Every breach of contract entitles the injured party to recover damages for the loss he has suffered. Other remedies include specific performance and injunction which are equitable remedies.
Generally, a plaintiff may suffer various kinds of losses consequent to a breach of contract by the other party:
1. The plaintiff may have lost the value of the benefit he has conferred on the defendant, for which he refuses to pay.
2. The plaintiff’s claim may be based on expenditure incurred in preparing for the defendant’s performance.
3. The plaintiff’s claim may be based on the potential benefit or net profit he would have made if the contract had been performed.
4. The claim may be based on personal injury or damage to property occasioned by the breach, sometimes referred to as consequential losses
5. The plaintiff’s claim may be based on compensation for expenses incurred after the breach in attempts to reduce the loss
Recovery of damages for breach of contract
The general objective of the courts in awarding damages is to place the injured party or the innocent party, as far as money can do it, in the position he would have been in if the breach had not occurred, that is if the contract had been performed. ROYAL DUTCH AIRLINES V FARMEX
What is the Test of reasonable foreseeability?- remoteness of damage
It is generally recognized that it would be impracticable to allow the plaintiff to recover all the losses that in fact result from the breach, no matter how vast and unpredictable they may be. Two concepts applied by the courts to limit the quantum of damages recoverable by the plaintiff are: remoteness of damages and mitigation of damages.
With regard to remoteness of damages, the general principle is that the plf is only entitled to recover damages or such losses as were reasonably foreseeable as likely from the breach of contract. The test for recovery of damages is therefore, one of reasonable foreseeability. HADLEY V BAXENDALE
VICTORIA LAUNDRY LTD V NEWMAN INDUSTRIES
The plfs, who were launderers, decided to expand their business. To do so, they required a larger boiler. The defs, an engineering firm contracted to sell and deliver to the plfs, a certain boiler of the required capacity. The defs failed to deliver the boiler until 5 months later. The defs were aware of the nature of the plf’s business. In an action for the breach of contract, the plf’s claimed: (1) damages for the loss of the profit they would have earned in that period but for the delay in delivery; and (2) damages for the loss of exceptional profits they would have earned on certain lucrative dyeing contracts they had obtained. Held- the defs with their engineering and with the knowledge of the facts possessed by them, could not reasonably contend that they did not contemplate that some loss of profit would result from their delay in delivering the boiler. The defs were, therefore, liable for the loss of profits caused by their delay in delivering the boiler.
It must be noted that the def was an engineering firm or a seller rather than a mere carrier was relevant. A def in that position would be expected to know more about the use to which the product is to be put than a mere carrier.
Lord Asquith reformulated the rule in HADLEY V BAXENDALE and stated the following propositions:
1. First of all, it was observed that there is actually one rule governing the award of damages which states the test as one of reasonable foreseeability
2. Upon breach of contract, the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as likely to result from a breach of the contract.
3. What was at the reasonably foreseeable depends on the knowledge then possessed by the parties, or, at all events, by the party who later commits the breach
4. For this purpose, knowledge possessed is of two kinds: imputed knowledge and actual knowledge
5. Everyone, as a reasonable person is taken to know the ‘ordinary course of things; and is therefore taken or presumed to know what loss is liable to result from a breach of contract in the ordinary course. This knowledge is imputed to the def
6. Added to this imputed knowledge, in certain cases, in knowledge, which the def actually possesses, of special circumstances outside the ordinary course of things, which are likely to cause additional or special losses.
FRAFRA V BOAKYE
The respondent who had a contract to supply timber logs to the Mim Timber Co. Hired a tractor from the appellant at a rate of 80 cedis a day to enable him haul timber logs from his timber concession in Mim. Under the agreement, the respondent paid a deposit of 1,100 cedis. According to the respondent, the appellant logs a day. The respondent, however, found the tractor hauling a maximum of seven logs a day and a total of 60 logs during a period of a little over a month. Consequently, the respondent brought an action for damages for breach of contract. Held- in awarding damages for breach of contract, the test to be applied was whether on the information available to the def when the contract was made, he should, or the reasonable man in his position would have realised that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that the loss of that kind should have been within his contemplation. The appellant should have foreseen that the respondent would suffer loss if his tractor proved defective. JUXON-SMITH V KLM DUTCH AIRLINES
ASHUN V ACCRA BREWERY LTD
The plaintiff was employed by the defendant brewery. On 29th November, 1996, the Defendant’s managing-director invited the plaintiff into his office and handed him, in the presence of two other members of the management, a letter informing him that his post in the company had been declared redundant as a result of a manpower rationalization exercise by the company. The letter stated that his services would no longer be required from 2nd December 1996, but that he would be paid up to that day and also be paid three months’ salary in lieu of notice. The letter further informed him that he would receive a severance award of two and a half months pay for each year of service, commencing from 1st January 1991. At the meeting with the managing-director, the plaintiff was given his three months’ salary in lieu of notice and two days salary for December 1996. He was also paid monetary compensation for his accrued leave days. On the 5th of December 1996, the Plaintiff collected from the Accounts Department of the Defendant the severance award referred to above.
