Done as assignment for Construction Law Module, BQS Taylor's University

1. Remedies for
Breach of Contract
Pang Khai Shuen
Sherlyn Ang Tse Yun

2. Breach of Contract
Remedies available to the innocent party :
DAMAGES SPECIFIC
PERFORMANCE
INJUNCTION QUANTUM
MERUIT

3. Damages
An Legal Remedy
Legal Remedy:
Any court order that imposes a penalty of enforces a right

4. Damages
Monetary compensation awarded to innocent party
Contracts Act 1950 - Section 74 (1) :
Compensation for loss or damage caused by breach of contract
Hadley v. Baxendale
Direct loss + Indirect loss
Contracts Act 1950 - Section 74, 75 & 76:
Remedy providing money compensation for a civil wrong to restored the
injured party to the position he would have enjoyed had the contract been
performed as agreed
1) Injured party is entitled to damages arising naturally
2) If the injured party claims for special damages, he must made known to
the other party, at the time of making the contract, that the special loss is
likely to result from the breach (Must not be too remote)
- Arises from Ordinary
Course of Things
- Does not arise naturally
- Contemplated by the
parties

5. Breach of Contract in construction
★ When one party fails to perform the complete performance of the
contract conditions & he has no legal excuse for the non-performance
★ Innocent party may decide to continue with the contract or treat the
contract as discharged
★ If the breach is one that cannot discharge the contract, innocent party
may recover damages (subject to some rules on recoverable monetary
loss)
Breach of Contract
End the Contract Keep the
Contract alive

6. A. Bringing contract to an end
Repudiation of contract
1) Where one party refuses to continue with his contractual obligations
Contractor removes all his plants, labour and materials & show no intention
to return to complete the work
(Employer fails to give site possession)
2) Where the breach committed by one party goes ‘of the root’ of the contract
(Employer repeatedly fails to pay on the interim certificates properly issued
by the Architect)
Brani Readymixed Pte Ltd v. Yee Hong Pte Ltd (1995)

7. B. Breach which does not discharge a contract
★ Where the breach is not of serious nature that goes to the root of the
contract which entitles the innocent party to end the contract, the legal
redress is an action in damages
★ Same for party who chose to continue with the contract for a serious
breach
★ If contractor commits a breach which does not go to the root of the
contract, the employer must still pay the contract price (but he is entitled
to recover by claiming for defects & omissions or setting them up in
diminution of the price)

8. B. Breach which does not discharge a contract
EXAMPLE
● Employer delays in giving the contractor site possession
○ Carr v. JA Berriman Pty Ltd (1953)
● Employer is in breach of his obligation to supply timely instruction for the
execution of works
○ Roberts v. Bury Commissioners (1870)
● Employer fails to nominate specialist sub-con in a timely manner
● Ar & QS fails to evaluate claims submitted by contractor within specified
time & employers fail to pay in accordance with the terms of contract
● Disruptions caused by other contractors employed by the employer

9. Computation of damages
★ Actual monetary loss
★ Innocent party should be restored to the position he would have been in had the
other party performed his obligation
○ Robinson v Harman [1848] 18LJ Ex 202
★ Where the contractor’s breach of contract consists of not doing work, the damages
will be the extra cost of completing the work at the earliest reasonable time
★ Where cost of remedial works is disproportionate or where remedial cost is not the true
measure of loss, then plaintiff may be compensated for the loss in value to the
property

10. Remoteness and Causation
Duty of the innocent party
Popular Industries Ltd v Eastern Garment Manufacturing Sdn Bhd (1990)
1) Caused by the defendant’s wrong
2) Not too remote to be recoverable
Contracts Act 1950 - Section 74:
Compensation for loss or damage caused by breach of contract
1) When a contract has been broken, the party who suffers by the breach is
entitled to receive, from the party who has broken the contract,
compensation for any loss or damage caused to him thereby, which
naturally arose in the usual course of things from the breach, or which the
parties knew, when they made the contract, to be likely to result from the
breach of it.
2) Such compensation is not to be given for any remote and indirect loss or
damage sustained by reason of the breach.

11. Mitigation of damages
Duty of the innocent party
Innocent party must take all reasonable steps to mitigate his loss - DUTY OF
MITIGATION
Contract Act 1950 - Section 74:
“Explanation— In estimating the loss or damage arising from a breach of
contract, the means which existed of remedying the inconvenience caused by
the non-performance of the contract must be taken into account.”
Kabatasan Timber Extraction Co v Chong Fah Shing [1969] 2 MLJ 6
If the damage still could not be mitigated, the innocent party can claim the full
extent of the damage that he has suffered:
Akitek Tenggara Sdn Bhd v Mid Valley City Sdn Bhd [2007] 5 MLJ 697
Duty of Mitigation can also be excluded through express provisions:
Kueh Sing Khay v Lim Boon Chuah [1950] SLR 23

12. Specific Performance
An Equitable Remedy
Equitable Remedy:
A remedy based on what is fair or seems right in a particular situation

13. Specific Performance
An Equitable Remedy
Building Contract Dictionary (3rd Edition):
‘Where damages would be inadequate compensation for breach of
contract, the contractor may be compelled by means of an injunction to
perform what he has agreed to go by a decree of specific performance…”
A court order for a defendant to perform a contractual obligation
Specific Relief Act 1950
*Government - Government Proceedings Act 1956
Specific Relief Act 1950 - Section 11(1)
Specific performance of a contract may be enforced when:
a) When an act is in performance of a trust
b) When there is no standard for ascertaining actual damage
c) When pecuniary (monetary) compensation would not afford adequate
relief
d) When pecuniary compensation cannot be got
Specific Relief Act 1950:
http://vpnathan-partners.com.my/pdf2/SPECIFIC%20RELIEF%20ACT%201950.pdf

