When there is a breach of contract,
DAMAGES
The award of damages is the common law
remedy for a breach of contract.
The purpose of damages:
to compensate the victim for the loss
that caused him by the breach of contract
a. Substantial Damages
Pecuniary / monetary compensation:
intended to put the plaintiff in the position he would have enjoyed had the contract
a. Substantial Damages
Damages has to be proved.
To recover damages, the plaintiff has to prove the loss he has actually suffered.
failure to do so will result the item of
Bonham-Carter v Hyde Park
Hotel Ltd
Lord Goddard stated :
“Plaintiff must understand that if they bring an action for damages it is for them to prove
their damages; it is not enough to write down the particulars, and so to speak, throw them at the head of the court, saying: “that is
Lee Sau Kong v Leow Cheng
Chiang [1961] MLJ 17
The parties entered into an agreement in writing whereby the respondent agreed to purchase all the scrap iron lying within the Bundi Concession, Terengganu.
Respondent paid deposit and advances which is totaling to RM22,600.00 and proceeded to remove metal.
Lee Sau Kong v Leow Cheng
Chiang [1961] MLJ 17
Eventually, they had a meeting for that and the Appellant then agreed that the respondent can continue with the said agreement but Respondent should pay RM 4,000.00 for that. The Respondent then paid via post dated
cheque. Upon presented for payment, the said payment of the cheque had been stopped.
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Held:
The trial court found as a fact that the respondent was not in breach of contract. The Appellant had no justification for
forbidding the respondent to remove further quantities of scrap iron and the act of Respondent to put the said agreement
as at end is justified.
b. Nominal Damages
In exceptional situations, a plaintiff may be awarded ‘nominal damages’ i.e. a very small
sum of damages.
Nominal damages consists of small token
award where the plaintiff has proved a breach of contractual rights but suffered
b. Nominal Damages
Nominal damages may also be awarded:
merely to acknowledge that his right
have been breached or
he is a victim of breach of contract
but is unable to prove the loss that he
Loh Kit On(t/a Fuji Hairdressing Saloon)
v Tanjong Aru Hotel Sdn Bhd
The Plaintiff was the sole proprietor of a
hairdressing saloon. The Plaintiff entered into an agreement with the Defendant, the owner of Tanjong Aru Beach Resort whereby the Defendant let the said premises to the Plaintiff for a term of three years.
Several months after the tenancy has been
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The defendant said that their re entry of the premises is justified and maintained that the
plaintiff in fact breach of the contract
because had caused illegal massage activities to be carried out on the premises which
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Held:
As there is no evidence as regard to that, the judge gave judgment in favour of Plaintiff. Since, there are no evidence as to the
damages suffered by plaintiff.
c. Exemplary or punitive
damages
Exemplary damages are also known as ‘punitive’ or vindictive’ damages.
Consists of sum awarded which is far
c. Exemplary or punitive
damages
Awarded only in exceptional circumstances such as breach of contract of marriage, or when banker wrongfully dishonour a trader’s
The measure of damages recoverable which is set out in S.74 (1) of CA, 1950 is
substantially re-enact the common law rule laid down in the judgment of Alderson B in
“Where 2 parties have made a contract,
which one of them has broken, the damages which the other party ought to receive…
should be considered arising naturally, i.e. according to the usual course of things from such breach of contract itself, or, such as may
reasonably be supposed to have been in the contemplation of both parties at the
Hadley v Baxendle (1854) 9 Ex 341
Plaintiff were mill (kincir angin) owner in
Gloucester.
They engaged the Defendant, a carrier to take
a broken crankshaft to Greenwich and asked for a new one.
Defendant (carrier) promised that it would be
there for following day, but Defendant had delayed in transporting the crankshaft.
Consequently, the replacement was not
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The Plaintiff sued for damages for the loss of profit that would have been earned if the replacement of crankshaft available on time.
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Held:
The Defendants had not been told about or informed of the special circumstances that the mill would be inoperative until
the new crankshaft delivered.
Consequently, it would not be apparent to him the Plaintiff would sustain loss or profit
by reason of the delay.
It would not be reasonable in the
Section 74(1)(First
Limb-damages arising naturally )
a) The situation that when the damage or
loss
caused to the injured party arose naturally in
the usual course of things from the breach.
