When there is a breach of contract, the party not in default may claim 1 or more of the respective remedies.

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When there is a breach of contract,



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.




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



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




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


Exemplary damages are also known as ‘punitive’ or vindictive’ damages.

Consists of sum awarded which is far


c. Exemplary or punitive


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


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



The Plaintiff sued for damages for the loss of profit that would have been earned if the replacement of crankshaft available on time.




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


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




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


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



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



Under Common Law; the court will decide if

they are liquidated damages or a form of


Basically, there is

no differences between

the liquidated damages and penalty.

Maniam v The State of Perak [1957]

Thomson J viewed that:



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


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




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



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.


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



Section 21(1) Specific Relief Act :

“The jurisdiction to decree specific

performance is


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


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



ORS [1969]

“ SP was granted to enforce a promise to sell certain shares not available in the open market”.


“SP had been granted for an agreement for the sale of railway shares, which were limited in numbers



5. Section 11(2),

when there is a breach of a contract to

transfer immovable property cannot be adequately relieved by compensation of



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


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



(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


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



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


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


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


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


Plaintiffs the tenants.

The Defendant was the landlord

One of the terms of the agreement



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.


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



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



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



The respondent declined to honor his contract and

began performing at another night club.

The appellant sued for ex parte interim injunctionHeld:

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


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



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.



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