MZUMBE UNIVERSITY

DEPARTMENT OF ACCOUNTING AND FINANCE

COURSE: BACHELOR OF ACCOUNTING AND FINANCE IN BUSINESS

SUBJECT: BUSINESS LAW 109

TASK: GROUP ASSIGNMENT 01

LECTURER: JOHN S. OMBELLA

NAMES OF GROUP NUMBER 04 MEMBERS

THERESIA MARWA 1201456/T.14

FRANK MEZA 1201451/T.14

AGNES KIMWERI 1201410/T.14

TITUS NYAGILO 1201492/T.14

DIONIS MWITA 1201439/T.14

GASPARY MANANA 1201406/T.14

ELIZABETH MTUNGA 1201411/T.14

MAGRETH A.BUGERAHA 1201469/T.14

SARA S. NDALIO 1201488/T.14

TONNY B. MWINGWA 1505071/T.14

QUESTION

“Our decisions are based on the principle ubi jus ibi remedium (where there is a right
there is a remedy)”
Justify this statement by discussing with cases and other authorities the legal remedies
available in case of breach of contract.

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 TABLE OF CONTENT

 INTRODUCTION
a. Definition of contract
b. Definition of breach of contract
c. Definition of Remedies
 MAIN BODY
 CONCLUSION
 REFERENCE

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INTRODUCTION

Definitions of terms

 Contract
A contract is an agreement enforceable by law1, section 2 (1) (h) of the law of contract
Act CAP 345 (LCA). That is an agreement between two or more parties intended to have
legal consequences. For the contract to be valid and binding the parties involved must
entails the associated ingredients, such as offer, acceptance, consideration, contractual
capacity, and parties2
 Breach of contract
Breach of contract refers as failure of party to fulfill obligations under the contract, or it
can be defined as a legal cause of action in which a binding agreement is not honored by
one or more of the parties to the contract by non-performance or interference with the
other party’s performance3. If the party does not fulfill the contractual promise or has
given information to the other party that he will not perform his duty as mentioned in the
contract he seems to be unable to perform the contract, he is said to breach the contract.
Breach of contract can be actual or anticipatory. As for actual breach of contract occurs
when on the due date of performance or during the performance a party fails to perform
his obligations.
The actual breach of performance on the due date of performance
Sometimes, on the due date of the performance, one party fails to perform his obligations.
In such cases, the other party is discharged from the performance of his obligations and
can hold the guilty party liable for the breach of contract.
Example
X agreed to sell his car to Y on 1 st June. But on 1ST June X refuses to sell the car, there
occurred a breach of the contract. And Y can hold X liable for the breach of contract.
The actual breach of contract during its performance;
Sometimes, one party performs his obligations under the contract and the other party fails
or refuses to perform obligations. And sometimes one party, no doubt, performs his
obligations but not strictly according to the contract. It is breach of contract.
1
See section 2 (1) (h) of The law of contract Act
2
see section 10 of the law of contact Act
3
Read also, Nisar. A (1999) “Commercial law Simplified” N.A Saleemi. Nairobi

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 Example

Z a shoe manufacturer contracted with Y a dealer in shoes, to supply him 500 pairs of

shoes at a certain price. The shoes were to be delivered on installments. After the supply

of 200 pairs of shoes, Y told X that no more shoes are required.

Anticipatory Breach of contract:

It occurs when prior to the due date of performance, the promisor absolutely refuses or
disables himself from the performance of his obligations. In other words, it is a
declaration by one party of his intention not to perform his obligations under the contract,
that is, the repudiation of the contract before due date of performance.
Example
X contracted to supply to Y 100 pieces of spark plugs on 15th December 2005. But before
the due date of performance, X informed Y that he is not going to supply the goods

 Remedies for breach of contract

Remedies refers to the means by which the violation of a right is prevented, it includes
Damages, specific performance, injunction, and rescission and quantum meruit.