Section 74(1)(First
Limb-damages arising naturally )
Illustration (f) Section 74:
A contracts to repair B’s house in a
certain manner, and receives payment in advance. A repairs the house, but not according to the contract. B is entitled to recover from A the cost
Section 74 (1) (Second
Limb-special damages)
b) the parties knew, when they made the
contract, to be likely to result from the breach of it.
(the party knew that because of that breach of
contract, the other party will suffer loss).
Illustration (j) Section 74
A, having contracted with B whereby to supply B
with tons of iron at RM100 a ton and to be
delivered at a stated time. He (A) also contracts with C for the purchase of 1000 tons of iron at
RM80 a ton, telling C that he does so for the purpose of performing his contract with B (supply to B). C fails to perform his contract with A, who cannot procure other iron, and B in
consequence, rescinds the contract. C must pay to A RM20,000 being the profit which A would
Victoria Laundry (Windsor) v Newman
Industries Ltd [ 1949] 2 KB 528
Plaintiff (V) was a laundry company (launderers & dryers). The Plaintiff contracted to buy from a Defendant a boiler which is to be used in his business. The defendant (N) agreed to sell to V a secondhand boiler and to deliver on June. But the boiler was not delivered until 8th Nov. The Defendant also
Victoria Laundry (Windsor) v Newman
Industries Ltd [ 1949] 2 KB 528
Because of that, V claimed for:
i) loss of profits on laundry business which would have been earned if the boiler is
delivered on time; and
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Held:
The laundry company was entitled to
recover for the profits for ordinary
laundry as N must foreseen their loss if there was delay.
Tham Cheow Toh v Associated Metal
Smelters Ltd [1972] 1 MLJ 171
The D/A had agreed to sell a metal melting furnace to the P/R, and giving an undertaking that the melting furnace (leburan) would have a temperature of not lower than 2,600 degrees F.
Held (Fed Court)
A would not normally be liable for the said
payment of damages for the loss of profit UNLESS there is evidence that the special object of the furnace had been drawn to their attention and they had contracted on the basic that delay in delivery would made them liable for
loss of profits.
In this case, the court satisfied that the A knew
the requirement to deliver the furnace capable of producing the specified temperature and the
urgency of delivery.
HOWEVER in… Section 74(2)
Such compensation is not to be given for any
remote and indirect loss or damage sustained by reason for the breach. (Remoteness of Damages).
Illustration (n) Section 74
A contracts to pay a sum of money to B on a day
specified. However, A does not pay the money on that day. B, in consequence of not receiving the money on that day, is unable to pay his debts and is
totally ruined. A is not liable to make good to B
Illustration (p) Section 74
A contracts to sell and deliver 500 bales of cotton to B on a fixed day. A knows nothing about the nature of the B’s business or how B
going to conduct his business. A then breaks his promise and because of not that; by not having the said cotton, B needs to close his
mill/ factory.
In summary:
The object of an award to damages is to place
the plaintiff so far as money can do it in same position as if the contract has been
performed.
To succeed in his claim, the Plaintiff must show that the loss he has sustained was caused by
the breach.
However, the court will not award
compensation to the Plaintiff for all the losses he has suffered as consequence of the
breach.
Sometimes, parties may
fix the amount
of damages
to be paid in the event of
breach of contract as a term of contract.
LD: Amount of damages is stipulated or
fixed by the parties under the contract.
If there is breach of the contract, the party
in default must pay damages up to the
amount stipulated in the contract.
(maximum limit of compensation).
Example of Clause in Agreement
DEFAULT BY PURCHASERUnder Common Law; the court will decide if
they are liquidated damages or a form of
penalty.
Basically, there is
no differences between
the liquidated damages and penalty.
Maniam v The State of Perak [1957]
Thomson J viewed that:
Example:
In the Sale and Purchase Agreement between the purchaser and the vendor. If the
developer fails to complete the house within the stipulated time. The purchaser can claim
Compensation for Breach of Contract
where Penalty Stipulated for
Section 75 of the CA, 1950.
“When a contract has been broken, if
a
sum is named in the contract as to the
amount to be paid in case of breach,
The party complaining about the breach
whether there is
actual damage prove
or
not,
To
receive from the party who has
Duty to mitigate losses
Explanation to Section 74
In estimating the loss or damages
arising from a breach of contract, the
means which existed of remedying the
convenience caused by the non
There is a general duty requiring that reasonable steps
to be taken to mitigate losses which is flowing from a breach of contract.
