REMEDIES FOR BREACH OF CONTRACT

A breach of contract is a civil wrong which involves civil liability. Thus, a

party who has performed his own part of a contract but has not received the
agreed counter-performance from the other party may seek appropriate civil
relief from the Court. The judicial remedies available for breach of contract
include; damages, specific performance, injunction, and restitution.

1. DAMAGES

This refers to the pecuniary or monetary compensation granted by law to

compensate an aggrieved party for the loss, injury or damage suffered by
him as a result of the wrongful or actionable act or omission of another party.
In contract law, damages refers to a sum of money paid to an innocent party
in compensation for a breach of contract. A breach of contract prima facie
gives the aggrieved party a right to an action in damages. This is
notwithstanding whether damages was mentioned in the contract except
there is something in the contract expressly or impliedly excluding the right
to damages. The Court stated the basis for damages in ROBINSON v.
HARMAN [1848] 1 EX. 85, as follows; where a party sustains a loss by reason
of a breach of contract, he is, so far as money can do it, to be placed in the
same situation with respect to damages, as if the contract was performed.
The Court further expatiating and qualifying the basis for damages in
HADLEY v. BAXENDALE [1854] 9 EX. 341, stated that where two parties
execute a contract and this was breached by a party, the damages
receivable by the other party should be such as may fairly and reasonably be
considered as either arising naturally from the breach, or such as may
reasonably be supposed to have been contemplated by the parties as the
probable result of a breach at the time of contract execution. Where a party
however executes the contract on the basis of special circumstances and
such was communicated to the other party, the damages resulting from a
breach of such contract would be such as would have been reasonably
contemplated by the parties as ordinarily arising from a breach of contract
under such special circumstances. Where such special circumstances were
not known to the defaulting party, damages obtainable would be such that
would arise generally in contracts of such nature and not contracts affected
by any such special circumstances.

This rule in HADLEY v. BAXENDALE recognizes two forms of damages

including; general or normal damages that arises from the usual course of
things, or that parties should reasonably have contemplated as constituting
a consequence of a breach; and special or specific damages that arise
because of special or exceptional circumstances. In that case, the plaintiffs
were millers and the defendants, carrier of goods. The crankshaft of the
plaintiffs’ steam engine was broken and work on the mill came to a standstill.
They ordered a new shaft from an engineer, and arranged with the
defendants to carry the broken shaft from their mill to the engineer to be
used as a model for the new shaft. The defendants did not know that the
plaintiffs had no spare shaft and that the mill could not operate until the new
shaft was installed. The defendants delayed the delivery of the broken shaft
to the engineer for several days with resulting delay to the plaintiffs in
getting their steam mill working. The plaintiffs claimed damages for breach
of contract. The Court had to decide whether the plaintiffs’ damages should
include loss of profits for the period of the defendants’ delay. The Court
noted that the only facts communicated by the plaintiffs to the defendants
were that the item to be carried was the broken shaft of their mill, and that
they were millers. The plaintiffs did not inform the defendants and the latter
were not aware that as a consequence of the shaft being broken, the mill
was at a standstill. Thus, the defendants could not have contemplated that
an unreasonable delay in delivering the shaft would result in loss of profits to
the plaintiffs since they could have thought that the plaintiffs had a spare
shaft with which they were operating the mill.