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 MAIN BODY
A contract gives rise to correlative rights and obligations. A right accruing to a party
under a contract would be of no value if there were no remedy to enforce that right. Due
to this fact, a remedy is the means given by law for enforcement of a right4.
Whenever there is a breach of contract, the injured party becomes entitled for some
remedies. These remedies are
1. Damages
2. Injunction
3. Specific performance
4. Quantum Meruit
5. Rescission

DAMAGES

Damages are monetary compensation allowed to the injured party of the loss or injury suffered
by him as a result of the breach of contract. The fundamental principle underlying damages is not
punishment rather than compensation. By awarding damages the court aims to put the injured
party into the position in which he would have been, had there been performance and not breach,
and not to punish the defaulter party. Damages have the following features, damages must be full
and adequate, damages are assessed once and for all and compensation is given for both loss and
injury which has already occurred.

The damage recoverable for breach of contract is governed by the rule in Hadley v. Baxendale
(1854).

“Where two parties have made a contract which one of them has broken, the damages which the
other party ought to receive in respect of such breach of contract should be, either such as may
fairly and reasonably be considered arising naturally, that is, according to the usual course of
things, from such breach of contract itself, or such as may reasonably be supposed to have been
in the contemplation of both parties at the time they made the contract, as the probable result of
the breach of it”

4
See section 73(1) of The Law of Contract Act
5
See Handley v. Baxendale (1854)
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This is the general rule. The plaintiff can only recover for loss arising naturally from the
defendant’s breach or for such loss was in the contemplation of both parties at the time when the
contract made.

Case: The Heron II (1969)6

The defendant’s ship, the Heron II, Was chartered by the plaintiff to carry sugar from Constanza
to Basrah, and the ship was to take an agreed route but the defendant deviated and took a longer
route and as a result delivery was delayed by nine days. In the meantime the market price of
sugar had fallen and the plaintiff lost a profit of $40000. Held: The loss of profit was recoverable
by the plaintiff, because fluctuations in the market prices are in the normal of things and the loss
suffered by the plaintiff must have been in the contemplation of both parties as probable result of
a breach of the contract.

According to section 73(1) of The law of contract Act (CAP 345)7 When a contract has been
broken, the party who suffers by such breach is entitled to receive, from the party who has
broken the contract, compensation for any loss or damage caused to him

QUANTUM MERUIT

The second remedy for a breach of contract available to an injured party against the guilty is to
file a suit upon quantum meruit. The phrase quantum meruit literally means “as much as is
earned” or “in proportion to the work done”. This remedy may be availed of either without
claiming damages, that is claiming reasonable compensation only or the work done or in addition
to claiming damages for breach. The aggrieved party may file a suit upon quantum meruit and
may claim payment in proportion to work done or goods supplied.

The court must then determine a reasonable sum to be paid for those goods or services, and the
plaintiff is said to have brought his suit on a quantum meruit. In the ease of contract of sale of
goods, this remedy has been codified by the sale of Goods Act. It provides, “where the
reasonable price is not determined, the buyer must pay the reasonable price. What is a reasonable
price is a question of fact dependent on the circumstances of each particular case”. The plaintiff
may also sue on a quantum Meruit where the original contract has been replaced by a new one
and work has been done by under him the new one

6
See the case; Czarnikow Ltd v Koufos (The Heron II) [1969] 1 AC 350
7
See section 73(1) of The Law of Contract Act (CAP 345)

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Illustration one

Planche v.colburn (1831)8

P agreed with C to write a volume on ancient armour for fee of $ 100. After P had written part of
his work the defendant C abandoned the periodical. The contract could not , therefore, be
completely performed, and P sued. Held: that the defendant had repudiated the contract and P
was entitled to treat it as discharged and recover on quantum Meruit for the work he had already
done.

Illustration two

A man talks to a neighbor and tells him he is going to build a wall on their property that will give
a benefit to both the man and his neighbor. The neighbor neither agrees nor disagrees with what
the man wants to build. The man builds the well, and then asks the neighbor to compensate him
for the benefit of the wall that he conferred on the neighbor. The neighbor refuses. The man is
entitles to some compensation based on quantum meruit. This is because there was an implied
promise between the man and the neighbor, which is derived from contract law.

RESCISSION

When there is a breach of contract by one party, the other party may rescind the contract and
need not perform his part of obligations under the contract and may sit quietly at home if he
decides not to take any legal action against the guilty party. But in case the aggrieved party
intends to sue the guilty of damages for breach of contract, he has to file a suit for rescission of
the contract. When the court grant rescission, the aggrieved party is freed from all his obligations
under the contract and becomes entitled to compensation for any damage which he has sustained
through the non fulfillment of the contract.

