Introduction:
A breach of contract happens when one party has not executed its commitment in line with the terms of the deal. The purpose of bringing a breach of contract lawsuit is to seek the right remedies for the same. As per Black’s legal dictionary, a remedy is described as “the mechanism by which a right is enforced or a violation of a right is avoided, redressed, or compensated”. In a legal context, the word “remedy” has nearly the same meaning as “cure” in a medical one. A remedy is a legal term that refers to a method of resolving a legal right infringement. There are two sorts of remedies available under common law: legal and equitable. The practice of providing equitable remedies arose to compensate for the common law courts’ shortcomings in granting remedy if the aggrieved party desired the contract performed or sought to avoid the commission of threatening harm. Equitable remedies, as opposed to legal remedies that offer damages or compensation, are based on the adage “ubi jus ibi remedium” which states that “where there is a wrong, there will be a cure.”
When we examine the history of equitable remedies, their evolution, and current position, we can see that there are elements of ambiguity and that the courts’ discretion is crucial. Equity turned into the main thrust behind legal growth from the finish of the seventeenth century to the furthest limit of the nineteenth century. According to Holdsworth, even though equitable remedies such as specific performance were unnamed and unregistered at the time, they were recognized from the beginning. He highlights this aspect in Shakespeare’s play “Merchant of Venice,” where Shylock is denied specific performance of his contract, and the debate continues as to whether it was fair to him.
History of Equitable Remedies
The common law system governs England and most of her former colonies, as is widely known. In a nutshell, this implies that judges have the ability to determine what the law is on a given subject in the lack of a statute or other legislation or regulation. Following that, subsequent courts dealing with the same problem are bound by the preceding court’s judgment, which is referred to as a precedent. A precedent was strictly enforced in order for this system to evolve in an orderly manner; if the circumstances of the case were more or less the same as a precedent, the precedent regulated the case before the court.
Early on (during the Middle Ages), the system began to show flaws. Parallel to the common law system, a second system known as equity began to emerge (and continued to develop over the course of several hundred years). As a result, the two independent court systems were given the authority to issue various sorts of remedies. Damages, or money, might be awarded by a court to compensate a person for the loss he or she has incurred. The monarch and the king alone in his council possessed extensive discretionary rights to execute justice among his subjects in the 13th century, but by 1384, the king had delegated all of these responsibilities to the chancellor.
The Chancery Court, as an equity court, may issue remedies that would restore balance and bring the parties to a reasonable and equitable conclusion. The distinct courts were, for all practical purposes, combined in the 19th century to address issues that came from these disparities. The designation of norms and remedies as legal or equitable, on the other hand, has not changed.
This is because the common law system’s precedents demand that rulings and remedies be founded on previous instances, thus judges and attorneys must still establish these distinctions in their arguments and decision-making processes. Injunction, Specific performance, Account of profits, Rescission, Declaratory remedy, Rectification, Equitable estoppels, and Subrogation are among the equitable remedies chosen by the courts. Injunctions and particular performance were the most popular.
Types of Equitable Remedies
Specific Performance
A judicial order to the promisor that he does the performance to which he committed himself in a contract is known as specific performance. Specific performance is an alternative to damages that the court may provide at its discretion, subject to a few conditions. The temporary and perpetual injunctions are defined under sections 36 to 42 of the Specific Relief Act. The grant of Mandatory Injunction is explicitly dealt with in Section 39 of the Specific Relief Act of 1963, which does not define it. Before awarding a mandatory injunction, two aspects must be considered: there must be a duty on the part of the defendant to undertake specific activities, the breach of which obligation must be asserted by the plaintiff, and the remedy must be enforced by the court. Emily executes a contract to sell Charlotte a gold samovar, a Russian antique that previously belonged to Charlotte’s mother and has sentimental importance. Emily then cancels the contract while it is still in effect. Charlotte may be entitled to an order of particular performance against Emily from the court.