After thus collecting the compensation offered in the letter of 29th November, 1996, the Plaintiff caused his lawyer to write a letter to the defendant dated 29th January 1997 which asserted that the Senior Staff Service Conditions of the defendant dated 1st April 1995 contained no provision covering redundancy. It characterized the defendant’s action in terminating the plaintiff’s employment as smacking of arbitrariness and injustice. It expressed the view that the defendant’s declaration of the plaintiff redundant was unlawful at law and in breach of the Industrial Relations Act 1965, Act 299. It requested the holding of amicable bilateral discussions to resolve the dispute. In a letter written in response, the solicitor to the defendant asserted that, in addition to the express conditions of service for the Senior Staff, the defendant had implied contractual terms, including working rules, corporate practices and conventions, built over the years, which together constituted the engagement terms of the work force, including the senior staff. The solicitor contended, in effect, that the redundancy exercise was in accordance with these terms implied by practice and usage.
When the dispute between the parties was not resolved by the correspondence between their solicitors, the Plaintiff issued a writ of summons against the defendant on 19th May, 1997. The Plaintiff’s claim was for: a declaration that his being declared redundant is unlawful and so wrongful, general damages for wrongful termination of employment by defendant, Monetary compensation of eight (8) months’ salary for every year of service with the defendant and an order for the payment to plaintiff of all salaries, increments and all other benefits for the remaining six (6) years of service with defendant company.”
Held- a contract is not necessarily a contract till the retirement age and as such it is terminable. If it is terminated wrongfully, it does not give the aggrieved party the right to be paid salary till his retirement age. However where an employer terminated an employee’s appointment in breach of a contract of employment, the employer is liable to pay damages to the employee. The measure of damages in the quantum of what the aggrieved party would have earned from his employment during a reasonable period, determined by the court, after which e or she should have found alternative employment. This quantum is subject to the duty of mitigation of damages
What is Likelihood of loss?
In VICTORIA LAUNDRY V NEWMAN INDUSTRIES, it was stated that in order to make a contract breaker liable, if suffices that if he had considered the question, he would as a reasonable man have concluded that the loss in question was likely to result. It need to be proved that the def could as a reasonable man for foresee that it was likely to result. THE HERON II.
Generally, as long as the kind of damage or loss caused by breach of contract was within the reasonable contemplation of parties at the time the contract was made, I is immaterial that the chain of events which resulted was unlikely or far more serious than what was reasonably contemplated.
WROTH V TYLER
The def failed to complete his contract to sell a house for £11,500. It was held that the def was liable to pay £5,500 as damages. A rise in the price of the house was in the contemplation of the parties when the contract was made, and it is irrelevant that they never expected a rise which would nearly double the price. PARSON LTD V UTTLEY INGHAM & CO
Assessment of damages for breach of contract for the Sale of Goods
Measure of damages for non-delivery-section 54
Damages for non-delivery are determined in the same way as damages for non-acceptance. The measure is the loss which could reasonably have been foreseen by the seller at the time when the contract was made as likely to result from his breach of contract.
Formula for calculation of damages for non-delivery-section 54(2)
Difference between the market price and the contract price where the market price is higher
Market price on which date
• where a times has been fixed in the contract for delivery, it is the market price of the goods on the date fixed ford delivery that is used
• where no date has been fixed, it is the market price on the date the seller actually refused to deliver the goods
• where a date has been fixed for delivery and the seller repudiates the contract before the date but the buyer does not accept the repudiation, it is the market price on the date fixed for delivery
• where the buyer accepts the repudiation it is the market price on the date on which the buyer repudiated the contract
• where the goods are to be delivered within a reasonable time, it is treated as though no date has been fixed for the delivery of the goods and therefore it is the market price on the date the seller actually refused to deliver the goods
Compensation for wasted expenditure
The court would compensate the plaintiff for the expenditure, which has been wasted as a result of the defendant’s breach if he can establish the expenses made in anticipation of the defendant’s performance of the contract and also show that the waste was a result of the breach. ANGLIA TELEVISION LTD V REED
What is Mitigation of damages?
