Prepared by:
Norazla Abdul Wahab
 When there is a breach of contract, the
party not in default may claim 1 or more of
the respective remedies.
REMEDIES OF CONTRACT
DAMAGES
SPECIFIC PERFORMANCE
INJUNCTION
QUANTUM MERIT
RESCISSION
1. DAMAGES
Categories
of
damages
Liquidated
damages
Types of
Damages
DAMAGES
 The award of damages is the common law remedy for
a breach of contract.
 The purpose of damages:
 to compensate the victim for the loss that caused
him by the breach of contract
 not to punish the party in default.
CATEGORIES OF DAMAGES
1.Substantial
Damages
2. Nominal
Damages
3.Exemplary
or punitive
damages
a. Substantial Damages
 Pecuniary / monetary compensation:
intended to put the plaintiff in the position he
would have enjoyed had the contract been
performed.
a. Substantial Damages
 Damages has to be proved.
To recover damages, the plaintiff has to prove the loss
he has actually suffered.
 failure to do so will result the item of loss being
disallowed.
Bonham-Carter v Hyde Park
Hotel Ltd
 Lord Goddard stated :
“Plaintiff must understand that if they bring an action
for damages it is for them to prove their damages; it
is not enough to write down the particulars, and so
to speak, throw them at the head of the court, saying:
“that is what I have lost; I ask you to give me these
damages..” They have to prove it.”
Lee Sau Kong v Leow Cheng
Chiang [1961] MLJ 17
 The parties entered into an agreement in writing
whereby the respondent agreed to purchase all the scrap
iron lying within the Bundi Concession, Terengganu.
 Respondent paid deposit and advances which is
totaling to RM22,600.00 and proceeded to remove
metal.
 Later on, the appellant alleged that the Respondent had
removed from the Concession’ machinery and metal
other than scrap.
Lee Sau Kong v Leow Cheng
Chiang [1961] MLJ 17
 Eventually, they had a meeting for that and the
Appellant then agreed that the respondent can continue
with the said agreement but Respondent should pay
RM 4,000.00 for that.
 The Respondent then paid via post dated cheque. Upon
presented for payment, the said payment of the cheque
had been stopped.
 The appellant then terminated the contract and claimed
for damages.
Continue…..
 Held:
 The trial court found as a fact that the respondent was
not in breach of contract.
 The Appellant had no justification for forbidding
the respondent to remove further quantities of
scrap iron and the act of Respondent to put the said
agreement as at end is justified.
 Then , the respondent was entitled to such damages
as he could prove.
b. Nominal Damages
 In exceptional situations, a plaintiff may be awarded
‘nominal damages’ i.e. a very small sum of
damages.
 Nominal damages consists of small token award
where the plaintiff has proved a breach of
contractual rights but suffered NO ACTUAL LOSS.
b. Nominal Damages
 Nominal damages may also be awarded:
 merely to acknowledge that his right have been
breached or
he is a victim of breach of contract
 but is unable to prove the loss that he claims.
Loh Kit On(t/a Fuji Hairdressing Saloon)
v Tanjong Aru Hotel Sdn Bhd
 The Plaintiff was the sole proprietor of a hairdressing
saloon. The Plaintiff entered into an agreement with
the Defendant, the owner of Tanjong Aru Beach Resort
whereby the Defendant let the said premises to the
Plaintiff for a term of three years.
 Several months after the tenancy has been made the
defendant then re entered the premises and evicted
the Plaintiff. The Plaintiff claimed damages for breach
of agreement.
Continue…..
 The defendant said that their re entry of the premises
is justified and maintained that the plaintiff in fact
breach of the contract because had caused illegal
massage activities to be carried out on the premises
which entitled them to terminate the agreement.
Continue…..
Held:
 As there is no evidence as regard to that, the judge
gave judgment in favour of Plaintiff.
 Since, there are no evidence as to the damages
suffered by plaintiff.
 Therefore, nominal damages of RM1 and costs were
awarded to the Plaintiff.
c. Exemplary or punitive
damages
 Exemplary damages are also known as ‘punitive’ or
vindictive’ damages.
 Consists of sum awarded which is far greater than
the actual pecuniary loss suffered by the plaintiff.
c. Exemplary or punitive
damages
 Awarded only in exceptional circumstances such as
breach of contract of marriage, or when banker
wrongfully dishonour a trader’s cheque or to recover a
loan (i.e. Dato’ Abdullah b Hj Mohd Hashim v Sharma
Kumari Shukla (no.3) [2001] 1 AMR 334.
 The measure of damages recoverable which is set out
in S.74 (1) of CA, 1950 is substantially re-enact the
common law rule laid down in the judgment of
Alderson B in Hadley v Baxendale (1854).
