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Discharge

by Breach
(J00 Q4b)

- Contracts may be terminated as a result of failure of the promisor to fulll his obligation under the contract. - A contract must be performed in accordance with its terms. - The promisor must perform or tender performance of his promise. - Where he has failed to do so, the promisee may be entitled to be discharged from future obligations under the contract. Breaches may occur

At the time when performance is due - Section 56 CA50 - the contract only becomes voidable at the option of the promisee if time was of the essence of the contract. If time was not of essence, the promisee would only be entitled to compensation.

During performance of the contract - The promisee may be performing the promise but not in accordance with the terms of the contract. - In such situations the innocent party is only entitled to treat the contract as discharged if the breach is of a vital term (i.e. condition). - If the breach is trivial, he is only entitled to damages. Choo Yin Loo v Visuvalingam Pillay

Before the time for performance - The promisor may indicate to the promisee that he does not intend to fulll his obligations under the contract. - This is called anticipatory breach. - It entitles the innocent party to treat the contract as discharged Section 40 CA50

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(J00 Q3; D04 Q5; J07 Q5)

Remedies

Section 21 SRA50 - The court has a discretion to refuse SP - The discretion of the court is not arbitrary but based on sound and reasonable principles, guided by judicial principles which are capable of correction by a court of appeal.

Damages
(D04 Q5b)

Specic Performance
(J07 Q5)

- An order for damages refers to an order of the court requiring the party in breach to pay the other party monetary compensation for the loss or other inconvenience suered as a result of the breach. - The measure of damages recoverable is stipulated in Section 74 CA50. This is similar to the measure of damages payable under common law. Hadley v Baxendale Section 74 CA50 - (1)When a contract has been broken, the party who suers 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, (i) which naturally arose in the usual course of things from the breach; or (ii)which the parties knew, wen they made the contract to be likely to result from the breach of it. (2)Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Bee Chuan Rubber Factory Sdn Bhd v Loo Sam Mooi Tham Cheow Toh v Associated Metal Smelters Ltd Mitigation of Loss - The law imposes a duty upon the person claiming damages to take all reasonable steps to reduce or minimize or mitigate their loss. - If they fail to take these steps, the amount of damages they can expect to recover will be reduced. - If the plainti is able to avoid a loss, damages will not be recoverable for the potential loss that the plainti may have suered. - The party seeking damages is under a duty to mitigate the loss. Kebatasan Timber Extraction Co. v Chong Fah Sing

- Specic performance is an order of the court requiring the party who is in breach of the contract to perform his part of the bargain. - It is an equitable remedy. In Malaysia, the remedy of specic performance is provide for under Specic Relief Act 1950. Section 11(1) SRA50 - SP of any contract may be granted at the discretion of the court in the following circumstances: 1. When the act agreed to be done is in the performance wholly or in part of a trust.
- Example A holds certain stock in trust for B. A wrongfully disposes of the stock. B may sue for SP.

2.Where there exists no standard for ascertaining the actual damage caused by the non-performance of the act agreed to be done.
- Example A agrees to buy and B agrees to sell, a picture by a dead painter and two rare China vases. A may obtain SP as there is no standard for ascertaining the actual damage which would be caused by its non-performance.

3.When the act agreed to be done is such that pecuniary compensation for its non-performance would not aord adequate relief.
- Example where A transfers without endorsement but for valuable consideration a promissory note to B. A becomes insolvent and C is appointed his assignee. B may compel C to endorse the note, for C has succeeded to As liabilities and a decree for pecuniary compensation for not endorsing the note would be fruitless.

Section 20 SRA50
SP cannot be specically enforced in the following contracts: 1. A contract for the non-performance of which compensation in money is an adequate relief; 2. A contract which runs into such minute or numerous details or which is so dependent on the personal qualications or volition of the parties or otherwise from its nature is such that the court cannot enforce SP of its material terms; 3. A contract whose terms the court cannot nd with reasonable certainty; 4. A contract which is in its nature revocable; 5. A contract made by trustees either in excess of their powers or in breach of their trust; 6. A contract made by or on behalf of a corporation or public company created for special purposes or by the promoters of the company which is in excess of its powers; 7. A contract which involves the performance of a continuous duty extending over a longer period than 3 years from its date; 8. A contract of which a material part of the subject-matter supposed by both parties to exist, has before it has been made, ceased to exist.

- Refers to the compensation which is intended to put the aggrieved party in the position that he would have been if the breach had not occurred.

Substantial Damages

- Refers to a token award granted by the court where the plainti has proved the defendants breach but has suered no actual loss.

Nominal Damages

- Refers to an award of damages which is intended to penalize a defendant for his breach. - The plainti in this case will be awarded more than his actual nancial loss. - It is only awarded in special circumstances - breach of promise of marriage 6 - 2 Teh Joo Ling All rights reserved

Exemplary Damages

(J00 Q3; D04 Q5; J07 Q5)

Remedies

Quantum Meruit
(J00 Q3v)

Rescission
(J00 Q3i)

Injunction
(D04 Q5a)

- literally as much as he deserves - Only arises in cases of part- performance. - This is a remedy by which a plainti may be able to obtain a reasonable sum for the work already performed by him, in situations where the contract does not provide for the amount or where the contract has been discharged by the conduct of the defendant. Craven Ellis v Canons Ltd

- Rescission is an equitable remedy, that entitles one party to a contract to put an end to ti due to the breach or default of the other party. - Section 40 CA50 - when a party to a contract has refused to perform or disabled himself from performing his promise, the promisee may choose to put an end to the contract. Section 65 CA50 - when a person at whose option a contract is voidable rescinds it, the other party need not perform any promise made by him under the contract. - The party rescinding the contract must restore to the other party any benet received from him. - The party rightfully rescinding the contract is entitled to compensation for any damages sustained by him as a result of the breach of the contract by the other party. Hsu Seng v Choi Soi Fua

- An injunction is essentially an order of the court which prevents or stops the defendant from doing or continuing to do something in breach of the terms of the contract between him and the plainti. - An injunction is a discretionary remedy and not one which is obtainable as of right. Two Types 1. Temporary Injunctions - Section 51 SRA50 - to continue until a specied time or until the further order of the court. - a.k.a interlocutory/interim injunction. - Usually granted by the court pending the outcome of a full hearing by the court. - An application for interlocutory injunction would normally be granted so long as the plainti has shown that there is a serious question to be tried. - Purpose: to preserve the status quo of the parties until the nal outcome of the court case. Mohamed Zainudin bin Puteh v Yap Chee Seng 2.Perpetual Injunctions - Granted by the court at the end of the hearing and upon the merits of the suit. - The defendant is thereby perpetually enjoined from the assertion of a right, or from the commission of an act, which would be contrary to the rights of the plainti. Neoh Siew Eng & ANor v Too Chee Kwong An injunction will not be granted to prevent the breach of a contract if the contract is one that cannot be specically enforced - Section 54(f) SRA50.

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