Generally, a plaintiff is entitled only to such damage as would have been suffered by a person acting reasonably after the breach. This means that where that where the party not in default, is in a position to take any action which would reduce or avoid the losses resulting from the breach of the contract, he is required to do so. A party not in default is under duty to mitigate his losses consequent upon the breach and thus can only recover damages for such losses occasioned by the breach as could not have been avoided by mitigation. Whether or not the plaintiff has failed to take reasonable steps to mitigate the loss caused by the breach is a question of fact depending on the particular circumstances of each case and the burden of proving such failure rests upon the defendant. PAYZU V SAUNDERS,
NUTAKOR V ADZRAH
The defendants by an indenture of conveyance containing the usual covenant of title purported to convey a piece of land to the plaintiff in consideration of £G45. In fact the land in question was family land and the defendants had no authority to make any grant of it. When the plaintiff made preparations to commence building operations on the land, he was warned by the family to keep off. Not heeding this warning, he proceeded to erect a building worth over £G4,000 on the land. The family successfully brought a suit for a declaration of title to and recovery of possession of the land. The plaintiff then sued the defendants claiming the value of the building he had put up on the disputed land and expenses incurred by the plaintiff in defending his title. The defendants did not dispute liability for breach of their covenant of title, but contended that they were not liable to pay the plaintiff the cost of his building. They however conceded that the plaintiff was entitled to a return of his purchase price and interest on it up to when the plaintiff learnt of his lack of title. The trial judge rejected the defendants’ submissions and awarded the plaintiff £G4,000 damages, taking into account the building erected by the plaintiff. From this judgment, the defendants appealed to the Supreme Court. Held- the proper measure of damages was the market value of the land at the date when the purchaser became seized of knowledge that he had acquired no title to the land by reason of the incapacity of his vendors to give him title. Because of the duty to mitigate damages, no improvement which a purchaser undertook after he had learnt of his want of title would be legally chargeable to the vendor in breach. On the facts, the plaintiff here had erected his building subsequent to his discovery of the defect in his vendors’ title. Consequently, the trial judge erred in taking the value of the building into account in assessing the plaintiff’s damages
SOCIETE GENERALE DE COMPENSATION V MOSHIE ACKERMAN,
By a contract drawn in the French language but executed in Ghana, the plaintiff, an Israeli national, agreed to serve the defendants, an external French company, as the defendants’ works supervisor “under the control of the defendants’ Tema [p.414] representative, at their building site at Tema, Ghana” for a fixed period of three years inclusive of a four-month probation period. The plaintiff’s salary was made payable in French currency in France with the exception of his living expenses which were to be paid in Ghana currency. Each party was entitled to terminate the contract during the probation period without either notice or compensation subject to the express limited right of the defendants to terminate the contract for either “a professional or disciplinary reason.” However, before the expiration of the probation period, the defendants summarily terminated the plaintiff’s contract on completely different grounds.
ATTITSOGBE V POST TELECOMMUNICATIONS CORPORATION,
The defendant locked a letter box it had rented out to the plaintiff, ostensibly for non-payment of rent. After it had come to his notice that the letter box had been locked, the plaintiff who had already paid his rent for 1994 at the time of closure of the letter box, made some inquiries and was informed by one of the defendant’s officials that the box was locked up for non-payment of rent. The plaintiff then went to see the defendant’s post master and represented to him that he had not received his bill, whereupon he was given a fresh bill. Thereafter, the plaintiff wrote to the defendant per the post master (exhibit C) for confirmation as to whether or not the defendant had locked the plaintiff’s letter box and how much was due to be paid in respect of the letter box. The plaintiff did not however disclose that he had already paid in respect of the letter box. Subsequently, after his letter box had remained locked for over a month, the plaintiff filed a suit against the defendant for a declaration that the closure of the letter box was wrongful and for damages. In support of his action the plaintiff asserted, inter alia, that as a result of the closure of the letter box for over one month he lost communication with the outside world, as well as business contacts and thereby suffered extensive damage. The plaintiff however admitted under cross-examination at the trial that he did not disclose earlier to the defendant (per the post master) that he had already settled his bill for 1994 because, as he put it, “he wanted to trap them and for them to commit themselves more.” After finding on the evidence that the plaintiff discovered the closure of his letter box on 11 February 1992 and that the defendant did not open the box till sometime in April 1994. Held- The law imposed on a claimant a duty of taking all reasonable steps to mitigate the loss consequent upon the breach of his contractual rights and barred him from claiming any part of the damage which is due to his negligence to take such steps. However, it was the defendant who assumed the burden of producing evidence to establish that as a reasonable man, the plaintiff should have taken steps to mitigate his loss. Thus any loss which was directly caused by the claimant’s failure to fulfil that duty was not recoverable from the defendant; yet, since the defendant was the wrong doer, the standard imposed on the plaintiff in such circumstances was not a high one. In the instant case, the plaintiff knew he had paid his rent but he failed to disclose it to the defendant but rather gave the defendant the impression that he had not paid the rent. By deliberately trapping the defendant, the plaintiff effectively created an avenue whereby his loss would be increased and thus his damage claim; and having done so to his detriment the plaintiff would not be entitled to recover damages for his misrepresentation which was an act in bad faith. In any event, whatever loss was occasioned the plaintiff after the closure of the letter box would not be recoverable because if the plaintiff had acted in good faith he would have had the box opened by 12 February 1994 by showing evidence of payment.