In VICTORIA LAUNDRY v. NEWMAN INDUSTRIES [1949] 2 KB 528, the

plaintiffs who are launderers and dyers, decided in view of great demand to
extend their business and thus, purchased a large boiler from the
defendants. The defendants knew at the time of the contract that the
plaintiffs were laundry men and dyers and that they required the boiler for
the purposes of their business. They were also informed by the plaintiffs that
they needed the boiler for immediate use. The defendants did not however
know exactly how the plaintiffs planned to use the boiler in their business.
They were not aware that it was to function as a substitute for a smaller
boiler already in operation. The defendants damaged the boiler when loading
it for delivery to the plaintiff, and it took them five months to repair and
deliver it. The plaintiffs claimed damages for loss of profits as follows;
16pounds a week for the extra number of customers they could have been
able to accommodate as a result of the increase of their boiler capacity, and
262pounds a week which they would have earned under a lucrative dyeing
contract with the Ministry of Supply. The Court held that reasonable persons
in the position of the defendants must be taken to foresee without any
express information that a laundry, which at a time when there was an acute
shortage of laundry facilities, was paying 2,000pounds for a plant and
intending to put the plant into immediate use, would suffer losses if there
was a five months delay in delivering the plant. Thus, the defendants were
held liable in general damages for the first claim. Regarding the second
claim however, the Court held that as constituting a special circumstance
and as such, it has to be established that the defendants were aware of the
special dyeing contracts to be liable for such special damages.

The award of damages is guided by some general principles which may

exclude an innocent party from being entitled to damages for breach of
contract. These general principles include;

 A breach must be established

 The innocent party had incurred a loss or suffered an injury
 The loss incurred or injury suffered by the innocent party was as a
result of the breach by the other party
 The loss or injury must not be too remote that is, it must be
reasonably foreseeable
 The innocent party have taken reasonable steps to mitigate the loss
or injury

CHAIN OF CAUSATION

In an action for damages, the plaintiff must establish that the defendant’s
breach occasioned the loss incurred by him, or the injury he suffered. The
requirement of causation may be either factual or legal causation. Factual
causation requires the application of the ‘but for’ test that is, but for the
breach of contract, the plaintiff would not have suffered the loss. Legal
causation on the other hand requires the breach to be the direct cause of the
plaintiff’s loss. Thus, where there are other intervening actions or events
between the time of breach and the time of loss so much that the
defendant’s breach cannot be regarded as the cause of the loss suffered, an
action for damages may fail. Such intervening actions which may break the
chain of causation may be that of the plaintiff or a third party. The action or
omission of the plaintiff may break the chain of causation where it was so
unreasonable that the defendant ought to be relieved of all liabilities. The
action of a third party may break the chain of causation where the plaintiff
had a duty to prevent the action. Where the intervening act was however
reasonably foreseeable by the defendant, he may remain liable for damages
to the plaintiff.
In BEOCO LTD. v. ALFA LAWAL CO. LTD. [1994] 4 ALL ER 464, the first
defendant installed a heat exchanger at an oil refinery. After installation, a
crack was discovered which resulted in a leak. The second defendant was
employed to repair the crack but the repair was only partially successful.
Despite this, the plaintiff put the equipment back into use and two months
later, it exploded causing extensive damage. The first defendant was found
guilty of breach of warranty, while the second defendant was found guilty of
breach of the contract to repair the cracks. The Court however held that the
cause of the explosion resulting in the extensive damage was the
recklessness of the plaintiff to carry out proper tests before putting the
machinery to use. Thus, the plaintiff cannot recover damages in respect of
the loss of profit suffered as a result of the extensive damage from the
explosion because it was not directly caused by the breach of contract. In
STANSBIE v. TROMAN [1948] 2 KB 48, a contractor contracted to decorate a
house leaves the front door opened and the house was burgled. The
contractor was held to remain liable for damages to the owner for failure to
take reasonable care.

Similar to this is the doctrine of contributory negligence whereby the plaintiff

may be regarded as a co-author of the loss incurred or injury suffered. In
such instances, the extent of the damages the plaintiff is entitled to may be
reduced to take cognizance of his degree of responsibility, or the
unreasonableness of the action of the plaintiff in causing the loss or injury
suffered. In LAMBERT v. LEWIS [1985] AC 225, a retailer sold a defective
towing hitch to a farmer, who continued to use the machine even after
becoming aware of the danger it poses. The defective hitch occasioned an
accident from which the farmer suffered some injury. In an action for
damages, the Court held that the action could not succeed because the
plaintiff’s negligence in continuing to use the machine even after knowing
the danger posed was enough to severe the chain of causation.

