Prepared by:

Norazla Abdul Wahab

When there is a breach of contract,

the party not in default may claim 1

or more of the respective remedies.

REMEDIES OF CONTRACT

1. DAMAGES

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

not to punish the party in default.

CATEGORIES OF
DAMAGES

a. Substantial Damages
Pecuniary / monetary compensation:

intended to put the plaintiff in the position

he would have enjoyed had the contract
been performed.

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

loss being disallowed.

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
what I have lost; I ask you to give me these
damages.. They have to prove it.

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.
Later on, the appellant alleged that the
Respondent had removed from the Concession
machinery and metal other than scrap.

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 appellant then terminated the contract and
claimed for damages.

Continue..

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.
Then , the respondent was entitled to such
damages as he could prove.

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
NO ACTUAL LOSS.

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
claims.

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

made the defendant then re entered the

premises and evicted the Plaintiff. The Plaintiff
claimed damages for breach of agreement.

Continue..
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 entitled
them to terminate the agreement.

Continue..
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.
Therefore, nominal damages of RM1 and costs
were awarded to the Plaintiff.

c. Exemplary or
punitive damages
Exemplary damages are also known as

punitive or vindictive damages.

Consists of sum awarded which is far greater
than the actual pecuniary loss suffered
by the plaintiff.

c. Exemplary or
punitive damages
Awarded only in exceptional circumstances

such as breach of contract of marriage, or

when banker wrongfully dishonour a traders
cheque or to recover a loan (i.e. Dato
Abdullah b Hj Mohd Hashim v Sharma Kumari
Shukla (no.3) [2001] 1 AMR 334.

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
Hadley v Baxendale (1854).

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 time they made the
contract as the probable result of the
breach of it.

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
delivered when it should have been. The mill
remain idle for a longer time.

Continue.
The Plaintiff sued for damages for the

loss of profit that would have been

earned if the replacement of crankshaft
available on time.
The Defendant (carrier) said that the only
information given the article to be carried
was the broken shaft of a mill and that the
plaintiffs were the miller of the mill.

CONTINUE..

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
circumstances to hold Defendant reasonable
for the loss or profit.

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.
To recover that damages, the Plaintiff has to

establish that the loss he sustained was

caused by the breach.

Limb-damages arising
naturally )
Illustration (f) Section 74:

A contracts to repair Bs 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
of making the repairs conform to the
contract.

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).
Or the defendant could foresee the 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
have been made by the performance of his
contract with B

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 knew that the
boiler was required for the business and
for immediate use.

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
ii) loss of profits on certain dyeing contract from
Minister of Supply.

Continue
Held:
The laundry company was entitled to
recover for the profits for ordinary
laundry as N must foreseen their loss if
there was delay.
and not entitle for dyeing work.

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.
However, this specification was not fulfilled
and consequently, the R brought an action
alleging breach of the condition and claimed
damages including the loss of profit

 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.
(R was awarded special damages)

HOWEVER in Section

Such compensation is not to be given for any

74(2)

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
anything except the principal sum he contracted to
pay, together with interest up to the day of payment.

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 Bs 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.
A IS NOT LIABLE /RESPONSIBLE to B for the loss
caused by B by closing of the said mill.

 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.
Where the loss or damage is too remote , the
plaintiff is not entitled to compensation.

LIQUIDATED DAMAGES
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 PURCHASER
In the event the Purchaser fails to pay the Balance
Sum as provided in Clause 3 of this Agreement for
any reason whatsoever, the Vendor shall unless
there are express conditions hereinafter
contained to the contrary, be entitled to
forfeit the deposit referred to in Clause 1 above or
such other amount of money as may be
hereinafter stipulated (hereinafter referred to as
the forfeitable sum) as agreed liquidated
damages

Under 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:
no differences between penalty and
liquidated damages

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 for
the liquidated damages.

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
broken the promise the penalty

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
performance of the contract must be
taken into account.

 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

that he could avoided it by taking all reasonable steps

possible in the circumstances.

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
supply to the First Defendant two million rubber
gloves per months from Nov 1988 till Oct 1989 for a
total price of USD 1,848,000. The agreement
required the first Defendant to open an irrevocable
letter of credit in favour of R, 30 days before the
date of the first shipment of goods. But, he failed to
do so.

Continue.

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 Rs claim for damages was
disallowed.

2. SPECIFIC
PERFORMANCE

In Malaysia, specific performance

and injunction are forms of what is

termed specific relief.
Specific relief is embodied in a
statute entitled the SPECIFIC
RELIEF ACT 1950:

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
is under an obligation not to do. (Injunction)

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
Appeal.

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

performance is to put the parties in the
position, to perform their obligation
as what would have done by them.

2. Situations where Specific

Performance may be granted

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
and not always to be in the open market.

Continue.
5. Section 11(2),
when there is a breach of a contract to

transfer immovable property cannot be

adequately relieved by compensation of
money.
Therefore, SP can usually enforce land
transaction.

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 Bs tin mining operation, and
compensation by way of money i.e. damages
would not afford adequate relief.
Thus, court granted SP.

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 exercised
of their discretion in that case.

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
(e) A contract made by trustees either in excess of
their powers or in breach of their trust

Continue..
(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
(h)A contract of which material part of the
subject matter supposed by both parties to
exist, has, before it has been made, ceased to
exist.

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 Plaintiffs 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
enforce the contract by SP.

3. Section 21(2)(b) of CA, 1950.

Where the performance of a contract would

involve some hardship on the defendant

which he did not foresee, whereas its nor
performance would involve no such hardship
on the Plaintiff.

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

section is permissible only if SP is
pleaded but not otherwise.

3. INJUNCTION

1. WHAT IS
INJUNCTION?
An order of Court to restrain the doing,

continuance or repetition of some

wrongful conduct which is against the
contract.

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
continue with the breach

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

discretion of the court by injunction,

temporary or perpetual

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 the parties, pending resolution of a legal
action.

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
tried.

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
something or to cease doing something.

Neoh Siew Eng & Anor v Too Chee

Kwong
Plaintiffs the tenants.
The Defendant was the landlord
One

of the terms of the agreement

would be that the Defendant as the
landlord and the registered consumer in
respect of water supply to pay RM2 and
the Plaintiff to pay the amount in excess

Continue.
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 by plaintiff would not be
disconnected.

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
subjected to an Injunction in order to
prevent the breach of it.

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 agreement.

Continue.
Illustration (c) Section 55

A contracts with B to sing for twelve

month at Bs theatre and not to sing in
public elsewhere. B cannot obtain specific
performance of the contract to sing, but
he is entitled to an injunction restraining
A from singing at any other place of public
entertainment.

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
respondent breached any of its term, the appellant
can terminate the contract, and in that event of such
termination, respondent was not to perform in Kuala
Lumpur for three months (fixed period) thereafter.

Continue.
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 of
the negative undertaking.

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 reimbursed by the other

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 may be
available for the value of the work done under
the new implied contract.

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

prevented from completing his obligations by

the other party.

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;
The P could recover on a QM his expenses as
well as payment for work he has done.

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
continuance

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
he received it.

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
study. Any other use or reproduction by any person without consent is prohibited.