DELMAS AGENCY GHANA LTD V FOOD DISTRIBUTORS INTERNATIONAL LTD
The plf-resp (FDI) ordered and purchased some cartons of yam to be shipped to the US, alleged by the def-appellant. The plf claimed that the yams were rendered fit for export, after a heavy rainfall, as a result of the defs inaction and sued for loss of profit and the value of the yams claiming an amount $20,000 in the statement of claim as well as paying a nominal filing fee of ₵5,500. In the meanwhile they did nothing to minimize their losses. Held- the law is that where the Plaintiff has failed to mitigate his loss where there were reasonable opportunities for doing so he is only entitled to nominal damages.
Scope of duty to Mitigate
The scope of the obligation to mitigate one’s losses upon breach of contract can be summed up in the following three points:
1. First of all, it must be noted that the plaintiff is expected to do only what is in the normal course of business. He is not required to take risks with his money, or to take steps which might damage his commercial reputation, or to take any complicated legal action against a third party in order to mitigate his loss. PILKINGTON V WOOD
2. Secondly, if the plaintiff in fact avoids or mitigates the loss by taking certain steps after the breach , he cannot recover any damages for such avoided loss
3. Thirdly, the plaintiff may recover damages for any loss or expenses incurred by him in reasonably attempting to mitigate his loss following the defendant’s breach. BANCO DE PORTUGAL V WATERLOW
What is Mitigation and anticipatory breach?
The application of the rules on mitigation is of great significance in the assessment of damages in cases of anticipatory breach. A person who accepts the repudiation is under a duty to mitigate his losses and is only entitled to recover such damages as he would have incurred if he had taken such reasonable steps in mitigation. Under the sale of goods act, where a buyer repudiates the contract of sale before the date fixed for acceptance of the goods and the seller accepts the repudiation, damages in such a case are calculated as the difference between the contract price and the market price on the date of repudiation.
Section 48—Assessment of Damages.
(1) The measure of damages in an action under section 47 of this Act is the loss which could reasonably have been foreseen by the buyer at the time when the contract was made as likely to arise from his breach of contract.
(2) Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price—
(a) if a time has been fixed for acceptance, or if the buyer repudiates the contract before the time of performance, and the seller does not accept the repudiation, at the time or times when the goods ought to have been accepted;
(b) in any other case, at the time or times of the refusal to accept the goods.
(3) In this section a time is not deemed to have been fixed for acceptance by reason only that the goods are to be accepted within a reasonable time.
The second option is to reject the repudiation and affirm the contract. Here, the plaintiff is not under a duty to mitigate until the date fixed for performance arrives and the defendant refuses to perform. The measure of damages us the difference between the contract price and he market price on the date fixed for acceptance.
Measure of damages for non-delivery- section 54 of the sale of goods act
(1) The measure of damages in an action under section 53 of this Act is the loss which could reasonably have been foreseen by the seller at the time when the contract was made as likely to result from his breach of contract.
(2) Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the market or current price and the contract price —
(a) If a time has been fixed for delivery, or if the seller repudiates the contract before the time of performance, and the buyer does not accept the repudiation, at the time or times when the goods ought to have been delivered;
(b) in any other case, at the time or times of the refusal to deliver the goods.
(3) In this section a time is not deemed to have been fixed for delivery by reason only that the goods are to be delivered within a reasonable time. TREDEGAR IRON COAL CO. V HAWTHORN BROS. & CO
Damages fixed by the contract-liquidated damages and penalties
Sometimes a contract may contain a clause which stipulates or prescribes a fixed amount of money as being payable upon a breach of contract by one party. Such fixed amounts, where they represent a genuine pre-estimate of the innocent party’s possible loss are normally enforceable by the courts as liquidated damages. However, where the fixed sums are in the nature of penalties or punitive in nature, stipulated as a threat to hold the other party to performance and obviously greater than any possible loss that might be occasioned by the breach, the courts will not give effect to that provision.
What is the Distinction between liquidated damages and penalties?
A clause in a contract qualifies as a liquidated damages clause if it is a genuine pre-estimate of the loss of one party in the event of breach by the other party. A clause is said to be a penalty, if it is obviously greater than any loss likely to be suffered by the innocent party; and is stipulated in terrorem of the offending party or as a security to the promisee for the performance of the contract. LAW V REDDITCH LOCAL BOARD
Whether a particular clause or stipulated sum is a liquidated damages clause or penalty is a question of construction determined by the nature of the contract, the terms of the clause and the surrounding circumstances. This is judged at the time of the making of the contract and not at the time of its breach. DUNLOP PNEUMATIC YRE CO LTD. V NEW GARAGE & MOTOR CO. Generally, the burden of showing that the fixed amount in a contract is a penalty ad not liquidated damages lies on the party who is sued for damages. ROBOPHONE FACILITIES V BLANK.