14. Specific Performance
An Equitable Remedy
The court will not grant specific performance of an ordinary building contract
as it requires supervision by the court.
Hepburn v Leather [1884]
Ryan v Mutual Tontine Westminster Chambers Association [1893]
Specific Relief Act 1950 - Section 20(1):
“The following contracts cannot be specifically enforced:
a) a contract for the non-performance of which compensation in money is
an adequate relief;”

15. Injunction
An Equitable Remedy
Equitable Remedy:
A remedy based on what is fair or seems right in a particular situation

16. Injunction
A court order instructing the defendant to commit or refrain from committing
some act
Specific Relief Act 1950 - Section 50: Preventive Relief
Section 51: Temporary & Perpetual Injunctions
1) Temporary Injunction - Granted at any stage
2) Perpetual Injunction - Granted by decree (court order) upon final hearing
Injunctions In Real Life:
a) Prohibitory injunctions e) Mareva Injunctions
b) Mandatory Injunctions f) Anton Piller Orders
c) Interlocutory Injunctions g) Erinford Injunctions
d) Quia Timet Injunctions (kooi-ya-tee-meh)
Temporary & Perpetual Injunctions:
http://www.shareyouressays.com/knowledge/11-major-differences-between-temporary-
injunction-and-perpetual-injunction-2/116844

17. Quantum Meruit
Entrusty Group:
http://entrusty.com/site/wp-content/uploads/2012/08/What-is-a-Quantum-Meruit-claim.pdf

18. Quantum Meruit
Contract Act 1950 - Section 71:
Obligation of person enjoying benefit of non-gratuitous act
“71. Where a person lawfully does anything for another person, or
delivers anything to him, not intending to do so gratuitously, and such other
person enjoys the benefit thereof, the latter is bound to make compensation to
the former in respect of, or to restore, the thing so done or delivered.”
Arises under six circumstances:
1) Where the contract is silent on how work done is to be paid
a) Parkinson vs Commissioners of Works (1949) 2 K.B. 632
2) Where the contract contains an expressed agreement to pay a
reasonable sum or on similar terms (Clause 11.6(c) PAM Contract “fair
market rates and prices”)
a) Laserbore Ltd vs Morrison Biggs Wall Ltd (1993) CILL 896
i) Cost Plus Basis is wrong in principle
ii) Fair market rates should be adopted

19. Quantum Meruit
3) An enforceable contract is mistaken to be in effect
a) Letter of Intent:
i) British Steel Corporation vs Cleveland Bridge & Engineering Co
Ltd (1981) 24 BLR 94
ii) Herman Suerken Gmbh & Co KG v Selco (Shipyard) Pte Ltd
(1991) 3 CLJ 2289 - (LOI is to enable recovery of quantum
meruit)
4) The employer requested for services not governed by the contract
a) Constain Civil Engineering Ltd vs Zanen Dredging & Contracting Co
(1997) 85 BLR 77

20. Quantum Meruit
5) The contract has been discharged by the doctrine of frustration
a) BP Exploration Co (Libya) vs Hunt (No 2) (1982) 1 All ER 125
6) The contract has been repudiated/breached
a) Renard Construction Ltd vs Minister of Public Works (1992) 26 NSWLR
234
i) Wrongful Termination
ii) Reasonable Remuneration - Quantum Meruit (Not limited by
contract)
iii) Value of Work Done - Contract Value

21. What is a Quasi
Contract?
(Extra but important)

22. How is Quantum Meruit different from
Damages?
CONTRACT QUASI CONTRACT
A legally enforceable agreement
made between two parties
An unintended contractual relationship
between two parties created and
enforced by the court
Breach of Contract Unjust Enrichment
Damages Quantum Meruit
Further Reading:
https://www.investopedia.com/terms/q/quasi-contract.asp
http://contractlawsandpractice.blogspot.my/2015/09/quantum-meruit.html

23. Summary

25. Question 1:
What are the 2 limbs that has been
mentioned in regards to Hadley v. Baxendale
case?

26. Question 1 Answer:
Direct loss + Indirect loss
- Arises from Ordinary
Course of Things
- Does not arise naturally
- Contemplated by the
parties

27. Question 2:
Under what circumstances does a breach of
contract bring a contract to an end? (2
circumstances)

28. Question 2 Answer:
1) Where one party refuses to continue with his contractual obligations
Contractor removes all his plants, labour and materials & show no intention to
return to complete the work
(Employer fails to give site possession)
2) Where the breach committed by one party goes ‘of the root’ of the contract
(Employer repeatedly fails to pay on the interim certificates properly issued by
the Architect)
Brani Readymixed Pte Ltd v. Yee Hong Pte Ltd (1995)

29. Question 3:
Does the court usually grand Specific
Performance for construction contracts?
Why?

30. Question 3 Answer:
No.
Because:
1) Damages is (usually) an adequate
compensation.
2) Specific performance of a construction
contract requires supervision by the court.

31. Question 4:
Can a Cost Plus basis be used when assessing
a Quantum Meruit claim?
Why?

32. Question 4 Answer:
No.
Quantum Meruit
= Fair Compensation
= Fair Market Rate
The Judge (Laserbore Ltd vs Morrison Biggs
Wall Ltd) held that using cost plus basis is
wrong in principle even though it may
sometimes produce the right result.