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Specific Remedies Notes

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INTRODUCTION

1. Traditional distinction between specific remedies and damages Unlike damages, for specific remedies the primary obligation to perform is not converted into a secondary obligation to pay damages. Specific remedies require the defendant to perform his side of the bargain. However, this traditional distinction may no longer hold true. McKendrick (2010) argues that the obligation that the defendant is ordered to perform generally differs in some way from the initial obligation that was undertaken in the contract:?

2. Most claimants do not seek specific performance until the defendant has already broken the contract. In such a case, the defendant obviously cannot perform exactly in accordance with the original contractual obligation in that, at the least, performance will take place at a different time from that originally agreed. The obligations imposed by specific performance are obligations imposed by the court, not the original contract, with different sanctions for noncompliance (criminal sanctions).

Positive and negative duties

Specific remedies can be divided into those that place 'positive' duties on the defendant (he defendant is required to do something) and those that place 'negative' duties (a duty not to do something)3.

The action for an agreed sum, specific performance and the mandatory injunction are in the first camp, with prohibitory injunctions in the second.

How willing should we be to award specific remedies

Burrows (2000) argues that we might expect that a claimant would always be able to obtain a specific remedy as an alternative to getting damages, because specific remedies more directly protect the claimant's right to contractual performance. Further, specific performance will often be more favourable to a claimant, given the presence of doctrines like mitigation that limit the damages recoverable. On the other hand, it is a greater intrusion upon one's autonomy and freedom to order him to do something than it is to order you not to do something. Allowing the defendant to decide between performing and paying compensation is far less intrusive to a defendant than ordering him to perform his side of the bargain. Beatson (2010) specific remedies should be awarded less frequently as it avoids the policy of the mitigation rule and that the courts are increasingly willing to award appropriate levels of compensation for a breach of contract.

4. Why is a court entitled to refuse to award a specific remedy?
A claimant who seeks a specific remedy is not merely asking the court to declare that the defendant is obliged to do something under the contract. He is asking for the court to order that the defendant do something, and back this order with the threat of criminal sanctions. The claimant and defendant never agreed that such an order should be made in event of breach, so the court has a choice as to whether to grant it or not.

A.

ACTION FOR AN AGREED SUM - "DEBT"

1. Differences between debt and damages

Sum awarded under an action for an agreed sum is "liquidated" (already determined). There is no need to consider remoteness of damage or mitigation.

2. In theory, the innocent party can opt to "reject" repudiatory breach, perform and claim the price in an action for an agreed sum.

3. The obligation to pay the agreed sum must have accrued before it can be claimed So where the contract is discharged (for repudiatory breach) before the obligation to pay the agreed sum falls due, only damages can be claimed.

2. In theory, the innocent party can opt to "reject" repudiatory breach, perform and claim the price in an action for an agreed sum. White & Carter (Councils) Ltd v McGregor [1962] AC 413 But remember there are two "exceptions" which might scupper the innocent party in practice ie must show these 2 to take advantage of the "debt rule"

1. Innocent party has "no legitimate interest" in performance; or Isabella Shipowner SA v Shagang Shipping Co Ltd (The Aquafaith) [2012]
EWHC 1077 (Comm) -> Cooke J "an innocent party will have no legitimate interesting maintaining the contract if damages are an adequate remedy and his insistence on maintaining the contract can be described as "wholly unreasonable", "extremely unreasonable" or perhaps in my words, "perverse" at [49]

2. Innocent party needs the co-operation of other party to perform his obligations

B.

SPECIFIC PERFORMANCE

1. Discretion exercised where damages are "not an adequate remedy" Is it just, in all the circumstances, that a claimant should be confined to his remedy in damages?
Damages may be an inadequate remedy because the claimant is unable to obtain a substitute for the promised performance. For example: (i) Sale of landBut what about an investor? Damages would be a perfectly adequate remedy - Southcott Estates Inc v Toronto Catholic District School Board 2012 SCC 51 (land not necessarily specially enforceable)

(ii) Sale of unique chattel, like a paintingSee also section 52 Sale of Goods Act 1979 52 Specific performance. (1)In any action for breach of contract to deliver specific or ascertained goods the court may, if it thinks fit, on the plaintiff's application, by its judgment or decree direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on payment of damages. (2)The plaintiff's application may be made at any time before judgment or decree. (3)The judgment or decree may be unconditional, or on such terms and conditions as to damages, payment of the price and otherwise as seem just to the court. (4)The provisions of this section shall be deemed to be supplementary to, and not in derogation of, the right of specific implement in Scotland.Even in the case of generic goods, like petrol, specific performance may be ordered where such goods cannot be obtained other than from the defendant (e.g. where there is an oil crisis, as in Sky Petroleum Ltd v VIP Petroleum Ltd [1974] - Goulding J recognised the exceptional market conditions oil crisis, issued interim injunction to prevent D breaching, equivalent of specific performance though not strictly specific performance, to compel the oil supplier to deliver petrol to the retailer)
? Interim injunction to stop D cancelling (awarded in this case) =
compelling D to perform ie specific performance
? Cf Societe des Industries Metallurgiques SA v Bronx Engineering (1975) where damages adequate when alternative manufacturer supplied machinery would take almost a year to arrive

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