First of all it is established that the fact that the parties have used the terms penalty or liquidated damages in the contract is not of itself decisive. Certain rules have been laid down for the guidance of the courts in deciding whether a particular sum stipulated in a contract as payable upon breach is in substances a penalty or liquidated damages clause.
These rule or guideline are clearly summarized by Lord Dunedin in the case of DUNLOP PNEUMATIC TYRE CO LTD V NEW GARAGE MOTOR CO
The following guidelines were given for the determination of whether a fixed sum is a penalty or liquidated damages
1. It will be held to a be a penalty if the sum stipulated is extravagant and unconscionable in amount in comparison with the greatest loss which could conceivable be prove to have resulted from the breach
2. A fixed sum will be held to be a penalty if the breach consists only of the payment of sum of money, and the sum stipulated as payable upon breach is a sum greater than the sum which ought to have paid
3. If a single is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious damage, and other trivial damage, there is a presumption (but no more) that it is a penalty
4. A fixed sum payable upon breach may still qualify as liquidated damages even if the consequences of each particular breach are incapable of precise calculation. This is so as long as the stipulated figure is justifiable as a genuine pre-estimate of possible loss. CAMPBELL DISCOUNT CO LTD V BRIDGE
Recovery of non-economic losses
Usually, a breach of contract leads to financial losses or at least losses which can easily be quantified in terms of money. The courts are generally reluctant to compensate a plaintiff for purely subjective losses such as disappointment, injured feelings, etc in cases of breach of contract. ADDIS V GRAMAPHONE CO LTD
There is no longer an absolute rule that damages cannot be recovered for mental distress in cases of breach of contract. In appropriates circumstances, damages may be awarded to compensate the plaintiff for mental distress, disappointment etc. GODLEY V PERRY-pain and suffering, H WEST & SONS LTD V SHEPHARD- injured feelings, CHELINI V NIERI- physical or mental illness resulting from injured feelings, BAILEY V BULLOCK- physical inconvenience. JARVIS V SWAN’S TOURS
What are Equitable remedies?
The equitable remedies for breach of contract include specific performance and injunction
What is Specific performance?
An order for specific performance is a decree by the court which compels a contracting party to do that which he has undertaken to do under the contract. This remedy is purely equitable in origin and it acts in personam. It is discretionary and not available to the party seeking it as a matter of right. LAMARE V DIXON. It has been held that equity will only grant specific performance, if considering all the circumstance, it is just and equitable to do so. STICKNEY V KEEBLE.
Conditions for granting specific performance
As a general rule, specific performance will be granted only where damages will not adequately compensate the plaintiff. For this reason, specific performance is generally not ordered in cases of breach of contracts to sell commodities or share, which are readily available in the market.
Damages will be deemed to be inadequate where the plaintiff cannot get a satisfactory substitute or where the seller refuses to deliver specific or ascertained goods. Indeed, section 58 of the sale of goods act states: in an action for breach of contract to deliver specific or ascertained goods the court may, if it thinks fit, by its judgment direct that the contract should be specifically performed without giving the seller the option of retaining the goods n payment of damages.
In contracts involving the sale of land in particular, the courts have traditionally taken the view that damages are an inadequate remedy and therefore the remedy of specific performance is normally available to either party in such contracts.
REDCO LTD V SARPONG
The respondent agreed to purchase a flat from the appellant-company at a cost of ¢72,000. In 1980 the respondent made a down payment of ¢19,000, with the remainder to be paid upon completion. The appellant in 1981 informed the respondent that the flat would be ready in December 1981 and was asked to pay a second instalment of ¢31,400. The respondent agreed and paid ¢32,000. At the end of 1981 no flat was allocated to the respondent. Seven years later the appellant informed the respondent that the flat now cost ¢3 million. The respondent immediately sued on his contract and claimed specific performance on the ground that although ¢21.000 was outstanding, what had been paid so far constituted sufficient part performance to warrant the grant of specific performance. In his defence the appellant stated that extraneous circumstances militated against the completion of the flat by the agreed date. The respondent then moved the court for judgment in that the defence disclosed no reasonable defence. Judgment was then given for the respondent. Held- The basis upon which specific performance would be granted in equity was quite settled. Certain contracts were of such a nature that time became of the essence, and a mere award of damages was not enough. For example, in contracts of sale where a house was required for immediate residence, as in the instant case, a delay of six to seven years without any explanation could not be compensated for by mere damages when it was clear that such damages could not supply the flat for which the respondent had paid a substantial purchase price. There was ample evidence that the conditions set out in the contract to be fulfilled by the respondent had all been, or a substantial part had been, fulfilled which in equity would entitle him to his equitable right of specific performance.