REMOTENESS AND ASSESSMENT OF DAMAGES

The rule of remoteness broadly requires the plaintiff to establish that the
damage alleged was of a kind which was reasonably foreseeable by the
defendant. It aims to set a limit on the extent of the loss or injury for which
the defendant may be held liable. This was given detailed consideration in
KOUFOS v. CZARNIKOW LTD. [1969] 1 AC 350, where the respondents
chartered the appellant’s ship to take a consignment of the respondent’s
sugar from Constanza to Basrah. The ship arrived Basrah nine days later
than it ought to have arrived due to some deviations made by the appellant
in breach of the contract. The respondent had intended to sell the sugar
promptly on arrival at Basrah but the appellant was unaware although aware
that there was a sugar market in Basrah. Shortly before the respondent
could sell the consignment, the price of sugar fell resulting in a loss to the
respondent. The respondent then brought an action in damages to recover
the difference in price. The appellant admitted liability to pay damages for
the delay period of nine days but argued that the fall in market value should
not be taken into account in assessing the damages. The Court held that the
loss due to the fall in market price was not too remote to be recoverable as
damages. Although the appellant was not told that the sugar was to be sold
immediately on arrival at Basrah, he knew there was a market for sugar at
Basrah. As such, he should have reasonably contemplated that it was likely
that the sugar would be sold in the market at market price on arrival, and he
should ordinarily have known that market prices are prone to fluctuation.

In UBN v. SPARKLING BREWERIES [1997] 5 NWLR (PT. 505) 344, the

plaintiff/respondent was a brewer of beer and soft drinks. The plaintiff sued
the defendant for breach of a contract to issue confirmed letter of credit in
its favour and in claiming for damages, included a claim for the loss of about
12million crates of beer and soft drinks. According to the plaintiff, as soon as
its distributors realized that it could no longer manufacture its products,
which was due to lack of raw materials caused by the failure of the
defendant to approve their letter of credit, the distributors seized and
converted all the plaintiff’s crates of bottles with them for their own use. This
resulted in the huge loss alleged by the plaintiff. It was held that if there was
indeed a breach, the plaintiffs could only be entitled to damages for the loss
of profit which they would have made, being the loss which was foreseeable
by the defendant as the probable consequence of a breach at the time of the
contract. According to the Court, the loss arising from the wrongful act of the
distributors cannot be regarded as arising naturally from the breach alleged
nor can it be said to have been within the contemplation of the parties at the
time of the contract as it was too remote.

After the determination of the nature and extent of damages, the Court is
usually faced with quantifying the damages in monetary terms. The
principles applicable to the assessment or quantum of damages for breach of
contract were explained in IJEBU-ODE LG v. ADEDEJI BALOGUN & CO. [1991]
1 NWLR (PT. 166)136, where the Court stated that assessment of damages
for breach is calculated based on the loss sustained by the innocent party,
which loss was either in contemplation of the parties at the time of the
contract, or is an unavoidable consequence of the breach. In this case, the
appellant council awarded a contract to the respondent company for the
construction of a market. The contract was wrongly terminated and the
respondent brought an action for damages. It was established that the
respondent would have realized profits of 20% or more from the contract
sum. The Court held that 20% of the contract sum was the loss sustained as
a consequence of the breach and this must have been in the contemplation
of the parties at the time of the contract. Thus, 20% of the contract sum was
the amount of damages the respondent was entitled to as this is the amount
that would put him in the position he would have been if there had been no
breach of the contract.

MITIGATION OF DAMAGES

The law imposes an obligation on all parties to take reasonable steps to

mitigate the losses caused by a breach of contract. Hence, a plaintiff cannot
recover loss which he could have avoided by taking reasonable steps. This
position is similar to that applicable in cases of contributory negligence. In
MARTENS v. HOME FREEHOLDS CO. [1921] 2 KB 526, it was held that where
a contractor abandons a building he was contracted to build before its
completion, it is the duty of the employer to complete the building in
conformity with the contract specifications at the earliest time possible. Any
increase in the cost of building brought about by his own delay cannot be
passed on to the defaulting contractor by way of damages.