Contract law - remedies

When one party to a contract breaches the terms of the contract (i.e. fails to follow the terms of the contract), the other party may seek the following remedies from the court (tick all that apply):

• terminate (end the contract)

• an order that the person be jailed for the breach

• seek an order for specific performance

• seek damages (compensation)

When a contract has been breached, the 'innocent' party can seek an order of specific performance from the court. Tick all of the following statements that are true about such an order:

• it is an order by the court that the party who breached the contract carry out their obligations as promised

• courts are reluctant to make such orders

• courts will make an order for specific performance even when damages (compensation) would be a perfectly good remedy

• most orders are made when the object of the contract is unique, e.g. land, a unique piece of art, a rare painting etc.

When a contract has been breached, the 'innocent' party can seek an order for damages (compensation) from the court. Tick all of the following statements that are true about such an order:

• damages are the usual remedy given by the court

• a court will only award damages where the innocent party can prove they have incurred a loss

• the object of damages is to put the injured, innocent party, as far as possible, in the same position as if the contract had been properly performed

• damages cannot be ordered unless the contract was for the sale of goods

When courts award damages (compensation) for breach of contract, which of the following rules must the court follow (tick all that apply):

• the damage suffered by the innocent party must not be too remote from the breach by the other party

• the injured, innocent party has a duty to mitigate their loss

• damages must be given for any disappointment suffered as a result of the contract being breached

Ms Gryg, who has won the lottery, enters into a signed contract to buy Van Gogh's famous painting 'Starry Night' from a private investor for the sum of $4 million. When she goes to pick up the painting, the investor refuses to hand over the painting and tells Ms Gryg she can keep her $4 million. The remedy Ms Gryg is most likely to want (and the court likely to give is:

• Damages (compensation)

• An order for specific performance

Ms Gryg books a ticket on a cruise ship to the Bahamas. While on board, a mysterious illness spreads throughout the ship and all passengers are confined to their cabins. Ms Gryg cannot show off any of her fabulous outfits or sunbake beside the pool. Ordinarily, she wouldn't be able to get damages for disappointment or distress. Which case set the precedent for allowing damages for disappointment where the contract was one for pleasure?

• Baltic Shipping Co v Dylan (1993) 176 CLR 344

• Payzu Limited v Saunders (1919) 2 KB 581

• Hadley v Baxendale (1854) 156 ER 145

Another word for 'damages' in the context of remedies for breach of contract is:

• compensation

• hurt