Previous: Discharge

Introduction

When a contract is breached, contract law attempts to fulfil an expectation interest. The law takes the view that every contract has a starting and finishing financial position for each of the parties. The aim is to use money to put the parties in that financial position. Conversely, tort law tries to put parties back to where they were if an act had not occurred. This fulfils a party’s reliance interest. Finally, a restitution interest prevents unjust enrichment.

Following a breach, it will usually be up to the innocent party in their choice of election as to whether further performance is required. Performance cannot usually be required, but damages are usually available. There are 3 common remedies available for a breach of contract: damages, injunctions and specific performance.

Damages for breach

Looking back to the case of Photo Productions v Securicor [1980] (see the page on discharge), we can see that damages for a breach actually arise from the contract itself; the primary obligations become secondary financial obligations. Confirming the purpose of contract law, Robinson v Harman [1848] said that damages in contract law intend to put both parties in the ‘same’ positions as if the contract had been carried out. Or at least as far as damages can do so.

When a contract has been breached, the ‘golden rule’ was set out in Teacher v Calder [1899]: contract law compensates loss, and does not reflect gain...

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