 “Where 2 parties have made a contract, which one of
them has broken, the damages which the other party
ought to receive… should be considered arising
naturally, i.e. according to the usual course of things
from such breach of contract itself, or, such as may
reasonably be supposed to have been in the
contemplation of both parties at the time they
made the contract as the probable result of the
breach of it.”
Hadley v Baxendle (1854) 9 Ex 341
 Plaintiff were mill (kincir angin) owner in Gloucester.
 They engaged the Defendant, a carrier to take a broken
crankshaft to Greenwich and asked for a new one.
 Defendant (carrier) promised that it would be there
for following day, but Defendant had delayed in
transporting the crankshaft.
 Consequently, the replacement was not delivered
when it should have been. The mill remain idle for a
longer time.
Continue….
 The Plaintiff sued for damages for the loss of
profit that would have been earned if the
replacement of crankshaft available on time.
 The Defendant (carrier) said that the only information
given “the article to be carried was the broken shaft of
a mill and that the plaintiffs were the miller of the mill.
CONTINUE…..
 Held:
The Defendants had not been told about or
informed of the special circumstances that the
mill would be inoperative until the new
crankshaft delivered.
 Consequently, it would not be apparent to him the
Plaintiff would sustain loss or profit by reason of the
delay.
 It would not be reasonable in the circumstances to
hold Defendant reasonable for the loss or profit.
Section 74
• Compensation For Loss or Damage Caused by Breach
of Contact
(Title)
Section 74(1)
First Limb
Section 74(1)
Second Limb
• The party who suffers by the breach is entitled to
receive, from the party who has broken the contract,
compensation for any loss or damage caused to him
which naturally arose in the usual course
• The parties knew when they made the contract, to be
likely to result from the breach of it.
Section 74(1)(First Limbdamages arising naturally )
 a) The situation that when the damage or loss
caused to the injured party arose naturally in
the usual course of things from the breach.
 To recover that damages, the Plaintiff has to establish
that the loss he sustained was caused by the
breach.
Section 74(1)(First Limbdamages arising naturally )
 Illustration (f) Section 74:

A contracts to repair B’s house in a certain
manner, and receives payment in advance. A
repairs the house, but not according to the
contract. B is entitled to recover from A the cost
of making the repairs conform to the contract.
Section 74 (1) (Second Limbspecial damages)
 b) the parties knew, when they made the contract, to
be likely to result from the breach of it.
 (the party knew that because of that breach of
contract, the other party will suffer loss).
 Or the defendant could foresee the loss.
 Illustration (j) Section 74
 A, having contracted with B whereby to supply B with
tons of iron at RM100 a ton and to be delivered at a
stated time. He (A) also contracts with C for the
purchase of 1000 tons of iron at RM80 a ton, telling C
that he does so for the purpose of performing his
contract with B (supply to B). C fails to perform his
contract with A, who cannot procure other iron, and B
in consequence, rescinds the contract. C must pay to A
RM20,000 being the profit which A would have been
made by the performance of his contract with B
Victoria Laundry (Windsor) v Newman
Industries Ltd [ 1949] 2 KB 528
 Plaintiff (V)
was a laundry company (launderers &
dryers). The Plaintiff contracted to buy from a
Defendant a boiler which is to be used in his business.
The defendant (N) agreed to sell to V a secondhand
boiler and to deliver on June. But the boiler was not
delivered until 8th Nov. The Defendant also knew
that the boiler was required for the business and
for immediate use.
Victoria Laundry (Windsor) v Newman
Industries Ltd [ 1949] 2 KB 528
 Because of that, V claimed for:
i) loss of profits on laundry business which would have
been earned if the boiler is delivered on time; and
ii) loss of profits on certain dyeing contract from Minister
of Supply.
Continue…
Held:
 The laundry company was entitled to recover for the
profits for ordinary laundry as N must foreseen
their loss if there was delay.
 and not entitle for dyeing work.
Tham Cheow Toh v Associated Metal
Smelters Ltd [1972] 1 MLJ 171
 The D/A had agreed to sell a metal melting furnace to
the P/R, and giving an undertaking that the melting
furnace (leburan) would have a temperature of not
lower than 2,600 degrees F.
 However, this specification was not fulfilled and
consequently, the R brought an action alleging breach
of the condition and claimed damages including the
loss of profit
 Held (Fed Court)
 A would not normally be liable for the said payment of
damages for the loss of profit UNLESS there is
evidence that the special object of the furnace had
been drawn to their attention and they had contracted
on the basic that delay in delivery would made them
liable for loss of profits.