When students grasp the fundamental concept of specific performance, they typically wish to use it to solve nearly any contract violation. It appears fair that the non-breaching party may simply seek the court to order the promisor to fulfill her obligations. However, particular performance is a very restricted remedy: it may only be used in the case of a breach of contract to sell a unique item, such as a samovar or a piece of real estate (all real estate is unique). If, on the other hand, the object is not unique and the non-breaching party may go out and buy another one, the legal remedy of monetary damages will suffice. And specific performance will never be utilized to compel someone to do services against their will since this would be involuntary slavery. A person can be forced to cease doing something he shouldn’t do (injunction), but not to do something he doesn’t want to do.
Injunction
The second form of equitable remedy allowed in a contract is an injunction (it is also available in tort). It’s a court order that tells someone to cease doing something she shouldn’t be doing. Section 94, 95, and Order 39 of the Civil Procedure Code precisely talks about the Injunctions. Section 94 of the CPC allows a supplemental process for Plaintiff to prohibit this privilege, whereby the Court may award a temporary injunction or make other interlocutory decisions under Section 94 (c) and (e) of the Code of Civil Procedure. These are temporary injunctions since their validity is limited to the court’s next order or the case’s ultimate decision. Under Section 95 of CPC, it is specifically mentioned that the temporary injunction may be granted in any suit wherein the Court is satisfied that there are sufficient grounds to grant the temporary injunction. If the Plaintiff fails to prove sufficient grounds in his application then the Court may pass the suitable compensation to the defendant, in case the Defendant is claiming in his application. An application for interim injunction along with an affidavit may be made by both Plaintiff or Defendant. Order 39 Rule (1)(a) any party to the suit can apply for a Temporary Injunction.
Only a party may be served with an injunction; no strangers or third parties are permitted. In addition, the injunction cannot be imposed against the Court or any of its judicial officials. For instance, if a business has a legitimate non-compete contract with a representative and the worker disregards the agreement by rivaling his past boss, a court may deny (issue a request for injunction) the previous representative from proceeding to rival his previous organization. A negative covenant is a commitment made by someone not to do something—in this case, not to compete (a covenant is a promise in a contract, itself a contract). If Seller agrees to grant Buyer first refusal on a piece of real estate or a one-of-a-kind work of art but then sells it to a third party in violation of a written agreement, a court may prohibit Seller from selling it to the third party. If someone disobeys an injunction, they may be placed in contempt of court & imprisoned for a period of time. Madison Square Garden v. Carnera Corporation is a well-known case regarding contractual injunctions Facts of the case- Madison Square Garden (MSG) filed suit against Carnera and MSG was granted an injunction, however, Carnera is now appealing it. Camera violated his contract with MSG when he agreed to enter into another contract to box one of the men (Sharkey) listed in his contract with MSG Camera was not allowed to box in other arenas, not to box with certain boxers listed in the contract without MSG’S concert. When MSG discovered Camera’s new contract they immediately filled injunction, Camera appealed. The issue was- Could the MSG prevent the Camera from entering into a fight with Sharkey, Decision was-Injunction upheld.
Restitution
Restitution is the third form of equitable remedy. Restitution is a remedy that can be used in a variety of situations, including instances where a contract was avoided due to incapacity or misrepresentation, cases where the other party broke, and circumstances where the person seeking restitution was breached. Restitution is the process of returning to one party what he provided to the other. As a result, the injured party may only be granted compensation to the degree that the damaged party provided a benefit to the other party. The argument is that a party who breaks a contract should not be punished, and the non-breaching party should not be benefited unfairly.
Landmark Judgements
Beswick v Beswick [[1968] AC 58]
In exchange for the Uncle transferring the business’s goodwill to the nephew, a nephew pledged his Uncle to provide an annuity to his Aunty. The contract did not include the Aunty. The court ruled that it may be enforced against the nephew by the Uncle’s agent (the Aunty).
The promisee or his estate had incurred no loss, therefore damages would have been merely minimal. Allowing the nephew to keep the whole benefit of the uncle’s performance without fulfilling his commitment would have been unfairly enriching him.
Patel v Ali [[1984] 1 All ER 978]
The vendor and her spouse owned the house they agreed to sell in 1979 as co-owners. The bankruptcy of the spouse caused a delay in the project’s completion. The vendor had bone cancer after the contract was signed, had her leg amputated, and subsequently gave birth to her second and third children. The buyer was granted specified performance, which the vendor challenged based on hardship. She knew little English and relied on friends and family for assistance, so leaving the house and moving away would be difficult. The court might reject particular performance in a valid case based on the hardship that occurred after the contract was signed, even if the hardship was not induced by the plaintiff and had nothing to do with the subject matter. Due to the circumstances, there would be an undue hardship, resulting in an award of damages.
