Discharge

 by  Breach
(J’00  Q4b)

-­‐ Contracts  may  be  terminated  as  a  result  of  failure  of  the  promisor  to  fulfill  his  obligation  under  the  contract.  
-­‐ A  contract  must  be  performed  in  accordance  with  its  terms.
-­‐ The  promisor  must  perform  or  tender  performance  of  his  promise.  
-­‐ Where  he  has  failed  to  do  so,  the  promisee  may  be  entitled  to  be  discharged  from  future  obligations  under  the  contract.

Breaches  may  occur

At  the  time  when  performance  is  due During  performance  of  the  contract Before  the  time  for  performance

-­‐ Section  56  CA’50  -­‐  the  contract  only   -­‐ The  promisee  may  be  performing  the   -­‐ The  promisor  may  indicate  to  the  
becomes  voidable  at  the  option  of   promise  but  not  in  accordance  with   promisee  that  he  does  not  intend  to  
the  promisee  if  time  was  of  the   the  terms  of  the  contract.   fulfill  his  obligations  under  the  
essence  of  the  contract.  If  time  was   -­‐ In  such  situations  the  innocent  party   contract.  
not  of  essence,  the  promisee  would   is  only  entitled  to  treat  the  contract   -­‐ This  is  called  anticipatory  breach.
only  be  entitled  to  compensation. as  discharged  if  the  breach  is  of  a   -­‐ It  entitles  the  innocent  party  to  treat  
vital  term  (i.e.  condition). the  contract  as  discharged
-­‐ If  the  breach  is  trivial,  he  is  only   Section  40  CA’50
entitled  to  damages.
Choo  Yin  Loo  v  Visuvalingam  Pillay

 6  -­‐  1                                                                                                                        ⓒ  Teh  Joo  Ling  All  rights  reserved

 Section  21  SRA’50  
-­‐ The  court  has  a  discretion  to  refuse  SP
Remedies -­‐ The  discretion  of  the  court  is  not  arbitrary  but  
(J’00  Q3;  D’04  Q5;  J’07  Q5) based  on  sound  and  reasonable  principles,  
guided  by  judicial  principles  which  are  capable  
of  correction  by  a  court  of  appeal.