Illustration: A contract to supply 100kg of tea leaves for sh 1500 to B on 15 th April. If A does not
supply the tea leaves on the appointed day, B need not pay the price. B may treat the contract as
rescinded and may sit quietly at home .B may also file a “suit for rescission” and claim damages.

9
See case, Planche v.colburn (1831)

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SPECIFIC PERFOMANCE

Specific performance, this is a decree issued by court ordering defendant to execute contractual
duty. It can also refer as the actual carrying out of the contract as agreed. The court has power to
enforce the defendant to perform his obligation which is unique and can only be covered by the
defendant, if the party responsible fails to perform his contractual duty he is held responsible to
pay fines and may sometimes be imprisoned or seizure of their property until compliance or he
performs his obligations. There are some cases that a specific performance has to be ordered by
the court against the defendant.

 When the act agreed to be done is such that compensation in money for its non
performance is not an adequate relief.
 When there exists no standard for ascertaining the actual damage caused by non-
performance of the act agreed to be done.
 When it is probably that the compensation in money cannot be got for the non-
performance of the act agreed to be done.

Consider the case of Beswick v. Beswick (1968) AC 58, Peter Beswick 10 was a coal merchant,
who entered into contract with his nephew that if he pay him a certain sum of money for as long
as he lived and then to pay his wife #5 as (the appellant) per week for the rest of her life after he
died, after his death the nephew paid only once to the wife and stated that no contract existed
between them. Mrs Beswick decide to report the issue to the court, Held since mrs Beswick was
also the part of the contract hence ordered the nephew to perform his obligation as how the
contract was agreed.

Nevertheless specific performance is not granted as a rule, it has some exemption such as;

o Where monetary compensation is an adequate relief. There other cases that when
money is paid on behalf of the specific performance can be adequate hence the
court can order the defendant to pay the money as a compensation of the
particular obligation whereby it must ensure that the amount paid is adequate.

10
See case of Beswick v. Beswick (1968) AC 58

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 o Where the court cannot supervise the actual execution of the contract, for example
a building construction contracts. Moreover in most cases damages afford an
adequate remedy.
o Where the contract is for personal services, there other contracts which have no
legal relation such that are termed as social contracts example marriage issues, a
father and a child contract such as awarding a gift after a good performance in
school.
o Where one of the parties to the agreement does not possess competency to
contract and hence cannot be sued for breach of contract
o Where the contract is too vague
o Where the claimant has misbehave

INJUNCTION

This is a decree by court ordering a person to do or not to do a certain act.it is given to protect
property or other rights from irreparable injury by restraining commission of certain acts which
might cause such injury.

It is the mode of securing the specific performance of the negative terms of the contract to put it
differently, where he is doing something which he promised not to do, the court may by issuing
an injunction restrain him from doing what he promised not to do,

Illustration

Mr. X agreed to sing at B’s club for the three months from 1 st may and to sing for no one else
during this period, subsequently he contracted to sing at C’s club and refused to sing at B’s club.
On the suit B, the court refused to order specific performance of her positive engagement to sing
at plaintiff’s club, but granted an injunction restraining Mr. X from singing elsewhere and
awarded damages to B to compensate him for the loss caused by Mr. X’s refusal.

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CONCLUSION

Our above decision based on the principle Ubi jus ibi remedium “where there is a right there is a
remedy” so due to the various remedy such as Damages, Quantum Meruit, Rescission, Specific
Performance and Injunction show the aspects which can results to breach of any contract, but on
contract which have absences of above remedies both parties on such contract tend to perform is
party effectively and follows his own obligation on contract.

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 REFERENCES

 Nisar. A (1999) “Commercial law Simplified” N.A Saleemi. Nairobi

 The Law of Contract Act (CAP 345)

 Sighal.J.P (2003). Law of demand and Compensation”.2nd Ed.The lexis Nexis.

 Edwin.P. (2010).The law of contract”.12th Ed.Thomoson Reuters.

 www.hg.og/aricles.asp%3fid%3D20711