Wolverhampton Corp v Emmons [[1901] 1 KB 515]
The plaintiff purchased the property for an improvement project and sold a portion of it to the defendant, who agreed to destroy existing structures and replace them with new ones. The demolition was completed, and new home designs were authorized. The defendant then said he didn’t want to go any farther. Specific performance would be imposed since the defendant’s responsibilities were specified by the blueprints, and damages would be insufficient because the defendant had control of the site and the plaintiff could not complete the work by hiring a different contractor.
Warner Bros v Nelson [[1937] 1 KB 209]
The defendant, an actress, promised to (1) act for the plaintiff while also agreeing to (2) not act or sing for anybody else for two years without the plaintiff’s written approval, and (3) not to take up any other job during that time without the plaintiff’s consent. The defendant might be held liable for breaching the second undertaking if an injunction was issued. She would not be compelled to represent the plaintiff since she could make a career doing anything else.
Grant v Dawkins [[1973] 1 WLR 1406]
The vendor’s title to the land was encumbered, which constituted a breach of contract. The plaintiff was granted specific performance of the defendant’s title, as well as damages based on the expense of removing the encumbrance.
Conclusion
It is possible to establish a moral objection to expanding the availability of this remedy on the grounds that mandating performance infringes on the promisor’s liberty more than requires payment of money. If this liberty interest outweighs the interests served by a particular performance, the equitable remedy should be disallowed or limited. A promisee cannot achieve particular performance under present law simply by demonstrating a breach and the lack of an acceptable legal remedy; unique defenses that apply solely to claims for specific performance further limit the remedy’s availability. Inadequacy of consideration, lack of assurance for the promisee’s performance, unilateral error by the promisor, and difficulties in overseeing performance are among these defenses.
Instead of a rigid distinction between legal and equitable remedies, which is damaging to legal growth, a more flexible approach is required. By adopting a flexible and responsive remedial strategy, the court system can better serve justice. The legal response to the needs of a developing society is hampered by the preservation of a distinction between law and equity. Historical justifications for a limited and split remedial jurisdiction are no longer valid. It is widely acknowledged that history and tradition cannot be completely ignored.
On some level, a distinction between law and equity must be preserved, but the breadth of this distinction has to be reconsidered. By the distinction between legal and equitable rights, a divide in remedies is not required. Rather, it is time to move toward a flexible framework of remedies that responds to the specific circumstances of the dispute, regardless of the measure’s historical roots. Following recent global decisions and the considerable flexibility in the menu of remedies that can be used to enforce equity, legal practitioners believe that the concept of granting equitable remedies has found new life in the modern commercial context. Even while the possible breadth of equitable remedies is still mostly unclear, it is certain to be addressed in future litigation as additional concerns surrounding legal remedies arise.
References:
(1) Kartik H. Shah, Remedies of Breach of Contract, IPleaders, March, 20, 2020, https://blog.ipleaders.in/remedies-for-breach-of-contract-under-the-indian-contract-act/
(2) Breach of Contract, Legit Quest, April, 8, 2021, https://www.legitquest.com/legal-guide/breach-of-contract
(3) Gorang Jagodia, Remedies for Breach of Contract, SSRN, April, 20, 2021, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2042652
(4) Ritika Sharma, Remedies for the Breach of Contract, Indian Legal Solutions, July, 14, 2020, https://indianlegalsolution.com/remedies-for-the-breach-of-contract/
(5) Beswick v Beswick [1968] AC 58
(6) Patel v Ali [1984] 1 All ER 978
(7) Wolverhampton Corp v Emmons [1901] 1 KB 515
(8) Warner Bros v Nelson [1937] 1 KB 209
(9) Grant v Dawkins [1973] 1 WLR 1406
(10) Madison Square Garden v. Carnera Corporation 52 F.2d 47 (2d Cir. 1931)
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