for an unreasonable time,and the plaintiffs suedto Baxendale for recover the damages.In the recent cases of Johor Coastal Development Sdn Bhd v.
ConstrajayaSdn Bhd 2009, an contract for two parties entered into two sale and purchaseagreements which containing identical terms, where the respondent purchase aland from appellant with an obligation to construct and complete the projectwithin three years from date of agreements, the respondents only paid 12% ofinitial payment but failed to pay the rest of the balance and further abandonedthe project three years after date of agreements.Hence, the appellant end theagreements and forfeit all monies paid by respondents.The respondents was thencommenced this action at High Court to recover the amount forfeited byAppellant on the ground that this was a penalty and it is unenforceable byvirtue of Section 75 of Contract Act.But in the mind of Appellant, he thoughtthat this is an reasonable compensation and argued that both parties had anmutual agreements contracted out of Section 75 of Contract Act. This cases wasthen leaved to the decision of minority that Appellant was entitled to receivethe reasonable compensation from the respondent but not exceeding the amount ofthe sum which had named in agreements because the word in Section 75 ‘whether or not actual damage is proved tohave been caused thereby’ must be a restricted construction.Hence, the partywho claims for damages for breach of contract must be produce reasonablecompensation.Moreover, damages also classified into specific performancewhich is a discretionary remedy under Specific Relief Act 1950 According to theS.20 (1)(a) states that discretion was not to decree specific performance wheredamages will provide an adequate remedy.
S.20(1)(c)states specific performancewill be refused where terms of contract are uncertain.S.21 of SpecificPerformance 1950 stated that court has discretion to refuse where the grantingof it would cause hardship to defendant and the High Court has discretionarypower to award the decree of specific performance.S12(2) of SRA 1950 statedthat it must be granted in respect of agreements relating to land transactionswhere there is presumption that the breach of contract to transfer immovableproperty cannot be adequate relieved by compensation in money.Other than that, damages also includes injunctions.
Aninjunctions is a discretionary court order unlike specific performance. It is acourt order restraining a party from breaking their contract or from committinga wrongful act and will not be awarded if damages are an adequate remedy.Aninjunction may be interlocutory where it freezes the status quo between theparties until the dispute can be heard by court, mandatory is to require aperson to perform some contractual obligation and prohibitory or sometimescalled temporary injunction was preventing the breach of contract. An exampleof mandatory injunction was shown in Neoh Siew Eng & Anor v Too Cheng Kwangwhich the court issued an injunction,ordered the defendant of plaintiff toproperly repair all the communication pipes and comply with all the regulationsof water department so that water supply of Waterworks Department will not beinterrupted. Inthe cases which between XunMing and Anieta was considered as damages. Xun Ming was an interiordecorator.
She contracted with Murugan that she able to re-do the design for hisrestaurant and this work will be completed by the middle of the January of2017. At the middle of December 2016, Xun Ming had not yet begun work but shewas discovered on similar job for Jasolyn’s restaurant.Then,Murugan cancelledthe contract with Xun Ming as he realize that Xun Ming was unable to completethis work by the middle of January.
After that, Murugan asked Anieta to takeover of the work. At the same time, Xun Ming decided by herself to abandon thework on Jasolyn’s restaurant which had in process and in order to undertake thework for Murugan which can earn more money.Murugan was out on vacation but hisworkers allowed Xun Ming and her workers do the interior work.
After three daysafter work, vandals started a fire and destroyed Murugan’s restaurant, causeAnieta and her workers unable to begin work.Due to this scenario, Xun Ming areunable to claim the compensation from Murugan. Next, Xun Ming are started thework without the permission of Murugan. As the S.74 of Contract Act states thatcompensation also can be claimed from the party who broken the contract.
But,Murugan had canceled the contract with Xun Ming before he hired Anieta for theinterior decoration work in his restaurant.Hence,Xun Ming cannot claim thecompensation from Murugan. On the other hand, Anieta has right to claim thecompensation from Murugan because Anieta cannot begun work due to Xun Ming hadstarted the work and the fire had destroyed the restaurant. Anieta had loss herprofits during this period, she supposed to take over of other project fromother parties to earn profit. Hence, Anieta can claim the compensation fromMurugan.Inconclusion, the contract between Xun Ming and Murugan was discharged by breachand the contract between Anita and Murugan is valid.