AHUMAH V AKORLI (NO 2),
In 1961 the defendant negotiated with B.T.C. for the sale of a plot of land for £G1,200. A deposit of £G800 was paid to B.T.C of which the plaintiff contributed half and the defendant half. The defendant then went into possession and managed the land, paying the balance of the purchase price from the money thus obtained. In 1963 B.T.C. executed a formal conveyance to the defendant. The plaintiff then asked the defendant to convey to him his portion of the land, and an area 300 ft. by 300 ft. was demarcated on which stood an engine room for which the defendant demanded an extra £G200. The size of the plaintiff’s portion was later reduced to 300 ft. by 100 ft. represented by a site plan, exhibit C, approximately one-third of the whole area and he accepted this but refused to pay for the engine room. Relations between the parties deteriorated and the plaintiff sued for specific performance of an oral contract by which he alleged the defendant was to share the land with him equally. He further asked for an account of the rents, tolls and other moneys collected by the defendant from the land since 25 February 1963 and an order for the payment to him of a one half share of the amount. Held- this was a case in which specific performance should be ordered because: the land was known, the terms of the purchase were known and the price paid by the plaintiff was known. There was no doubt that there was to be some form of sharing, which, in the absence of any fixed proportions to the contrary, the court should ensure was reasonable and equitable. The matter was simplified by the plaintiff’s acceptance of the one-third share and the one point of difference, which the court could settle, was the extra payment for the engine room. DJAN V OWOO,
PRAH V ANANE
By an agreement in writing dated 3rd June, 1958, between the appellants and the respondent, drawn up by the appellants, the respondents allowed her seven –room house to be pulled down by the appellants for the purpose of building a market. By the same agreement, the appellants promised to erect for the respondent, as a substitute, a new house containing seven rooms in small sizes each and reserved to the respondent a right of action in the event of default on the part of the appellant. Shortly after the agreement, the appellants stated building in the market which took them only three months to complete. They however failed to erect for the respondent the house promised. After a period of over three years the respondent brought this action against the appellants claiming damages for breach of contract. The appellants denied that they had committed a breach of the contract. The appellants denied that they had committed a breach of the contract contained in the agreement and maintained that their failure to erect the house for the respondent earlier was due to her inability to select a site for the building. Held- the learned trial judge rejected the appellants; case and held inter alia that they had showed a total lack of consideration for the respondent’s interest. The appellants had committed a breach of contract and therefor liable to the respondent in damages.
The court noted that the general rule in equity was that an agreement to erect buildings could not be specifically performed, but there are certain exceptions to that general rule. The authorities show that, where there is a definite contract, by which a person, who has acquired land in consideration thereof, has agreed to erect on the land so acquired a building, of which the particulars are clearly specified, and the erection of which is of an importance to the other party which cannot adequately be measured by pecuniary damages, that is a case in which specific performance ought to be ordered and also to be considered whether there is a building of which the particulars are clearly specified.
The question in the instant case was whether from the evidence on record the case for the respondent could be brought with any of the exceptions above stated. The first question is whether the work, as described in the contract, was sufficiently defined. It was held that it was not. The other question was, whether the respondent’s building obtained possession of a piece or parcel of land on which the respondent’s building was to be erected by means of the contract for its erection. Clearly they did not. It seemed therefore, that this case could not be brought within the exception laid for an order for specific performance.
Specific performance will normally be granted where the quantum of damages is difficult to assess and would be unfair to the plaintiff.
DOMINS FISHERIES LTD V BREMEN-VEGESACKER FISCHEREI
The defendants, the owners of a foreign fishing vessel, The Paderborn, offered to sell the vessel to the plaintiffs, a fishing company, for ¢30,000.00 after a lengthy discussion at a meeting held between the solicitors of both parties. The terms of the sale were verbally agreed upon at the meeting where the plaintiffs, to whom the vessel was of special interest and value, accepted the offer through M., their solicitor. Consequently, M. on behalf of the plaintiffs, paid to the defendants through Q. their solicitor, ¢2,000.00 as part payment of the agreed deposit of ¢3,000.00. On the receipt of that amount, Q. embodied all the terms of the sale verbally agreed upon in a letter in which M. was requested to confirm in writing the plaintiffs’ acceptance of the terms of sale inclusive of payment of the balance of the purchase price by twelve equal monthly instalments commencing from a specified period. On 23 November 1970, M. in his reply, enclosed a cheque for ¢1,000.00 as final payment of the deposit and confirmed the plaintiffs’ [p.491] acceptance of the offer but requested a “three-month moratorium before the commencement of the payment of the instalments.” The plaintiffs’ request was however rejected on 28 December by the defendants through Q. their solicitor. M. therefore on behalf of the plaintiffs, wrote to Q. on 5 January 1971 to the effect that the instalment proposals were acceptable to the plaintiffs. The letter was delivered by hand on the same day. However, on 6 January, Q. verbally informed M. that the defendants were no longer prepared to sell the vessel to the plaintiffs because the defendants had already concluded a contract on 30 December 1970 to sell the vessel to the Ghana Government.
