WHAT ARE THE REMEDIES FOR BREACH OF CONTRACT?

When one of the parties to a contract commits a breach of that contract there are in principle three avenues open for the other to follow. Firstly, he can enforce or uphold the contract and insist upon the agreed performance' i.e. he can insist upon specific performance. Secondly, he can uphold the contract but accept a defective performance. Thirdly, he can resile from the contract - i.e. cancel the contract. But whichever course the innocent party may decide on, he is in each case entitled to compensation for any damage which he may have suffered.

The choice which the innocent party has between specific performance and cancellation is not a free choice. Firstly, he can only insist on specific performance if specific performance is still possible. But even if specific performance is still possible a court has a discretion to refuse ordering it. Secondly, cancellation in only possible if the innocent party has stipulated for himself a right to resile or if the breach is so serious to justify cancellation.

The most difficult question which arises in connection with breach of contract, however, is often that relating to the amount of damages which should be awarded. The principle is simple enough: the innocent party must, by the award of an amount of money, be placed in the position in which he would have been had the breach not taken place - stated positively, in the position in which he would have been had the contract been carried out according to its terms.

It is in the application of the principle that the problem lies. The innocent party is, of course, only entitled to claim compensation for damage caused by the breach of contract: he therefore first has to prove a causal link between his loss and the breach. Secondly, however, it is not possible to recover compensation for all damage which is causally connected with the breach. In certain cases the damage is regarded as "too remote" to justify holding the guilty party liable to compensate it. In principle a party who breaches a contract ought to be held liable only for damage which was foreseen at the time of the breach of contract or which was then reasonably foreseeable and for damage which he undertook to compensate.

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