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Revision Copyright Guy Harley 2008 1 Types of Remedy Termination Rescission Recovery of Contract Price Damages Equitable Remedies Specific Performance Injunction Rectification Restitution Copyright Guy Harley 2008 2 Damages 2 Types Liquidated Damages Unliquidated damages Copyright Guy Harley 2008 3 Agreed Damages The contract may provide for agreed damages Agreed damages must be a genuine preestimate of damages Courts will not enforce a penalty Copyright Guy Harley 2008 4 Penalty An agreed damages clause will be a penalty if It is extravagant Where breach is failure to pay money and clause provides for a greater payment Applies to several different types of breach Copyright Guy Harley 2008 5 Unliquidated Damages The amount of damages should place the innocent party in the same position that he would have been in had the contract been properly performed Damages can include Expectation loses Personal injuries Disappointment, distress and discomfort Copyright Guy Harley 2008 6 Damages for Disappointment etc Courts have been reluctant to award damages for disappointment, distress and injured feelings Not awarded for breach of most commercial contracts Two cases where may be awarded; Distress flows from physical inconvenience Where enjoyment or entertainment or freedom from molestation is an essential feature of the bargain Copyright Guy Harley 2008 7 Remoteness of Damage (cont.) A two part test Losses that flow ”according to the usual course of things” from the breach Losses within the actual contemplation of the parties at the time the contract was made Copyright Guy Harley 2008 8 Mitigation of Damages Plaintiff has a duty to mitigate losses Cannot claim losses which could have been reduced or avoided by the taking of reasonable steps Copyright Guy Harley 2008 9 Specific Performance Court orders a party to carry out their contractual obligations Not available if: Damages would be an adequate remedy Court has to continually monitor performance Used to enforce a contract for personal services Against a minor Copyright Guy Harley 2008 10 Injunction Court orders a party to a contract to refrain from breaching their contractual duty Not available if damages would be an adequate remedy Copyright Guy Harley 2008 11 Quantum Meruit Where one party requests goods and\or services without specifying a price Implied promise to pay a reasonable amount Need not show loss by plaintiff only benefit by defendant Applies where Contract formed but no agreed price Partial performance of a contract has been accepted Contract is void Contract is breached Copyright Guy Harley 2008 12 Agency Copyright Guy Harley 2008 13 Agency - Definition An agent Has legal authority To affect the legal rights and obligations Of the principal In dealings with third parties Copyright Guy Harley 2008 14 Agency - Requirement A person cannot always act personally Agencies are usually created for the making of contracts in commercial situations It is a fiduciary relationship Copyright Guy Harley 2008 15 Agency - Contracts Two contracts Between agent & principal Between Principal and Third Party A principal is liable for the acts of an agent that are committed within his authority Copyright Guy Harley 2008 16 Types of Agent Universal Agent Can enter into all contracts on behalf of principal General Agent Agent has usual authority of someone in that position in that trade Special Agent Given instructions to carry out a specific task Copyright Guy Harley 2008 17 Types of Agency Actual agency Express Implied Agency by Necessity Apparent Agency (Ostensible agency) Agency by Ratification Copyright Guy Harley 2008 18 Agency by Necessity Agency arises in an emergency situation Three requirements Agent is legally in possession of Principal’s property Immediate action is required to avoid loss Agent is unable to communicate with Principal to obtain instructions Springer v Great Western Railway Great Northern Railway v Swaffield Copyright Guy Harley 2008 19 Apparent\Ostensible Authority Agent has no actual authority but Principal’s actions lead Third Party to believe that Agent has authority 4 conditions A representation made by Principal to Third Party No actual authority Third Part is induced to enter into contract Principal had capacity to enter contract Copyright Guy Harley 2008 20 Apparent\Ostensible Authority Tooth v Laws Derham v AMEV Copyright Guy Harley 2008 21 Agency by Ratification Agent does not have authority Principal later ratifies (i.e. authorises) agent’s actions Copyright Guy Harley 2008 22 Agency by Ratification - Requirements Agent expressly contracts on behalf of Principal Keighley Maxstead v Durant Principal must be in existence at time of contract Principal must have capacity at time of ratification Principal must act within reasonable time Contract must not be void Whole contract must be ratified Langlands v Worthington Ratification must be retrospective Copyright Guy Harley 2008 23 Duties of Agent To follow Principal’s instructions To use reasonable care & skill Not to make a secret profit Not to disclose confidential information To keep proper accounts Breach of duty = breach of contract Copyright Guy Harley 2008 24 To Use Reasonable Care & Skill Where paid must use the skill & competence of a reasonable agent in the same trade Mitor Investments v General Accident Fire & Life Copyright Guy Harley 2008 25 Not to Make a Secret Profit Agent must not take advantage of position to obtain extra benefit from Third Party of which Principal is not aware Reiger v Campbell-Stuart Copyright Guy Harley 2008 26 Not to Disclose Confidential Information Fiduciary relationship Duty to disclose facts material to Principal’s decision to contract with Third Party Must act in Principal’s best interests Copyright Guy Harley 2008 27 Keep Proper Accounts Money received on behalf of Principal must be held in a separate account (trust account) Copyright Guy Harley 2008 28 Rights of Agent Right to Remuneration Paid agreed amount If no agreed amount then what is reasonable Right to indemnity Principal must reimburse expenses reasonably incurred Principal must pay any claims against agent Right to a Lien Copyright Guy Harley 2008 29 Liens Particular Possessory Lien Where Agent has purchased goods on behalf of Principal Can retain goods until Principal pays for them General Possessory Lien Agent can retain any of Principal’s goods in Agent’s possession until paid Copyright Guy Harley 2008 30 Third Party’s Rights Can take action against Agent where Agent has no actual authority (breach of warranty of authority) If Agent has not disclosed agency, can take action against Agent under contract If Agent has disclosed agency, can only take action against Principal under contract Can always take action against Principal both in contract and tort Copyright Guy Harley 2008 31 Independent Contractors Independent Contract acts on own behalf but does work for “Principal” International Harvester v Carrigan’s Hazeldene Person hiring independent contractor is not liable for their actions Two contracts between independent contractor and Third Party “principal” and independent contractor Use of the word “agent” is not conclusive Potter v Customs & Excise Commissioners Copyright Guy Harley 2008 32 Indicators of agency Who keeps the profits and bears losses? Who provides office, staff, tools etc? Who decides when, where and how work is carried out? Is the agent paid a commission? Does agent receive money on behalf of the principal Does agent pay money on behalf of the principal Is agent authorised to make representations for which the principal will be responsible Is the agent required to account to the principal? Copyright Guy Harley 2008 33