Calculating Damages For Breach Of Contract
Calculating Damages For Breach Of Contract – There are many deals you can make in your lifetime. But if the party you’re signing a contract with doesn’t fulfill its obligations or doesn’t fulfill them properly, does the law give you recourse?
Contracts are legally binding agreements. This means that the obligations created by these agreements are enforced by law. Of course, not every arrangement you make will be a contract (for example, a husband agrees to pick up his wife after work). In general, a valid contract should have the following elements:
Calculating Damages For Breach Of Contract
Provided all of the above conditions are met, the agreement is a valid contract and a remedy may be provided for breach.
Breach Of Contracts
What does breach of contract mean? A breach of contract is not just a complete failure to fulfill an obligation. This can happen if the performance does not meet the standards that can reasonably be expected of the participant, e.g. when too late To determine whether a breach has occurred, one must first determine the specific obligations created by the contract.
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Obligations that are expressly established in the contract are called express terms. They are generally straightforward, although courts sometimes have to interpret the meaning of these terms to give effect to the parties’ intentions.
However, in addition to express terms, a court may sometimes find that the parties are in breach of terms that were not expressly agreed upon. These terms are known as specific terms. Essentially, what the court is doing here is reading into the additional terms of the contract. The main reason for this is to ensure that the contract makes commercial sense, e.g. If A contracts to set up a marquee for B’s wedding, it is understood that the task will be completed in time for the wedding, even if this is not expressly stated. Certain implied terms are automatically included in all contracts of a certain type, e.g. The Sale of Goods Act requires that all contracts relating to the sale of goods state that the goods will be sold in a reasonable condition.
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Importantly, however, implied terms usually cannot conflict with express terms. Because it will violate the freedom of the parties to negotiate as they wish. The more detailed the wording of the contract, the less likely such problems will arise.
After checking the obligations under the contract, it can be decided that a breach has occurred if one of the parties does not fulfill any of the obligations according to the required rule.
It is not always necessary for a violation to actually occur before a lawsuit can be filed. To the extent it is proven that the party intended to default, the innocent party will be afforded the same defenses and remedies as if the breach had occurred. These are known as prior violations.
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An anticipatory breach can occur when the defaulting party is given verbal notice that it does not want to perform its contractual obligations. An inference may be drawn from the actions of the minor party that would otherwise make compliance difficult or impossible (but this largely depends on the facts of the case).
The fact that a violation occurred (or was foreseeable) does not automatically guarantee legal protection. If the negligent party has a legitimate excuse for the wrongdoing, he may escape punishment.
The first option is to provide for the alleged breach of contract terms. The parties can, and often do, include clauses that exclude their liability for certain breaches, e.g. A contracts for the delivery of goods to B, including an exclusion clause to the effect that he is not liable for damage incurred in transit. Another example is a rescission clause, which allows a party to withdraw from the contract entirely without liability if certain conditions are met. It can be assumed that such a clause conditions the obligations established by the contract, firstly, the violation did not occur.
Posts In Breach Of Contract
Even if the breach is not contractual, there are rare cases where the non-liable party is absent. Known as the doctrine of frustration, which applies when an unforeseeable event beyond the control of the party has occurred, e.g. A is hired to clean B’s prized cat, but before he can do so, the cat is overwhelmed and killed. The rules governing frustration are contained in the Bad Contracts Act (see 115, 1985 Rev Ed).
If the defaulting party can cite a legitimate excuse justifying the breach of contract, this will be a valid defense to any legal claim.
Assuming a violation has occurred and there is no defense, the innocent will be given recourse. However, there are many remedies that can be used in any combination. The specific remedy to be granted in each case is a matter for the court.
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It is important to remember that the purpose of a breach of contract remedy is to put the parties, as far as possible, in the position they were in before the breach occurred. In general, they do not want to punish the pure party; rather, they simply compensate the innocent to the extent of the damages caused by the breach.
The most common default remedy is damages. Damages refer to monetary compensation awarded to an innocent party for damages suffered as a result of the breach. This may include loss of expected profits or additional costs that may be incurred by the innocent. For example, if A contracts with B to supply a component required in B’s product but supplies it in a defective condition, A may be liable not only for the cost of the defective component but also for any costs incurred by B in replacing the component. Any loss of profits caused by B.
However, when calculating damages, the court expects the innocent party to take all reasonable steps to minimize the damages caused by the breach. If an innocent party causes additional damages by failing to take reasonable steps after becoming aware of the breach, this will not be included in damages. Taking our previous example, if B discovers that A’s supplied component was defective but still continues to sell its product, the additional loss of profit caused by returns and complaints will not be included in A’s damages.
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Another possible remedy is to allow the innocent party to rescind the contract entirely, releasing him from contractual obligations in terms of breach. However, this remedy is only available if the breach involves a specific type of contractual term. In general, two types of terms can be found in a contract:
Even if there is a right to rescind the contract, the innocent party may choose to continue the contract by claiming damages for the breach.
Subsequent appeals are discretionary, more demanding than the above, and (in contrast) rarely granted. This is because they were used as remedies in equity and not at common law (the distinction is not very important).
Remedies For Breach Of Contract
As you can see, assessing whether you have a claim for breach of contract can be complicated. The following checklist can be used to determine if there are claims:
If you have legal questions about contract disputes, you can get a quick consultation with Ka Hee or other lawyers. With Quick Consult, you can check in minutes, and for a fixed transparent fee of S$49, lawyers will call you within 1-2 days to answer your questions and provide legal advice.
This article was written by Lau Ka Hee of Derrick Wong & Lim BC LLP and edited by Tessa Sim of Asia Law Network.
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This article does not constitute legal advice or a legal opinion on any of the matters discussed and should not be relied upon as such. It cannot be taken as an exhaustive statement of legislation and practice in this area. If you need advice or information, contact a practicing attorney in your jurisdiction. No person who is a member, partner, shareholder or consultant of Interstellar Group Pte. Ltd. accepts or assumes any liability of any person in relation to this article.
Ka Hee is active in commercial litigation, arbitration, as well as immigration law, employment law, corporate compliance and governance. In addition, he has experience advising and representing various parties in contractual, commercial, corporate, banking, property, labor and financial disputes, as well as investment disputes. In the area of corporate compliance, Ka Hee’s practice includes bank fraud investigations, defense against government/regulatory investigations, and white collar criminal cases. Ka Hee has experience in controversial tax matters, given her dual qualifications as a lawyer.
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