VIETNAM MARITIME UNIVERSITY

INTERNATIONAL SCHOOL OF EXCELLENT

ASIGNMENT
CRITICALLY ANALYSE THE COMMON REMEDIES FOR
BREACH OF CONTRACT UNDER US BUSINESS LAW OF
CONTRACT.

Full name : Phạm Phương Uyên

Student ID : 94058
Course :Business Law
Lecturer : PhD. Nguyen Binh Minh

HẢI PHÒNG - 2023

I. The contract and breach of contract
1. Definition of the contract
A contract is a promise that the law will enforce and is an agreement made
between two or more parties that creates rights and obligations that are
enforceable by law.

2. Definition of breach of contract

There are instances where one or more parties break their promises and
agreements made in a contract. As a result, this situation is known as a breach of
contract, which refers to a failure to keep the terms of an agreement's promises
or contracts. An action for breach of contract is brought when one or more
parties fail to enforce the terms of a legally binding contract.

A breach of contract generally falls under one of two categories:

* Anticipatory Breach of Contract: A party declares his intention of not

performing the contract before the performance is due.

* Actual Breach of Contract: A party declares his intention to breach the

contract on the deadline for performance or in the course of performance.

A contract, being a fountainhead of a correlative set of rights and

obligations for the parties, would be of no value if there were no remedies to
enforce the rights arising thereunder. The "guilty party" is the one who violated
the terms of the agreement, and the "injured" or "aggrieved" party is the one
who was wronged . Therefore, in the case of a breach of contract, the aggrieved
party would have one or more remedies against the guilty party:

1. Suit for rescission

2. Suit for damages
3. Suit for specific performance
4. Suit for injunction
5. Suit for quantum meruit

II.The common remedies for breach of contract under US business laws of

contract.

1.Suit for rescission

Rescission is the legal term for not doing or not making a contract between
two parties. The breach of contract by one party, the other party may rescind the
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contract and need not perform his part of obligations under the contract. When
the court grants rescission, the aggrieved party becomes available from all of his
responsibilities under the contract and has become able to get compensation for
any injuries he sustained through the no fulfillment of the contract.

The primary reasons for rescission are as follows:

1) Innocent or Fraudulent representation

2) Mutual mistake

3) Lack of capacity to contract

4) An agreement that cannot be carried out that the parties were not prepared to.

5) Duress

6) Undue influence.

A party can rescind a contract if another party breaches it, but the breach must
be so serious that it defeats the purpose of the contract. A contract can also be
rescinded by agreement. If all parties to a contract agree to cancel it, they have
the right to do so.

Case: Loh Boon Siew v. Chin Kim & Anor

Facts: A land purchase agreement had been signed by the parties. The
buyer sent the vendors $40,000 in an attempt to purportedly exercise his option
under the terms of the contract of sale on May 5, 1962. The vendors returned the
deposit on or around June 8, 1962, claiming that the option had not been
properly exercised. The purchaser did not take any further action until the writ in
the action was issued on August 29, 1966, in which he demanded specific
performance of the contract.

 Held : Federal Court held that the purchaser should have made a clear stand
as to whether or not he accepted the repudiation or refused it on the repudiation
of the contract by the vendors. The Federal Court further ruled that it is not

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reasonable for a buyer to wait four years following the vendors' breach of the
sale and purchase agreement.

2.Suit for damages

Damages refer to the financial compensation that the party in default is

obligated to make to the affected party in exchange for the loss he sustained as a
result of the breach of the contract. Consequently, the party who suffered harm
could bring an independent lawsuit for damages against the party responsible for
the contract breach. Due to the breach, the party responsible for the breach may
be forced to pay compensation to the aggrieved party. The most frequent remedy
available to the injured party is remedied in the form of damages.

