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Damages and Liquidated Claims

Damages and liquidated claims are the common law remedies available following a breach of contract

Damages for breach of contract are viewed as a 'substitute' for performance - consequently, they are designed to put the plaintiff in the position they would have been in had the contract been performed properly. Punitive damages are not available. The loss claimed must not be too remote from the breach and the non-breaching party must do what is reasonable to reduce (mitigate) the damage they suffer.

NB: damages might also be available for certain pre-contractual conduct (misleading conduct, duress etc - in other areas, such as tort or pursuant to statute - here we are focussing on damages for contractual breach)

The other remedies that may be available following contractual breach are for debt or liquidated damages.

Liquidated damages will be available where a clause in the contract between the parties provides that a particular sum of money will be payable upon breach; provided that the sum specified does not constitute a 'penalty', the non-breaching party may sue for this 'liquidated' sum rather than for unliquidated damages.

A debt is quite different from damages (liquidated or otherwise) in that it involves a claim for a sum of money due under the contract - it is, therefore, a liquidated sum, but is not in the form of a substitutory remedy but is a claim for a specified monetary amount owed under the contract.


Equitable Remedies

There are two main equitable remedies for breach of contract.

Specific performance - this is an order directing the breaching party to perform the contract in the way specified by the court. It will only be ordered if damages will not provide adequate compensation and will not be awarded in relation to contracts of personal service.

Injunctions - these are orders directing a party not to do something - eg, not to persist with a contractual breach.

Both remedies are discretionary; the court is not obliged to award them even where breach is established.

Equitable damages may also be available in some cases