LAW 1014 BUSINESS LAW

 Where a defendant has infringed the rights of

the plaintiff, then remedies serve as a means to:
 redress that infringement of rights as best as is
possible or
 to prevent a prospective infringement from occurring
or
 to compel the performance of an act or
 restore the parties to the position they were in before
the infringement.
 In short, remedies aim to right a wrong.
 REMEDIES

CONTRACT TORT
Company A and Company B enter into a
contract for the supply of office furniture.
Company A delivered the wrong kind of
furniture to Company B. After discovering the
mistake later in the day, Company B insisted
that Company A pick up the wrong furniture and
deliver the right furniture. Company A refused to
pick up the furniture and said that it could not
supply the right furniture because it was not in
stock. What are Company B’s remedies?
 The remedies available to an innocent party
in the event of breach will depend on
whether:
 the contract is treated as discharged for breach, i.e. a breach of a
condition, in which case the innocent party has a choice of:
▪ treating the contract as discharged and/or
▪ sue for damages; OR

 the contract is not discharged for breach, e.g. where there is only a
breach of warranty, in which case the innocent party can only claim:
▪ damages;
or, if damages are not an appropriate remedy:
▪ specific performance; or
▪ an injunction.
 WHAT DOES THE PLAINTIFF APPROPRIATE
WANT? REMEDY

• To be compensated by monetary payment for loss? Then = Damages

• Defendant to complete his/her obligations under Then = Specific performance

the contract?

• To prevent Defendant from breaching his/her Then = Injunction

obligations under the contract?