The plaintiffs sued claiming, inter alia, a declaration that the defendants had by a contract sold the vessel to them, an order for specific performance of the contract and general damages for loss of use. The defendants, however, contended inter alia that (a) the three-month moratorium requested by the plaintiffs had modified the instalment proposals and that that amounted to a rejection and counter-offer which was subsequently rejected and therefore no contract was concluded on 23 November 1970, (b) in any case, their offer was validly withdrawn on 6 January 1971, and (c) the remedy for specific performance was not in the circumstances available to the plaintiffs.
Held- having regard to all the surrounding circumstances and particularly to the deposit payments by the plaintiffs as well as the previous negotiations held between the parties, the plaintiffs’ letter of 23 November amounted to acceptance of the defendants’ offer. The court noted that specific performance was supplementary to the common law remedy of damages and its grant was discretionary to meet cases where, as in the instant action, remedy by an action for damages was not adequate compensation for breach of contract. Since the vessel in the instant case was of special interest and value to the plaintiffs who might not easily get its kind from another source, an order for specific performance would be granted, even though the vessel was a foreign vessel and it had been transferred to a third party.
The court will not order a contract to be specifically performed if the contract is incomplete or if its terms are uncertain.
ASARE V ANTWI
The defendant owned several plots of land at Adabraka some of which he sold to interested parties. The plaintiff expressed interest in buying one of these plots provided the price was right. The plot was never identified. Three years later the plaintiff sued the defendant for “specific performance of a ‘partly performed’ agreement for the sale by the defendant of his plot of land at Adabraka measuring 120 feet by 60 feet, for the sum of ¢2,000.” In support of his claim the plaintiff tendered exhibit A, a temporary receipt, which read, “Receipt from Mr. S. K. Antwi the sum of fifty pounds (£G50) being part payment of the cost of plot 120 ft. x 60 ft. to be sold to him. (Sgd.) J. G. Asare, 1 December 1964.” Held- there was no effective contract between the parties which could be specifically enforced since (a) there was no agreement as to the purchase price; (b) the parties were not ad idem about the subject-matter of their inchoate agreement; (c) the payment of part of the purchase price per se was not sufficient evidence of part performance of a contract of sale of land, and it could not be deduced from exhibit A that the payment of £G50 was made as part performance of a concluded contract of sale
Specific performance will not be ordered if it would be impossible for the defendant to comply with the order. An example is contract of sale of land not owned by the vendor (WATTS V SPENCE) or if the contract is oppressive (WALTERS V MORGAN).
Further, specific performance will generally be refused if the plaintiff had acted unfairly or dishonestly. Also, the courts have held that equity cannot be invoked in aid of an illegal transaction.
ZAGLOUL REAL ESTATES CO LTD (NO 2) V BRITISH AIRWAYS LTD
In 18 June 1986 the plaintiff, a limited liability company incorporated under the laws of Ghana, agreed in writing to lease out part of its premises to British Caledonian Airways Ltd (BCAL), an external company, for a period of 25 years commencing from 1 October 1986. In October 1986, the parties in pursuance of the agreement executed a formal lease and a total rent of 40 million cedis for 25 years was paid in advance by the defendants. Before the execution of the lease, both parties were aware of the External Companies and Diplomatic Mission (Acquisitions or Rental of Immovable Property) Law, 1986 (PNDCL 150), which had come into force on 13th June 1986. The law provided that any or tenancy in respect of any immovable property to an external company should receive the consent in writing of the committee and the payment of the said sum must be in convertible currency notwithstanding any agreement to the contrary. To circumvent PNDCL 150, the solicitors of the BCA prepared a deed of indemnity which was subsequently signed by the parties by which if BCAL, as an external company were obliged to pay rents to the plaintiffs in convertible currency, then, the plaintiffs would give an indemnity to BCAL to the full extent of the sum of 40 million cedis paid by the lessee (BCAL) and will on demand repay to the lessee the said sum.
Sometime later the operations of BCAL ceased in Ghana and they, with the consent of the plaintiff assigned the remainder of the 25-year lease to British airways Ltd (BA Ltd), another external company. The ministry of foreign affairs later requested that BA Ltd pay rent in respect of the leased property in convertible currency (US$ 1900) per mouth as assessed by the implementation committee established under PNDCL 150. The plaintiffs therefore tendered back to BA Ltd the 40 million cedis under the original agreement. BA Ltd refused to accept the payment contending that the advanced payment had discharged them from complying with the provisions of PNDCL 150.
