Lecture Overview – Global Homework Experts

LAWS11030 Foundations of
Business Law
Contract Law II
Remedies
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Lecture Overview
A. The Remedy of Rescission
B. Common Law Damages
C. Equitable Remedies
D. Statutory Remedies

A. The Remedy of Rescission
What is Rescission?
• Rescission is an order of the court declaring a
contract to be terminated or unenforceable
– Common law, equity and statutory remedy
• Examples where recession is permitted:
– Complete non-performance: eg Gold Coast Oil Co Pty Ltd v Lee
Properties Ltd
[1885] 1 Qd R 416
– Breach of a condition: eg
Bettini v Gye (1876) 1 QBD 183;
Associated Newspapers v Bancks (1951) 83 CLR 322
– Misrepresentation
– Absence of genuine consent
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When is Rescission Permitted?
• Whether or not the other party is entitled to rescind the
contract will depend upon whether:
1. There was a complete failure to perform or a partial performance
2. Partial performance involves breach of a condition or of a warranty
– comply with some of the terms of the contract but breach one or
more of the other terms
• A party will completely fail to perform if:
– They make no effort to perform their contractual obligations
– Their actual performance is completely different to what they were
required to do under the contract
– Prior to the time for performance they clearly indicate that they will
not be performing their obligations
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B. Common Law Damages
Breach of Contract and Damages
• A breach of contract may allow a party to terminate a contract
if there has been a breach of a condition but the innocent
party may sue for damages if:
1. They do not want to terminate the contract; OR
2. The breach is of a less serious nature and involves a warranty.
• Common law damages are compensatory and aim to put the
innocent party in the position had the contract been performed

Types of Loss or Damages
• Contractual damages related to contract can be
awarded if the breach is due to negligence and such
damages may include:
1. Ordinary damages
• Actual loss
2. Nominal damages
• No loss
3. Exemplary damages
• Penalty or punitive
Liquidated v Unliquidated Damages
• Damages may be:
1. Liquidated
• Agreed to in the contract or be an agreed penalty
2. Unliquidated
• Not specified in the contract
Damages and Remoteness
• Damages cannot be too remote and the party in breach of contract
is liable for two types of damages:
1. Direct losses arising naturally from the breach
2. Indirect losses contemplated by the parties
: Hadley v Baxendale
(1854) 9 Exch 341; Koufos v C Czarnikow Ltd; The Heron II
[1969] 1 AC 350
• Damages are generally not recoverable for disappointment, distress,
injured feelings or mere inconvenience arising from a breach unless
that is what is contracted: see
Baltic Shipping Co v Dillon (1993) 176
CLR 344

Mitigation of Losses
• The law imposes a duty upon a person claiming
damages to take all reasonable steps to mitigate or
minimise the loss caused by the breach of contract:
Pazyu v Saunders [1919] 2 KB 581
• A person who fails to mitigate their loss cannot recover
any part of the loss that is attributable to their failure
• The burden of proof is on the party claiming damages

C. Equitable Remedies
Specific Performance
• Specific performance is an equitable remedy that allows a court to
require a party to perform their obligations under the contract
– Examples: contracts for the sale of land, contracts where the goods are
unique (eg rare art works), contracts for licences not readily available on the
market eg. taxi cabs in
Dougan v Ley (1946) 71 CLR 142
• Specific performance will not be granted where:
1. Damages are an adequate remedy
2. The contract is an employment contract – specific performance
à contract
of slavery
3. The contract would require constant supervision by the court
4. The order is not mutually available – it must be available to both parties
eg. employment contracts

Injunction
• An injunction is an order of the court that prohibits a person from
doing a wrongful act, such as breaching a contract
• If the outcome of an injunction would cause undue hardship or
unfairness the court will choose not to make this order
• An injunction will usually not be ordered if damages are adequate
• Courts have granted an injunction in special circumstances in
employment contracts that involve the provision of unique
services for a specified time:
Lumley v Wagner [1852] De G.M.
and G. 687
à in Australia applied to professional sport: see eg
Buckenara v Hawthorn Football Club [1988] VR 39
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Restitution
• Restitution compels payment to the innocent party where it would be
unjust to allow the other party to retain the benefit of money, goods
or services they have received at the innocent party’s expense
– Based on the equitable principle of unjust enrichment
– A legal remedy imposed independently of the contract
– Usually initiated either because there is no express contract between the
parties or the contract is void/unenforceable
• Restitution is usually awarded where:
1. The defendant has received a benefit
2. That benefit was at the plaintiff’s expense
3. It would be unjust to permit the defendant to retain the benefit
4. There are no defences available to the defendant eg. estoppel, incapacity
or illegality

D. Statutory Remedies
Limitation of Actions
• The Statutes of Limitation in States and Territories limit
the periods during which legal proceedings may be taken
to enforce a right under a contract.
• These statutes do not in general affect the rights of the
parties under the contract but prevent parties suing on
such contracts after the expiration of a certain time
– Simple contracts – six years from the cause of action arising
(three years in Northern Territory)
– Deeds – varies 12 to 15 years after end of contract

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