(Before awarding such damages, the court will look at the duty of the party not in default to mitigate the loss).
The Plaintiff cannot recover any part of the damages
Malaysian Rubber Development Corp Bhd
v Glove Seal Sdn Bhd
Facts: The appellant (Second Defendant) was the
agent of the first Defendant. In its capacity as an agent, the appellant entered into contract with Respondent (Plaintiff)
Under the agreement, The respondent was to
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At the time of the breach, the Respondent (Plaintiff) aware that there was no ready market for rubber gloves. but he still continue manufacturing the said gloves.
Held:
The respondent (Plaintiff) was under a duty to mitigate its loss immediately upon the
breach, if there was no market available. Thus, the R’s claim for damages was
In Malaysia, specific performance
and injunction are forms of what is
termed specific relief.
Specific relief is embodied in a
1. Section 4 of SRA, 1950;
Specific Relief Act is
given-(b) by ordering a party to do the very act which is under an obligation to do (Specific Performance). (c) By preventing a party from doing that which he
WHAT IS SP?
Section 21(1) Specific Relief Act :
“The jurisdiction to decree specific
performance is
discretionary
The court is not bound to grant any such
relief merely because it is lawful to do so;
But the
discretion of the court
is not
arbitrary but
sound and reasonable
,
guided by judicial principles and
capable of correction by Court of
When Specific Performance
available?
As an equitable remedy, specific
performance is
an order of Court
requiring a party to perform in terms
the very obligations
he undertook to
discharge on entering the contract.
The purpose of an order of specific
S. 11 (1) (C)
“pecuniary compensation for its non-
performance would not afford adequate
relief.”
GAN REALTY SDN BHD & ORS V NICHOLAS &
ORS [1969]
“ SP was granted to enforce a promise to sell certain shares not available in the open market”.
DUNCUFT V ALBRECHT ( 1841)
“SP had been granted for an agreement for the sale of railway shares, which were limited in numbers
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5. Section 11(2),
when there is a breach of a contract to
transfer immovable property cannot be adequately relieved by compensation of
money.
Zaibun Sa Binte Syed Ahmad v
Loh Koon Moy & Anor [1982]
The P contracted to sell to B certain pieces of land adjacent to some lands which B was carrying out for mining operation. Later A refused to continue with the contract. B sued
A.
The particular lands were important for use in association with B’s tin mining operation,
and compensation by way of money i.e. damages would not afford adequate relief.
Privy Council considered S. 11 (1) (c ) and S.11 (2) and affirming the decision of the Federal Court by ordering SP of a contract
for the sale of land.
It was also pointed that although there was an alternative claim for damages but the Judges viewed that it was irrelevant to the
3. Situations where Specific
Performance Cannot be Granted
1. Section 20 (1) : circumstances when a Specific Performance cannot be granted:
(a) Where money compensation is an adequate relief;
(b) A contracts which is so dependent on the personal qualifications or volition of the parties; (c )A contract the terms of which the contract
cannot find with reasonable certainty.
(d) A contract which is in its nature revocable
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(f)A contract made by or behalf of a corporation created for special purposes.
(g) A contract the performances of which involves the performance of a continuous duty exceeding over a longer period than three years from its date
2. Section 21(2)(a) of CA. 1950
Where the circumstances under which the contract is made are such as to give the Plaintiff an unfair advantage over the Defendant, Though they may be no fraud or misrepresentation on the Plaintiff’s part
Illustration:
A contract to sell B certain land. To protect the land from floods, it is necessary for its owner to maintain
expensive embankment. B does not know of that circumstances and A conceals it from B. A cannot
3. Section 21(2)(b) of CA, 1950.
Where the performance of a contract would
Furthermore, in s. 18 (3):
Specific Relief Act gives power to the
court to award compensation in addition to SP if SP alone NOT SUFFICIENT to
satisfy the justice in the case.
LEE HOY & ANOR V CHEN CHI [1971] “the grant of compensation under this
1. WHAT IS INJUNCTION?
An order of Court to restrain the doing,
continuance or repetition of some wrongful conduct which is against the
Condition precedents for the grant of an
injunction:
The Plaintiff must have interest to protect; Damages must be shown not to be
adequate remedy i.e. the Plaintiff will suffer irreparable harm if the injunction is not
granted;
That is danger unless restrained,
the Defendant will breach the contract or
Section 4(c) Specific Relief Act
,
By preventing a party from doing that
which he is under an obligation not to do
•
Section 50 Specific Relief Act
Preventive relief is granted at the
A. Temporary injunction
• Section 51(1) Specific Relief Act
“Temporary injunctions are such as are to
continue until a specified time, or until the further order of the court.
