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SUBTOPIC 5:
DISCHARGE & REMEDIES

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2.5

Discharge of remedies

When contract is brought to an end or dissolved or


terminated.

Obligations under contract can be discharged in 6 ways:


Performance
Breach of Contract
Agreement
Term of contract
Operation of Law
Doctrine of Frustration

LAW 243 COMMERCIAL LAW

Source: Syed Ahmad Alsagoff, Principles of the law of contract in Malaysia, Lexis Nexis, 2005; Contract Act 1950.

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PERFORMANCE
As a general rule, performance of a contract must be exact and
precise and should be in accordance with what the parties had
promised.
Perform by whom?
>
By parties: S 38(1) CA 1950 provides that parties to a
contract must either perform or offer to perform their
respective promises, unless such performance has
dispensed with any law.
> S. 38(2) CA 1950 - Representative if parties died

LAW 243 COMMERCIAL LAW

Source: Syed Ahmad Alsagoff, Principles of the law of contract in Malaysia, Lexis Nexis, 2005; Contract Act 1950.

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CONTINUE
Performance may be from a third party and not necessarily
from the promisor:
> S. 42 CA 1950 provides that when a promisee accepts
performance of the promise from a third person, he cannot
afterwards enforce it against the promisor.

LAW 243 COMMERCIAL LAW

Source: Syed Ahmad Alsagoff, Principles of the law of contract in Malaysia, Lexis Nexis, 2005; Contract Act 1950.

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CONTINUE
Performed by Whom?
S. 38(1)- Parties
S. 38(2)- Representative if parties died
S. 41- requirement tt performance by promisor himself
Promisor must perform
In other case, may employ competent person to perform
Issue: consideration may move from other person.

LAW 243 COMMERCIAL LAW

Source: Contract Act 1950.

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CONTINUE
Time & Place of Performance

S. 47-50
GR= at specified time & place
If time X specified- any reasonable time (s.47)
If place X specified- promisee must specify (s. 50 & 51)

LAW 243 COMMERCIAL LAW

Source: Contract Act 1950.

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CONTINUE

Performance of Reciprocal Promise

S. 52-55
Simultaneous performance
Promisor need not perform his promise unless,
Promisee is ready/willing to perform his promise

LAW 243 COMMERCIAL LAW

Source: Contract Act 1950.

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BREACH

Occurs when party fails/refuses to perform his contractual


obligation
Defaulted party v. innocent party
Innocent has 2 options:
Repudiate - relieved from performance &
- entitled to damages
Continue contract entitled to damages
- but must perform

LAW 243 COMMERCIAL LAW

Source: Syed Ahmad Alsagoff, Principles of the law of contract in Malaysia, Lexis Nexis, 2005

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CONTINUE
2 Options to Innocent Party:
1. Discharge
May refuse further performance of his oblign
Resist any action by defaulting party
Recover any money tt he has paid
Sue for damages if suffered any
Alternatively, sue on quatum meruit for value of work
done/goods supplied
2. X Discharge
Must perform his contractual oblign
If nature of breach disentitles to discharge (warranty)entitled to damages
LAW 243 COMMERCIAL LAW

Source: Syed Ahmad Alsagoff, Principles of the law of contract in Malaysia, Lexis Nexis, 2005.

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CONTINUE
Not all breach enables to terminate contract
Depends on nature of the term breached

LAW 243 COMMERCIAL LAW

Source: Syed Ahmad Alsagoff, Principles of the law of contract in Malaysia, Lexis Nexis, 2005.

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REMEDIES FOR BREACH OF CONTRACT


The remedies available for breach of contract are:
1. DAMAGES
2. QUANTUM MERUIT
3. SPECIFIC PERFORMANCE
4. INJUNCTION
5. RESCISSION
6. RESTITUTION
7. ANTON PILLER ORDER

LAW 243 COMMERCIAL LAW

Source: Lee Mei Pheng & Ivan Jeron Detta, Commercial law, Oxford Fajar, 2011.