Damages Specific  Performance

(D’04  Q5b) (J’07  Q5)
-­‐ An  order  for  damages  refers  to  an  order  of  the  court   -­‐ Specific  performance  is  an  order  of  the  court  requiring  
requiring  the  party  in  breach  to  pay  the  other  party   the  party  who  is  in  breach  of  the  contract  to  perform  his  
monetary  compensation  for  the  loss  or  other   part  of  the  bargain.
inconvenience  suffered  as  a  result  of  the  breach.   -­‐ It  is  an  equitable  remedy.  In  Malaysia,  the  remedy  of  
-­‐ The  measure  of  damages  recoverable  is  stipulated  in   specific  performance  is  provide  for  under  Specific  Relief  
Section  74  CA’50.  This  is  similar  to  the  measure  of   Act  1950.
damages  payable  under  common  law.
Hadley  v  Baxendale Section  11(1)  SRA’50  -­‐  
SP  of  any  contract  may  be  granted  at  the  discretion  of  the  
Section  74  CA’50  -­‐ court  in  the  following  circumstances:
(1)When  a  contract  has  been  broken,  the  party  who  suffers   1. When  the  act  agreed  to  be  done  is  in  the  performance  
by  the  breach  is  entitled  to  receive,  from  the  party  who   wholly  or  in  part  of  a  trust.
has  broken  the  contract,  compensation  for  any  loss  or   -­‐ Example
damage  caused  to  him  thereby, A  holds  certain  stock  in  trust  for  B.  A  wrongfully  disposes  of  
(i) which  naturally  arose  in  the  usual  course  of  things   the  stock.  B  may  sue  for  SP.
2.Where  there  exists  no  standard  for  ascertaining  the  
from  the  breach;  or  
actual  damage  caused  by  the  non-­‐performance  of  the  
(ii)which  the  parties  knew,  wen  they  made  the  contract  
act  agreed  to  be  done.
to  be  likely  to  result  from  the  breach  of  it.
-­‐ Example
(2)Such  compensation  is  not  to  be  given  for  any  remote   A  agrees  to  buy  and  B  agrees  to  sell,  a  picture  by  a  dead  
and  indirect  loss  or  damage  sustained  by  reason  of  the   painter  and  two  rare  China  vases.  A  may  obtain  SP  as  there  is  
breach. no  standard  for  ascertaining  the  actual  damage  which  would  
be  caused  by  its  non-­‐performance.
Bee  Chuan  Rubber  Factory  Sdn  Bhd  v  Loo  Sam  Mooi 3.When  the  act  agreed  to  be  done  is  such  that  pecuniary  
Tham  Cheow  Toh  v  Associated  Metal  Smelters  Ltd compensation  for  its  non-­‐performance  would  not  afford  
adequate  relief.
Mitigation  of  Loss -­‐ Example
where  A  transfers  without  endorsement  but  for  valuable  
-­‐ The  law  imposes  a  duty  upon  the  person  claiming  
consideration  a  promissory  note  to  B.  A  becomes  insolvent  and  
damages  to  take  all  reasonable  steps  to  reduce  or   C  is  appointed  his  assignee.  B  may  compel  C  to  endorse  the  
minimize  or  mitigate  their  loss. note,  for  C  has  succeeded  to  A’s  liabilities  and  a  decree  for  
-­‐ If  they  fail  to  take  these  steps,  the  amount  of  damages   pecuniary  compensation  for  not  endorsing  the  note  would  be  
they  can  expect  to  recover  will  be  reduced. fruitless.
-­‐ If  the  plaintiff  is  able  to  avoid  a  loss,  damages  will  not  be  
Section  20  SRA’50
recoverable  for  the  potential  loss  that  the  plaintiff  may  
SP  cannot  be  specifically  enforced  in  the  following  contracts:
have  suffered. 1. A  contract  for  the  non-­‐performance  of  which  compensation  in  
-­‐ The  party  seeking  damages  is  under  a  duty  to  mitigate  the   money  is  an  adequate  relief;
loss. 2. A  contract  which  runs  into  such  minute  or  numerous  details  or  
Kebatasan  Timber  Extraction  Co.  v  Chong  Fah  Sing which  is  so  dependent  on  the  personal  qualifications  or  volition  
of  the  parties  or  otherwise  from  its  nature  is  such  that  the  
court  cannot  enforce  SP  of  its  material  terms;
3. A  contract  whose  terms  the  court  cannot  find  with  reasonable  
certainty;
4. A  contract  which  is  in  its  nature  revocable;
Substantial  Damages Nominal  Damages Exemplary  Damages 5. A  contract  made  by  trustees  either  in  excess  of  their  powers  or  
-­‐ Refers  to  the   -­‐ Refers  to  a  token  award   -­‐ Refers  to  an  award  of   in  breach  of  their  trust;
compensation  which  is   granted  by  the  court   damages  which  is   6. A  contract  made  by  or  on  behalf  of  a  corporation  or  public  
intended  to  put  the   where  the  plaintiff  has   intended  to  penalize  a   company  created  for  special  purposes  or  by  the  promoters  of  
aggrieved  party  in  the   proved  the  defendant’s   defendant  for  his  breach.  
the  company  which  is  in  excess  of  its  powers;
position  that  he  would   breach  but  has  suffered   -­‐ The  plaintiff  in  this  case  
have  been  if  the  breach   no  actual  loss. will  be  awarded  more   7. A  contract  which  involves  the  performance  of  a  continuous  
had  not  occurred. than  his  actual  financial   duty  extending  over  a  longer  period  than  3  years  from  its  date;
loss. 8. A  contract  of  which  a  material  part  of  the  subject-­‐matter  
-­‐ It  is  only  awarded  in   supposed  by  both  parties  to  exist,  has  before  it  has  been  made,  
special  circumstances  -­‐   ceased  to  exist.
breach  of  promise  of  
marriage  6  -­‐  2                                                                                                                        ⓒ  Teh  Joo  Ling  All  rights  reserved
 Remedies
(J’00  Q3;  D’04  Q5;  J’07  Q5)