The Supreme Court held that the deed of indemnity was a dishonest device which sought to defeat the intentions of PDCL 150 and at the same to enable the defendants to avoid any loss from such a violation. Such an agreement was the defendant to avoid any loss from such a violation. Such an agreement was illegal and therefore void. Having any regard to the fact that deed was void, the issue of the 40 million cedis was not an issue which had to be remitted to High Court for retrial since it was not legitimate because the deed from which it arose was avoid and, therefore unenforceable.
The court will not order specific performance of contracts for personal services or contracts he performance of which requires the constant supervision of the court. As a rule, the court will not order specific performance of contract involving the application of personal skill (for example the court will not compel an employee to do any work by ordering specific performance). FRANCIS V MUNICIPAL COUNCILLORS OF KUALA LUMPUR. This is because it is improper to compel one man to serve another. By the same rule, an employer will not be compelled by equity to keep a servant. PAGE ONE RECORDS LTD V BRITTON.
Specific performance will not be ordered where there is lack of mutuality. That is the remedy is available to the plaintiff only if it can be awarded against him. For this reason specific performance will generally not be granted to a minor since the remedy does not lie against a minor.
It has been established, however that where the plaintiff has fully performed his obligations under the contract, such that there is nothing that the other party could possibly ask a court to specifically decree. The remedy would be available to the plaintiff in spite of the lack of mutuality.
LARTEY V BANNERMAN
The defendant, a lessee of the State Housing Corporation, contracted to sell his property to B.L. B.L. informed the defendant that he was buying the property for his daughter – the infant plaintiff. After B.L. had, in pursuance to the contract, [p.462] paid part of the purchase price and given the balance to his solicitor to be given to the defendant when he executed the deed of assignment, the defendant refused to execute the deed of assignment. Consequently, B.L. brought an action in his own name for, inter alia, specific performance against the defendant. Whilst giving evidence, however, B.L. testified that his daughter was a minor. He was therefore cross-examined about his authority to commence and maintain the action. The writ was subsequently amended to indicate that the plaintiff was suing by B.L. as her next friend. The defence in an amended plea thereupon claimed that the agreement could not be specifically enforced as it purported to have been made with an infant. The trial judge refused to decree specific performance on the ground of the absence of mutuality in contracts involving infants. Held- the sole justification for the rule that specific performance might not be granted to an infant was that because of the privileged position of the infant the other party could not obtain the remedy against him. The basis of the rule therefore disappeared where the infant came before the court with a request for the decree after he had performed his side of the bargain because there was nothing that the other party might possibly ask a court to specifically decree. The remedy of specific performance should therefore be available to the plaintiff to compel the defendant to perform his part of the contract.
What is Injunction?
An injunction is an order of the court to a party to a contract to do or refrain from doing a specified act. It is issued when the conduct of a party is likely to cause injury to the applicant and that injury could not be adequately compensated in damages. An injunction operate in personam. An injunction may be prohibitory or mandatory.
A prohibitory injunction orders a defendant not to do something in breach of a contract he has entered into and it enjoins the defendant to refrain from a particular type of conduct. It is generally granted in the case of a negative promise that is a promise not to do something or engage in a particular kind of conduct. It is also known as a restrictive injunction.
A mandatory injunction requires a defendant to reverse the effects of an existing breach. It requires the defendant to do a particular act. With mandatory injunctions, a court will apply the balance of convenience test, refusing relief if the hardship caused to the defendant by compliance with the order outweighs the consequential advantages to the plaintiff.
With regards to the period of operation, an injunction may be an interlocutory or interim injunction, which is designed to regulate the position of the parties pending a hearing or final determination of the suit. An injunction may be perpetual which is given after the plaintiff’s right has been established. This is also called a permanent injunction
Prima facie, an injunction will not be granted to restrain actionable wrongs for which damages are the proper and adequate remedy. In granting an injunction the courts will consider a number of factors to ensure that the order when granted will not unduly prejudice the interests of the parties and will in fact achieve the purpose for which it is given.
First of all the court will generally not order the defendant to do the impossible; nor would it grant an order of injunction if it will confer no appreciable benefit to the plaintiff and would be materially detrimental to the defendant. CHARRINGTON V SIMONS & CO LTD
The general rule is that an injunction will not be granted if the effect is to do directly or indirectly compel the defendant to do acts, the performance of which the court would not grant specific performance. On this basis, an injunction will generally not be granted to require the performance of a contract for personal services.
However there are some important exception to this rule. A service contract may contain negative obligations which could be enforced by injunction without compelling positive performance of the whole contract. LUMLEY V WAGNER
An important qualification has, however been introduced to the effect that an injunction will not be granted if its effect would be to compel the defendant to work for a particular person or force the alternative starving. WHITWOOD CHEMICAL CO V HARDMAN. In other words, an injunction may not be granted to prevent the defendant from breaching an undertaking because the inevitable result would be to compel him to work for the plaintiff or otherwise starve.