Elements in a Contract 25
In addition to common law remedies
for breaches of contract there are also remedies that are provided by equity
and they come into play when common law remedies fail to deliver a just
outcome. As per the norm equitable remedies are governed by equitable principles
or the rules of equity and for breaches of contract the types of equitable
remedies that the courts will allow are as follows: -
i) Specific performance and
ii) Injunctions
Specific Performance
Specific performance simply means
that the courts will compel a party to a contract to perform their duties and
obligations under the contract.
In Nutbrown v Thornton (1805) the
plaintiff entered into a contract with the defendants to purchase some
machines. Subsequently the defendant refused to deliver the machines and
because the defendant was the sole vendor for that type of machines, the
plaintiff brought an action against the defendants and sought specific
performance as a remedy. The court granted specific performance and compelled
the defendants to perform their duties as stipulated by the contract.
The above however would not have
been the case if the machines were available elsewhere. In Cohen v Roche (1927)
the plaintiff a furniture shop owner entered into a contract with the
defendants to purchase a certain type of chairs. The defendants subsequently
failed to deliver the chairs and the plaintiff sued for breach of contract and
requested for the remedy of specific performance. The court did not grant
specific performance despite there being a breach of contract because the
chairs could be purchased elsewhere.
In order for specific performance to
be granted the party requesting for specific performance must have acted fairly
or equitably.
In Walter v Morgan (1861) the
defendant had acquired some land and the plaintiff compelled the defendant to
sign a lease allowing the plaintiff to mine on the land. The defendant once
he’d discovered the true value of the land refused to allow the plaintiff to
mine and the plaintiff brought an action against the defendant requesting for
specific performance to be granted. The court refused. Specific performance is
an equitable remedy and the equitable maxim that he who comes to equity must
come with clean hands applies.
In Lamare v Dixon (1873) the
defendant sought to rent some cellars from the plaintiff and when he went to
make an inspection of the cellars he discovered that the cellars were damp and
requested that the plaintiff make the cellars dry before the defendant used the
cellars. The plaintiff agreed to do so but subsequently failed to carry out his
promise and the defendant refused to continue with the arrangement. The
plaintiff sought an action for breach of contract and requested that the
defendant be compelled to take possession of the cellars. The court rejected
his claim. The plaintiff had acted unfairly himself and therefore he could not
compel the defendant to continue with the contract. In other words, he wasn’t
entitled to an equitable remedy because he hadn’t acted equitably himself.
Specific performance is normally
granted when damages are nominal or are not sufficient to cover the breach. In
Beswick v Beswick (1968) the plaintiff’s husband sold a business to his nephew
with the stipulation that an annual income be made to him and upon his death to
his wife. The nephew failed to make the stipulated payments, following his
uncle’s death, as agreed and the plaintiff sued. It was held that that the
aunty despite not being privy to the contract was able to sue because she was
also the executor of her husband’s estate and the courts via the remedy of
specific performance compelled the nephew to pay the stipulated annual
payments. If they’d awarded damages instead of specific performance, the
damages would’ve been nominal and the plaintiff would have most likely lost out.
Specific performance because of its
equitable nature will not be granted if it would cause undue hardship to one of
the parties. In Patel v Ali (1984) the defendant had agreed to sell her house
to the plaintiff. Four years had lapsed since the parties entered into the
agreement and in that time the defendant’s husband had gone bankrupt and the
defendant had become disable due to an illness. The plaintiff requested for
specific performance to compel the defendant to sell her house but the courts
refused on the grounds that compelling the defendant to follow through with the
conditions or stipulations in the agreement would cause undue hardship to the
defendant.
Certain types of contracts would not
be granted the remedy of specific performance especially in circumstances where
to do so would require the continuous performance of a duty. In Ryan v Mutual
Tontine Association (1893) where the lease on a flat required that a porter be
in constant attendance, the courts refused to grant the remedy of specific performance
because to do so would require that a porter be in attendance at all times, for
the duration of the lease.
The decision in Ryan v Mutual
Tontine Association (1893) however has to be compared with the decision in
Posner v Scott-Lewis (1987) where the plaintiffs, who rented a luxury flat,
sought to enforce their landlord’s undertaking that there would be a porter
handy. The courts granted specific performance on the grounds that there was no
continuous duty imposed.
In Co-Op Insurance v Argyll Stores (1997)
the plaintiffs, developers of shopping centers, had granted the defendants a
35-year lease to operate a supermarket with the stipulation that the
supermarket should not be closed for more than four months in the entire
35-year period because the customers from the supermarket generated income for
the other smaller retailers in the shopping center. 15 years into the lease,
the defendants realizing that they were running at a loss sought to vacate the
supermarket. The plaintiffs offered to allow the defendants to rent the
premises at a lower rate but the defendants refused. The plaintiffs brought an
action in court seeking to compel the defendants to do so. Their claim was
rejected by the House of Lords because under normal circumstances the courts would
not compel a party to carry on with business. In addition to that despite the
offer to rent the premises to the defendants at a lower rate it was difficult
to estimate the defendants turn-over or profits in the next 20 years.
Copyright © 2019 by Dyarne Ward
and Kathiresan Ramachanderam
Comments
Post a Comment