According to Sections 73–75 of the Indian Contract Act, 1872, the right of
the party who has suffered losses as a result of the contract's non-performance to
recover damages is known as a remedy by way of damages. The following
damage types are possible:

2.1.Odinary damages

In the case of a breach of contract, the injured party can almost always
recover ordinary or general damages from the guilty party. These are the
damages that can be fairly and reasonably considered to have resulted naturally
and directly from the breach of contract itself. Even if the party who suffered a
loss was aware of the potential harm from a contract breach, he is still obligated
to receive compensation.

Example: Suppose a restaurant contracts with a supplier to deliver a specific

quantity of food on a certain date for $5,000. The supplier fails to deliver the
goods on time, causing the restaurant to lose out on potential business due to a
shortage of ingredients. In this scenario, the restaurant may seek ordinary

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damages from the supplier to cover the lost profits that resulted from the late
delivery.

2.2 Special damages

A contracting party may be notified of special circumstances affecting the

contract. If he breaches the contract in these types of circumstances, he will
responsible for both ordinary and special damages.

Example: Suppose that Co. A contracts with Co. B to develop a custom

software program for their business and pays $100,000 for the work. However,
due to negligence on the part of Co. B, the software program is delivered with
major flaws and does not function properly. As a result, Co. A loses $500,000 in
potential sales and must invest an additional $50,000 to fix the software
program. In this case, Co. A may seek special damages from Co. B to cover the
specific financial losses they incurred delivered as contracted.

2.3. Vindictive or Exemplary Damages

These are the kinds of damages that are given to make the punishment for
the guilty party rather than compensating the aggrieved party for their loss.

The most basic principle of the law surrounding damages for breach of
contract is that the injured party should be compensated and the guilty party
should not be punished. However, there are two exceptions to this rule:

(a) Breach of a marriage contract. The number of damages, in this case, will be
determined by the extent of the party's emotional injury. One may be ruined,
while others may not care.

(b) A banker refusing to honor a check when the customer has enough money
in their account. The maxim "the smaller the cheque, the greater the damage"

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applies to calculating damages in this case. Obviously, the actual cost of
damages will vary depending on the condition of the component.

2.4. Nominal damages

Nominal damages are those that are only awarded for the sake of being
named. These are not awarded as compensation to the injured party or as
punishment to the guilty party. These variables are awarded to establish the right
to make a decision for breach of contract when the aggrieved party has not
suffered any substantive harm and consist of just a tiny amount of money, say a
rupee or two.

Example: In a case where an individual sues their employer for violation

of their rights under a non-compete agreement, the court may award nominal
damages of $1 to acknowledge the plaintiff's win in the case. Since the plaintiff
suffered no actual financial loss and could not prove any quantifiable damages
as a result of the violation, nominal damages represent a symbolic win and
recognition of the plaintiff's legal rights under the agreement.

3. Suit for specific performance

This is an equitable remedy that the court may choose to grant. A court
order providing specific performance compels a party to carry out his
contractual obligations. The Court orders the party committing the breach of
contract to perform the promise according to the terms of the contract. Under the
Specific Relief Act of 1877, the contract may be subject to specific performance.
This remedy is typically available when financial compensation from damages is
insufficient.

Specific performance refers to carrying out the terms of the contract in

every aspect. An injured party may bring a claim for specific performance in

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certain situations. Not every type of contract is suitable for an agreement for
specific performance. The courts only issue a decree for specific performance
when it is just and equitable to do so, that is, when the legal remedy is
inadequate or flawed.

Specific Performance can be granted only when monetary damages are

insufficient, when the Court can supervise the execution of the contract, or when
the contract is Certain, Fair, and Just. The Personal Service Contracts are not
enforced by Specific Performance.

Example: A agrees to buy and B agrees to sell a picture and two China
Vases. Because there is no established method for calculating the actual harm
that B's nonperformance would cause, A may specifically compel B to fulfill the
terms of the contract.

The following factors are taken into consideration when the court performs
its broad discretion to grant specific performance:

1) Delay in requesting for the order.