Quantum  Meruit Rescission Injunction

(J’00  Q3v) (J’00  Q3i) (D’04  Q5a)
-­‐ literally  ‘as  much  as  he  deserves’ -­‐ Rescission  is  an  equitable  remedy,   -­‐ An  injunction  is  essentially  an  order  
-­‐ Only  arises  in  cases  of  part-­‐ that  entitles  one  party  to  a  contract   of  the  court  which  prevents  or  stops  
performance. to  put  an  end  to  ti  due  to  the  breach   the  defendant  from  doing  or  
-­‐ This  is  a  remedy  by  which  a  plaintiff   or  default  of  the  other  party. continuing  to  do  something  in  breach  
may  be  able  to  obtain  a  reasonable   -­‐ Section  40  CA’50  -­‐  when  a  party  to  a   of  the  terms  of  the  contract  between  
sum  for  the  work  already  performed   contract  has  refused  to  perform  or   him  and  the  plaintiff.
by  him,  in  situations  where  the   disabled  himself  from  performing  his   -­‐ An  injunction  is  a  discretionary  
contract  does  not  provide  for  the   promise,  the  promisee  may  choose   remedy  and  not  one  which  is  
amount  or  where  the  contract  has   to  put  an  end  to  the  contract. obtainable  as  of  right.
been  discharged  by  the  conduct  of  
the  defendant. Section  65  CA’50
2
Craven  Ellis  v  Canons  Ltd -­‐ when  a  person  at  whose  option  a   1. Temporary  Injunctions
Two  Types

contract  is  voidable  rescinds  it,  the   -­‐ Section  51  SRA’50  -­‐  to  continue  until  a  
other  party  need  not  perform  any   specified  time  or  until  the  further  
promise  made  by  him  under  the   order  of  the  court.
contract. -­‐ a.k.a  interlocutory/interim  injunction.
-­‐ The  party  rescinding  the  contract   -­‐ Usually  granted  by  the  court  pending  
must  restore  to  the  other  party  any   the  outcome  of  a  full  hearing  by  the  
benefit  received  from  him.   court.
-­‐ The  party  rightfully  rescinding  the   -­‐ An  application  for  interlocutory  
contract  is  entitled  to  compensation   injunction  would  normally  be  granted  
for  any  damages  sustained  by  him  as   so  long  as  the  plaintiff  has  shown  
a  result  of  the  breach  of  the  contract   that  there  is  a  serious  question  to  be  
by  the  other  party. tried.
Hsu  Seng  v  Choi  Soi  Fua -­‐ Purpose:  to  preserve  the  status  quo  
of  the  parties  until  the  final  outcome  
of  the  court  case.
Mohamed  Zainudin  bin  Puteh  v  Yap  
Chee  Seng

2.Perpetual  Injunctions
-­‐ Granted  by  the  court  at  the  end  of  
the  hearing  and  upon  the  merits  of  
the  suit.
-­‐ The  defendant  is  thereby  perpetually  
enjoined  from  the  assertion  of  a  
right,  or  from  the  commission  of  an  
act,  which  would  be  contrary  to  the  
rights  of  the  plaintiff.
Neoh  Siew  Eng  &  ANor  v  Too  Chee  
Kwong

An  injunction  will  not  be  granted  to  

prevent  the  breach  of  a  contract  if  the  
contract  is  one  that  cannot  be  
specifically  enforced  -­‐  Section  54(f)  
SRA’50.

 6  -­‐  3                                                                                                                        ⓒ  Teh  Joo  Ling  All  rights  reserved