They may be granted at any period of the suit”
Synonymous with Interlocutory or Interim
Injunction
The purpose is to preserve the “status quo” of
American Cyanamid Co v Ethicon
Basic principles of temporary
injunction/interlocutory injunction:
“An interlocutory injunction is
granted to maintain the status quo,
if there were serious questions to be
b. Perpetual Injunction
Section 51(2) Specific Relief Act
Perpetual injunction can only be granted after the full trial and upon the merits of the case; the Defendant is permanently/ perpetually prohibited from doing the act or asserting a right which the injunction was granted.
To prohibit the Defendant permanently and
granted after a full hearing.
Also known as Prohibitory Injunction whereby direct the Defendants named therein not to do
Neoh Siew Eng & Anor v Too Chee
Kwong
Plaintiffs the tenants.
The Defendant was the landlord
One of the terms of the agreement
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The Plaintiff had an uninterrupted flow of water.
The water works found that common pipe was
badly corroded. The Defendant also did not take any action to change the pipes that was corroded badly.
Held:
Granted a Perpetual injunction by ordering the Defendant to keep all the communications pipes on and in proper repair and to comply all
regulations of the Waterworks Department so that the water supply to the rented premises
Situations where Injunction
cannot be Granted
Section 54(f)Specific Relief Act
….to prevent the breach of contract the performance of which would not be
specifically enforced.
It means that, any contract that can not be enforced by SP, may also cannot be
Exception:
• Section 55 Specific Relief Act
Notwithstanding s.54(f) where a contract comprises an affirmative agreement to do a certain act, the circumstances that the Court is unable to compel Specific Performance of the affirmative agreement
shall not preclude it from granting an Injunction to perform the negative agreement…..
By virtue of this exception, any contract which consists of both positive and negative
agreement, Injunction can be granted in order to prevent the breach of the negative
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Illustration (c) Section 55
A contracts with B to sing for twelve
Pertama Cabarate Nite Club Sdn
Bhd v Roman Tam
The appellants were the owners of a night club in
Kuala Lumpur.
The respondent were a well known singer from
Hong Kong. The respondent had agreed to appear and sing at the appellant's night club for a few days.
Clause 15 of the said contract provided that if the
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The respondent declined to honor his contract and
began performing at another night club.
The appellant sued for ex parte interim injunction Held:
The Federal Court decided that, the Defendant is not a resident in the country, and had signed a contract of singing for the Plaintiff on certain
dates.
The defendant had also given a negative undertaking not to sing elsewhere in Kuala
Lumpur for a certain period.
Federal Court decided that as illustration (c) Section 55, the fact that the Court was unable
to compel specific performance but the Court can grant an injunction to compel performance
4. QUANTUM MERUIT
Where a Plaintiff sues for unspecified amount for services rendered , he is said to sue on a
quantum merit (as much as he has earned).
Claim for reasonable remuneration.
S. 71 of the CA, 1950.
“ a person who is interested in the payment of money which another is bound by law to pay, and who therefore pays it, is entitled to
When Quantum merit applicable?
When there is an express or implied
agreement to provide a service but no agreement as to price
When the parties have not performed the terms of their contract but a new contract can be inferred from their conduct to have replace the original, a quantum merit award
Where a contract is terminated by breach after one party has performed his obligations,
the party not in default may elect to accept the breach and sue on a QM for the value of
work done.
A QM is also available to a party who is
De Bernady v Harding
The P was an agent of the D. An agreement provided that P was to be paid for his work and for expenses he might incur. Before the P could complete his agency function, the defendant terminated the agency. T he D paid the expenses incurred by the P but refused to pay for the work.
Held;
5. Rescission of Contract
Section 40
When a party to a contract has refused to
perform, or
Disabled himself from performing, his
promise in its entirely
The promisee may put an end to the
contract, unless he has signifies by word
or conduct his acquiescence in its
Section 66
Any person who received any advantage under the
agreement or contract is bound to restore it, or to
make compensation for it, to the person from whom
Note: This Notes and Copyright therein is the property of Madam Norazla Abdul Wahab and is prepared for the benefit her students enrolled in the MGM3351 course for their individual