Note: There are other remedies available in contract for example, rescission and restitution. Please
refer to Chapter 13 of the set text.
 The purpose of awarding damages is to
compensate the Plaintiff for the loss suffered
due to the Defendant’s breach of contract.
 Damages is that sum of money which will
put the party who has been injured or who
has suffered, in the same position as if the
contract had been properly performed.
 Robinson v Harman (1848) 154 ER 363 at 365
(Parke B)
Step 1 - Is there a breach?
Yes
Step 2 - Is the loss or injury too remote?
No
Step 3 - Has P taken steps to
mitigate the loss?
Yes
Step 4 – Measure and Timing of damages?
No. No award of damages
Yes. No award of damages unless
second rule in Hadley v Baxendale met (see also
s74 CA 1950.)
No. Damages may be reduced by
the court
 Step 1
 onus on P to establish there is a breach of contract
 breach may be:
▪ “Anticipatory” i.e. where D has indicated before
performance is due that s/he will not be able to
perform; or
▪ “Actual” i.e. D has not performed their part of
the bargain at the agreed time.
 In order to recover damages, the Plaintiff
must show that his losses were caused by the
Defendant’s breach (show causation).
 He has to prove that the loss was due to the
act or default of the Defendant and there is
no break in the chain of causation between
the Defendant’s breach and the Plaintiff’s
losses.
 Apart from causation, the Plaintiff must also
show that the losses he has suffered are not
remote in order to recover them.
 In English law, the test of remoteness of
damages was laid down in Hadley v
Baxendale (1854) 9 Ex 341.
 A shaft in the plaintiffs’
mill broke down and the
plaintiffs hired the
defendant to transport the
shaft for repairs.
 The Defendant delayed in
returning the shaft and
the Defendant did not
know that the plaintiffs
did not have a spare shaft.
 The Plaintiffs sued for loss
of profits as damages.
 The Court held that the
losses which are too
remote are not
recoverable.
 Losses are not too remote if they are:
 A) ordinary losses which arise naturally in the usual course of
things; or
 B) extraordinary losses which arise within the reasonable
contemplation of the parties at the time they entered into
the contract.
 Here, the loss of profits did not fall under the 1st limb
as normally mills would have spare shaft.
 Since the Defendant did not know that the
Plaintiffs did not have spare shaft, the losses
did not fall under 2nd limb.
 Hence, the losses are not recoverable.
 The Court further explained the test of Hadley v
Baxendale in that:
 A) the Plaintiff can always recover foreseeable losses
or damages which arises naturally
 B) what is reasonably foreseeable depends on the
knowledge the parties had
 C) knowledge is actual or imputed knowledge
 In Malaysia, Section 74 Contracts Act 1950 sets out the
consequences of a 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 to be given for any
remote and indirect loss or damage sustained
by reason of the breach.
 Section 74 of the Contracts Act 1950 provides for the test for
remoteness of damages which is nearly similar to the test in
Hadley v Baxendale : Toeh Kee Keong v Tambun Mining Co Ltd
[1969] 1 MLJ 171.
Therefore, once it is shown that the losses could fall under the
1st or 2nd limb, the Defendant is liable to the full extent of it so
long as the extent of damages has been shown on the balance
of probabilities.
 Step 3
 P must take all reasonable steps to minimise or
mitigate the loss to them caused by the breach of
contract.
 A person who fails to mitigate cannot recover any
part of the loss which is attributable to their
failure to mitigate.
 The duty to mitigate only comes about when there is
a breach of contract.
 The explanation in Section 74 CA 1950 provides that
in estimating the loss or damage arising from a
breach of contract, the means taken to remedy the
inconvenience caused by the non-performance of the
contract must be taken into account.
 The Plaintiff must take reasonable steps to
mitigate his loss and must not incur
unreasonable expenses.
 If the Plaintiff fails to mitigate his loss, he could
only recover that part of the loss which is
caused by his failure to mitigate.
 If the Plaintiff mitigates his loss and does not
incur any loss, then the loss cannot be
recovered.
 If the Plaintiff mitigates his loss and still incur
losses, then these losses can be recovered
 British Westinghouse Co. Ltd. v Underground
Electric Railways Co. of London Ltd
 Illustration to Section 74
 Malaysian Rubber Development Corporation
Bhd. v Glove Seal Sdn. Bhd
 KabatasanTimber Extraction Co. v Chong Fah
Shing
 Joo Leong Timber Merchant v Dr. Jaswant
Singh a/l Jagat Singh
 As a general rule, damages should be assessed as at the date
of breach.
 In Malaysia, the Court in Elkobina (M) Sdn Bhd v Mensa
Mercantile (Far East) Pte Ltd [1994] 1 MLJ 553 held that:
 A) the normal measure for damages is the difference between the
market price of the goods or property as at the date of breach and the
contract price.
 B) in appropriate cases, losses can be assessed as at the date of trial.
 Damages for distress are not available in an
action for breach of contract. Hence,
damages are not generally recoverable for
any distress, frustration, anxiety, displeasure,
vexation, tension or aggravation.
 An exception to this rule is where the subject
matter of the contract is enjoyment or peace
of mind.
 Perry v Sidney Phillips & Son [1982] 1 WLR 1297
 Jarvis v Swan Tours Ltd [1973] 1 All ER 71
 Once it has been determined that P is entitled to
compensation, it will have to be determined
what type of damage will be awarded:
 ordinary damages - the most common form of
damages and awarded by the court on its assessment
of the loss suffered by P as a result of the breach by D;
 nominal damages - P’s legal rights have been
infringed but they have suffered no actual loss, courts
award a token sum, e.g. $1;
 exemplary damages- awarded to punish the party in
default.
 Specific performance is an order requiring a
party to the contract to perform or complete the
performance of his obligations as arising under
the contract.
 Hence, where such an order is made, the party
who is in breach must perform his obligations as
agreed in the contract, failing which, the
offending party will be deemed to be in
contempt of court.
 The purpose of an order of specific performance
is to put the parties in the position to perform
their obligation as what would have been done
by them.
 CIRCUMSTANCES IN WHICH SPECIFIC
PERFORMANCE WILL BE GRANTED
 Section 11(a) to (d) Specific Relief Act 1950
 CIRCUMSTANCES WHERE SPECIFIC
PERFORMANCE WILL BE REFUSED
 Section 20(1)(a) to (h) Specific Relief Act 1950.
 An injunction is a remedy by which the court
makes an order to the defendant in personam to
either prohibit him from doing, or to compel him
to do, a specific act, temporarily or permanently.
It is usually used as a means to restrain the doing,
continuance or repetition of some wrongful
conduct which is against the contract.
 A prohibitory injunction restrains the defendant
from doing something; a mandatory injunction
requires a defendant to do something.
 REMEDIES IN TORT

