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5 Remedies for breach or non-performance - Coggle Diagram
5 Remedies for breach or non-performance
Performance
primary right in civil law
§241
right to performance arises from concluded contract
Art.1217
party against whom a contractual obligation wasn't performed may seek specific enforcement
Art.1221
creditor of obligation may, after formal notice, seek performance unless its not possible or cost of performance for debtor in good faith is disproportionate
No specific right to claim performance but recognized that with conclusion of contract parties have right to obtain performance
Art.3:296
procedural basis for performance claim
if there was breach, claimant would first contact debtor to seek performance
if debtor refuses, claimant may seek a court order to command performance ( could be performance by third party on expense of debtor)
still refuse, bailiff can seize property or debtor or impose a penalty
Specific Performance
arises from equity
discretion of courts
Available when damages are inadequate remedy
s.52 SoGA 1979
not possible to use damages to obtain substitute performance elsewhere because unique goods
Contracts relating to land
all land considered unique
Quantification of damages difficult
Cooperative Insurance Society v Argyll Stores Holding 1998
Impossibility
Absolute Impossibility
no one could perform
not available for generic goods
can arise for specific/unique goods
Relative Impossibility
not absolute impossible but as good reasons to regard performance as good as impossible
Practical Impossibility
performance remains possible but would cause unreasonable efforts/expenses
§275(2)
Art.1221
Moral Impossibility
Performance possible but would be unreasonable because it bears a danger to someone
Legal Impossibility
after conclusion it becomes illegal to perform
Personal Services
nature of contract closely associated with personal capacity/characteristics of contracting party
unreasonable to enforce because it infringes on persons liberty
Frustration
Parradine v Jane
failure to perform a contract leads to claim for damages
Taylor v Caldwell 1863
Excuse non-Performance based on frustration
covers impossibility and unforeseen circumstances (hardship)
brings contract to an end
Termination
brings an end to obligations arising from contract
Neither party must accept/demand performance
obligation to perform replaces by paying monetary compensation
leads to secondary remedial obligation to pay damages
Photo Production Ltd v Securicor Transport Ltd 1980
When?
depends on the term that was breached
when breached term is essential condition of contract: termination
when term is classified as warranty: claim for damages
Intermediate Terms: look to consequences of breach, sufficently serious
Condition
an essential term of the contract
Honkong Fir Shipping Co v Kawasaki Kissen Kaisha 1962
first place to look if term is a condition is contract itself
SoGA 1979 s.14
standard conditions laid down: implied conditions
Warranties
less important
not essential core of contract
damages will be sufficient to compensate for breach
NO TERMINATION
Intermediate Terms
term that may be broken in different ways
between warranty and condition
seriousness of breach different depending on circumstances
Honkong Fir Shipping Co v Kawasaki Kissen Kaisha 1962
first time recognized that intermediate terms exist 'more complex character'
§323
(1)creditor can terminate contract if late or defective performance in bilateral contract if he sets additional period of term for performance
after 2nd chance still no performance
(5) not for trivial breach of contract
(2) 2nd chance not necessary if debtor refuses to perform, date was specified, special circumstances
§324
termination if debtor violates obligation of §241(2)
ancillary duty
§326
termination where debtor must no longer perfrom under §275
impossibility or right to refuse perfromance
Art. 1224
3 options for termination
Art. 1225
Termination clause within contract
contract gives reason for termination
Art. 1226
unilateral notice from creditor that contract is terminated for sufficiently serious breach
creditor must give debtor a second chance to perform except for urgent cases
Art.1227
termination can be requested to the court
courts establish good reasons for termination
Art. 6:265
every deficiency in performance is ground for termination
unless breach is too trivial
Conditions
(2)
classify if performance is impossible
give notice of termination to debtor
if performance remains possible, debtor must be put it default
Art. 6:82 (1)
debtor must be given a 2nd chance and put in default
(2)
no second chance if debtor conduct shows its useless, simple notice sufficient to end contract
Art.6:83
if contract contains time period, debtor is automatically in default and no 2nd chance is needed
Art.6:271
contacting parties are released from obligations
already done performance must be undone
Damages
Requirements
establish a breach
loss is suffered
causal link
In Civil law:
Attributability
Debtor be put in default
3basic requirements
Breach:
Parradine v Jane 1647
:
doctrine of strict liability for contracting parties
Nicolene Ltd v Simmonds 1953
Loss: adapt expectation interest (put creditor in position if contract wasn't breached)
Causal link: Remoteness of damage
Hadley v Baxendale 1854
:
debtor liable for loss that arises in usual course of things
Victoria Laundry v Newman Industries
only foreseeable losses can be covered by damages claim
§280 (1)
if debtor violates his duties from contract and causes loss to creditor
must be accountable to debtor
for collateral damages
Identify types of damages to be claimed
Attributability
§201 (1)
Debtor must be responsible
§276
debtor responsible for intention and negligence breach or guarantee in contract
§278
debtor responsible for breaches by persons he is responsible for
Loss
§249
Remedy expectation loss
§252
damages must also cover lost profits that could have been expected under normal circumstances
Damages for delay
meet requirements of §280 (1) (Breach, Loss, Causal Link, Attributability)
(2) refers to §286
put debtor in delay by warning notice, (2) gives exceptions for notice
Damages in lieu of performance
meet requirements of §280 (1) (Breach, Loss, Causal Link, Attributability)
(3) distinguishes 3 situations
breach must generally be sufficiently serious
+§281
late/defective performance
must be sufficiently important
creditor must give debtor a second chance
debtor has not performed, then damages can be claimed
+§282
breach of ancillary duty (obligation relationship)
if it was unreasonable to accept performance
claim for damages may arise
+§283
debtor not obliged to perform under §275
not obliged for
(1) Impossibility
(2) Performance would be disproportionate in relation of interest of creditor
(3) debtor must perform in person and obstacle of performance is weighed against interest of creditor in performance
Art.6:74(1)
Breach, Loss, Causal Link, Attributability
(2)
put debtor in default if performance is still possible
Attributability
Art.6:75
Breach was fault of debtor
law does so
contract does so by guarantee
attributable because of views of society
Art.6:76
also liable for breaches for employees, persons he is responsible for
Art.6:81
debtor in default for time where performance is still possible
Art.6:82
default begins when he got written notice of default and he got reasonable time to perform
still no performance, then able to claim for damages
Art.6:83
gives exceptions for when default notice is not necessary
Art. 1217
claim for damages for non-performance of contractual obligations
Art.1231
if performance is still possible, debtor must be given reasonable time for performance and put in default
Art.1231-1
debtor must establish non-attributability (force majeure) to not be liable for damages
Art.1218
force majeure: unforeseen event beyond debtors control
Art.1231-2
entitled to losses and missed profits, subject to
1232-3
debtor only liable for damages that could have been anticipated at time of conclusion of contract
Art. 1232-4
only damages that result from immediate consequences of breach
Art. 1344
how to give a formal notice