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Johnson v Agnew [1980] AC 367

By Oxbridge Law TeamUpdated 04/01/2024 07:00

Judgement for the case Johnson v Agnew

KEY POINTS

  • When a vendor chose particular performance over damages, the contract remained in effect; but, he may subsequently choose damages if the specified performance was not carried out, in which case the contract would be terminated.

  • Stated differently, the right to terminate a contract and file a suit for breach of contract is not lost when a particular performance order is obtained.

FACTS

  • Johnson agreed to sell his property to Agnew after discovering that he was behind on his mortgage. Johnson's mortgage may be paid off with the agreed-upon sum, allowing him to buy another property. However, Johnson eventually sought legal action after Agnew failed to execute the sale as planned.

  • Johnson asked the court for a summary order for specific performance, relying on Agnew to carry out his end of the bargain. Unfortunately, Agnew disregarded the court's directive for particular performance. Additionally, the mortgagees used their authority to sell the property, but the proceeds were insufficient to fully pay off the mortgage. In light of these events, Johnson demanded compensation from Agnew.

  • On the other hand, Agnew asserted that the court has no power to enforce specific performance because Johnson has effectively waived his right thereto when he filed a complaint for damages.

JUDGEMENT

  • The House of Lords allowed Johnson’s claim for damages.

COMMENTARY

  • This case clarified the legal landscape by recognizing that a party's right to seek damages remains intact if the other party breaches a contract, regardless of whether an order for specific performance has been granted.

  • This ruling underscores the importance of maintaining flexibility in remedies available to parties in contract disputes and ensures that they have recourse when the other party fails to fulfill their contractual obligations.

ORIGINAL ANALYSIS

  • Plaintiff had contracted to sell their house to Defendant for an amount exceeding Plaintiff’s mortgage. However Defendant failed to go through with the transaction, even after a court’s order of specific performance to do so.

  • The bank then repossessed the houses and sold them for an amount less than the total of Plaintiff’s mortgage. Plaintiff sued Defendant for the difference between the amount owed via the mortgage and the amount raised by the sale of the house.

  • HL allowed Plaintiff’s claim for the damages. It held that where a vendor elected for specific performance rather than damages the contract remained in force, but he could nevertheless later elect for damages if the specific performance was not complied with and this would terminate the contract. 

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