JUDICIAL EXTRA JUDICIAL

EXPULSION OF A
TRESPASSER, RE-
DAMAGES
ENTRY ON LAND,
RECEPTION OF GOODS

INJUNCTIONS
 You own and manage your own neighbourhood
convenience store. You have been very busy with
stocking your inventory and have not had time to
fix a leak in the roof of your store. On a particular
day, after a heavy downpour, a puddle of water
formed at the entrance to your store. A customer
walks in, slips on the puddle and falls heavily
breaking her arm and injuring her spine. She now
intends to sue you. Can she? What course of action
would she have? What can she claim? How can you
defend against her claim? How can you minimise
the risk?
 The defendant (D) will only be liable if the
plaintiff (P) can prove that:
 D owed them a duty of care;
 D was in breach of the duty of care;

 D’s breach of duty was cause of P’s loss; and

 the damage suffered by P was not too remote
 Damages for personal injury include both
special damages and general damages, and
claims may be made for pecuniary as well as
non-pecuniary losses.
 General damages are those that flow from
the tort and are actionable, and hence, do
need to be specifically pleaded.
 Special damages are damages that the
claimant must plead and prove.
 Where the defendant’s tort causes damage or
loss to the plaintiff’s property, then the
plaintiff is entitled to make a claim for
damage to property.
 In cases concerning pure economic loss, the P
suffers no personal injury or physical damage
to her/his property but is financially worse off
as a result of the D’s negligence.

 Main category is Negligent Misstatement

 In certain circumstances the law will imply a duty of care in the making of a
statement, whereby a negligent, but honest, statement may give rise to an
action for damages:

 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964]:

P was an advertising agency had to place advertisements on behalf of a
company Easipower. As P had to personally guarantee the payment of the
advertising, it sought credit references from D, Easipower’s bank. D wrote
back indicating Easipower were creditworthy but disclaimed responsibility
for its credit reference. Easipower were unable to pay the account. Hedley
Byrne sued Heller for negligence, claiming that the information was given
negligently and was misleading.
 The court found that the relationship between the parties
was "sufficiently proximate" as to create a duty of care. It
was reasonable for them to have known that the information
that they had given would likely have been relied upon for
entering into a contract of some sort. This would give rise,
the court said, to a "special relationship", in which the
defendant would have to take sufficient care in giving advice
to avoid negligence liability. However, on the facts, the
disclaimer was found to be sufficient enough to discharge
any duty created by Heller's actions.
 Therefore the appropriate test for determining the
existence of a duty of care in the making of
statements or the giving of advice is whether a
“special relationship” exists between the parties,
such that:
 there is an identified assumption of
responsibility by D; and
 reasonable reliance by P
 The development of law in Malaysia has not been entirely
consistent.
 In Teh Khem On v Yeoh & Wu Development Sdn. Bhd., the
High Court dismissed claims for damages in negligence as
being pure economic loss.
 In Dr. Abdul Hamid Abdul Rashid v Jurusan Malaysia
Consultants, the High Court in this instance allowed a
claim for pure economic loss arguing that it would be
grossly inequitable, with justice not being served, if the
scope of such a claim was limited.
 The court in Steven Phoa Cheng Loon v Highland Properties
Sdn. Bhd. allowed the recovery of pure economic loss.
 Injunctions can provide a remedy in some tort
claims and are most commonly used in the
torts of nuisance and trespass. An injunction
is an order of the court prohibiting a person
from doing something or requiring a person
to do something.