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1.

DAMAGES

The main purpose of damages is to enable the innocent party to


receive monetary compensation from the party responsible for the
breach of contract.
Damages are not awarded to punish a wrongdoer, but rather to put
the injured party back in the position that they would have occupied
if the contract had been performed as originally intended.
Damages are calculated on the basis of looking at what the position
should have been properly performed.
S. 74 C.A. 1950

LAW 243 COMMERCIAL LAW

Source: Lee Mei Pheng & Ivan Jeron Detta, Commercial law, Oxford Fajar, 2011.

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2.

QUANTUM MERUIT

Literally: as much as he has earned


Where Plaintiff sues for unspecified amount for his services
Concept recognized in S. 71 C.A. 1950
Different from Damages:
Damages- Claim for compensation for a loss
QM Claim for reasonable remuneration

LAW 243 COMMERCIAL LAW

Source: Lee Mei Pheng & Ivan Jeron Detta, Commercial law, Oxford Fajar, 2011.

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CONTINUE
Available when:
1. Express/implied agreement to provide services but X
agreement to price
2. Parties X perform obligation under contract, but a new
contract inferred from their conduct to have replaced the
original- QM for work done
3. Contract terminated by breach after performance of
obligation by one party- sue on QM for value of work
done
4. Person is prevented from completing his obligation by
other party.
LAW 243 COMMERCIAL LAW

Source: Lee Mei Pheng & Ivan Jeron Detta, Commercial law, Oxford Fajar, 2011.

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3.

SPECIFIC PERFORMANCE

An order of court requiring a party to perform to put the


parties in position which due performance of their obligation
would have placed them.
When specific performance available?
1. Breach of S & P of land contract Damages X adequate to
compensate
2. Subject matter of contract is rare/unique, e.g. antique car
damages X adequate
3. Exceptional case where damages would not be adequate
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4.

INJUNCTION

An order of Court to prohibit threatened or continuing


illegal conduct of certain kinds
Conditions:
1. Plaintiff must have an interest to protect
2. Damages must be shown to be inadequate
- E.g. Plaintiff will suffer irreparable harm if injunction
not granted
3. There is danger that, unless restrained, Defendant will
breach the contract or continue with the breach
complained
- E.g. Custody of children

LAW 243 COMMERCIAL LAW

Source: Lee Mei Pheng & Ivan Jeron Detta, Commercial law, Oxford Fajar, 2011.

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QUIZ
1.

Where a breach of contract occurs the innocent party can


usually choose whether or not to terminate the contract
(True / False)

2.

Which one of the following is NOT a method by which


a contract can be discharged:
a. Consideration
b. Performance
c. Frustration
d. Agreement

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CONTINUE
3.

Injunction is an order of Court to prohibit threatened or


continuing illegal conduct of certain kinds
(True / False)

4.

Which one of the following is NOT a condition of


injunction:
a. Damages are adequate
b. There is danger that, unless restrained, Defendant will
breach the contract or continue with the breach
complained
c. Damages must be shown to be inadequate
d. Plaintiff must have an interest to protect

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CONTINUE

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5.

An order of court requiring a party to perform to put


the parties in position which due performance of their
obligation would have placed them.
(True / False)

6.

The following are situations when specific


performance available except:
a.
Breach of S & P of land contract- damages
inadequate
b.
Subject matter of contract is rare/unique
damages not adequate
c.
Exceptional case where damages would not be
adequate
d.
Damages are adequate

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CONTINUE
7.

Performance may be from a third party and not


necessarily from the promisor (True / False)

8.

Performance may not be performed by representative if


parties died (True / False)

9.

Damages are awarded to punish a wrongdoer (True /


False)

10. Quantum Meruit available when a person is prevented


from completing his obligation by other party (True /
False)
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Thank you!

LAW 243 COMMERCIAL LAW