2) Whether the party requesting performance is prepared to carry out his
obligations under the Contract.
3) The difference between the benefit that would be provided to one party by
the order and the other party's performance costs.
4) Whether the individual against whom the order has been requested would
experience difficulty in complying.
5) Whether any third-party rights would be impacted.
6) If the contract is for insufficient consideration, even if it is sealed, specific
performance will not be required because the "equity will not assist a
volunteer" rule applies.

4. Suit for Injunction

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 The term "injunction" may also be defined as a court order that instructs a
party to stop performing an insignificant activity that was the subject matter of
the contract. Where a party has agreed not to do something and then does it,
committing a breach of contract, the aggrieved party may seek the Court's
assistance and obtain an injunction. The power of the Court is optional and can
be provided for a limited or indefinite period of time.
Example: A singer signs a contract with B, the theater manager, promising
to sing at that theater for a year while staying away from singing at other
theaters while the show is playing. When she is absent, B cannot force A to
perform at his theater, but he is allowed to sue her in order to obtain an
injunction preventing her from performing at other theaters.
As an injunction is an equitable remedy, the court may only impose one at
its discretion. Three categories are available:
1. Interlocutory or interim relief (temporary restraining order pending a
court hearing)
2. Prohibitory (a court order directing a party not to take a certain action)
3. Mandatory (a directive requiring a party to take action)
5. Suit for Quantum meruit
The remedy for a breach of contract was readily available to an injured
party against the guilty party is to institute a suit on quantum meruit. Literally
translated, the term "quantum meruit" means "as much as is earned" or "in
proportion to the work done." If one party simply complies with the terms of the
agreement, when there is a breach of the agreement, or when the agreement is
found to be or becomes void, a right to use upon quantum meruit typically
arises. This remedy may be used either in instead of damages (i.e., claiming
reasonable compensation only for the work completed) or in addition to
damages for breach (i.e., claiming reasonable compensation for partial
performance and damages for the remaining unperformed part).

VII
 In the following situations, the aggrieved party may bring a lawsuit based
on quantum meruit and may demand payment in proportion to services rendered
or goods provided:
1. When work has been completed according to a contract that has been
fulfilled by the defendant's default.
2. If work has been completed according to a contract that is later
determined to be invalid or "becomes invalid," provided the agreement is
divisible.
3. When something is done without the parties' prior permission but
without any intention of doing so gratuitously.
4. A party who is in breach of contract may sue on a quantum meruit basis
if both of the following conditions are met:
a. The agreement must be divisible
b. The other side must have benefited from the part that was performed,
even if he had the option of decreasing it.

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 CONCLUSION
A breach is a legal violation. When one of the parties to a contract releases
himself from obligation under it, makes it impossible for him to fulfill his
obligations under it, or completely or partially fails to do so, that party has
violated the terms of the contract. A party who has been harmed by a breach of
contract may sue the other party for damages to cover their losses. In the case of
a contract breach, the injured party may pursue one or more remedies, including
suit for rescission,damages, injunction, specific performance, and quantum
meruit. Primarily, unclear contract terms are what lead to a breach of contract.
Therefore, to prevent a breach of contract, it is crucial to ensure that all parties
are aware of the terms and conditions of the agreement.

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 REFERENCES
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Remedies in contract law. (n.d.). Retrieved from
http://e-lawresources.co.uk/Contract-remedies.php
https://www.vedantu.com/commerce/remedies-for-breach-of-contract
https://slideplayer.com/slide/1656046/
https://www.slideshare.net/MohdAadil/law-remedies-for-breach-of-contract
Poole, J. (2003). Casebook on contract law. Oxford University Press.
Quantum Meruit - Definition, Examples, Cases, Processes. (2015, October 05).
Retrieved from https://legaldictionary.net/quantum-meruit/
Walt, S. (n.d.). Penalty Clauses and Liquidated Damages. Contract Law and
Economics, doi:10.4337/9781849806640.00016