 In this case, the court satisfied that the A knew the
requirement to deliver the furnace capable of
producing the specified temperature and the urgency
of delivery.
(R was awarded special damages)
HOWEVER in… Section 74(2)
 Such compensation is not to be given for any
remote and indirect loss or damage sustained by
reason for the breach. (Remoteness of Damages).
 Illustration (n) Section 74
 A contracts to pay a sum of money to B on a day
specified. However, A does not pay the money on that
day. B, in consequence of not receiving the money on
that day, is unable to pay his debts and is totally
ruined. A is not liable to make good to B anything
except the principal sum he contracted to pay,
together with interest up to the day of payment.
 Illustration (p) Section 74
A contracts to sell and deliver 500 bales of cotton to B on
a fixed day. A knows nothing about the nature of the
B’s business or how B going to conduct his business. A
then breaks his promise and because of not that; by
not having the said cotton, B needs to close his mill/
factory.
A IS NOT LIABLE /RESPONSIBLE to B for the loss
caused by B by closing of the said mill.
 In summary:
 The object of an award to damages is to place the
plaintiff so far as money can do it in same
position as if the contract has been performed.
 To succeed in his claim, the Plaintiff must show that
the loss he has sustained was caused by the breach.
 However, the court will not award compensation to
the Plaintiff for all the losses he has suffered as
consequence of the breach.
 Where the loss or damage is too remote , the plaintiff
is not entitled to compensation.
LIQUIDATED DAMAGES
 Sometimes, parties may fix the amount of
damages to be paid in the event of breach of
contract as a term of contract.
 LD: Amount of damages is stipulated or fixed by
the parties under the contract.
 If there is breach of the contract, the party in
default must pay damages up to the amount
stipulated in the contract. (maximum limit of
compensation).
Example of Clause in Agreement
DEFAULT BY PURCHASER
“ In the event the Purchaser fails to pay the Balance Sum
as provided in Clause 3 of this Agreement for any
reason whatsoever, the Vendor shall unless there are
express conditions hereinafter
contained
to the contrary, be entitled to forfeit the deposit
referred to in Clause 1 above or such other amount of
money as may be hereinafter stipulated (hereinafter
referred to as “the forfeitable sum”) as agreed
liquidated damages …”
Under Common Law; the court will decide if
they are liquidated damages or a form of
penalty.
Basically, there is no differences between
the liquidated damages and penalty.
Maniam v The State of Perak [1957]
Thomson J viewed that:
“ no differences between penalty and
liquidated damages
Example:
 In the Sale and Purchase Agreement between the
purchaser and the vendor. If the developer fails to
complete the house within the stipulated time. The
purchaser can claim for the liquidated damages.
Compensation for Breach of Contract
where Penalty Stipulated for
 Section 75 of the CA, 1950.
 “When a contract has been broken, if a sum is
named in the contract as to the amount to be
paid in case of breach,
The party complaining about the breach whether
there is actual damage prove or not,
To receive from the party who has broken the
promise the penalty”
Duty to mitigate losses
 Explanation to Section 74
In estimating the loss or damages arising from
a breach of contract, the means which existed
of remedying the convenience caused by the
non performance of the contract must be
taken into account.
 There is a general duty requiring that reasonable steps
to be taken to mitigate losses which is flowing from a
breach of contract.
(Before awarding such damages, the court will look at
the duty of the party not in default to mitigate the
loss).
 The Plaintiff cannot recover any part of the damages
that he could avoided it by taking all reasonable steps
possible in the circumstances.
Malaysian Rubber Development Corp Bhd
v Glove Seal Sdn Bhd
 Facts: The appellant (Second Defendant) was the agent
of the first Defendant. In its capacity as an agent, the
appellant entered into contract with Respondent
(Plaintiff)
 Under the agreement, The respondent was to supply
to the First Defendant two million rubber gloves per
months from Nov 1988 till Oct 1989 for a total price of
USD 1,848,000. The agreement required the first
Defendant to open an irrevocable letter of credit in
favour of R, 30 days before the date of the first
shipment of goods. But, he failed to do so.
Continue….
 At the time of the breach, the Respondent (Plaintiff)
aware that there was no ready market for rubber
gloves. but he still continue manufacturing the said
gloves.
 Held:
 The respondent (Plaintiff) was under a duty to
mitigate its loss immediately upon the breach, if there
was no market available.
 Thus, the R’s claim for damages was disallowed.
2. SPECIFIC PERFORMANCE
What is SP
When SP
CANNOT be
GRANTED
When SP
may be
GRANTED
 In Malaysia, specific performance and
injunction are forms of what is termed
specific relief.
 Specific relief is embodied in a statute
entitled the SPECIFIC RELIEF ACT 1950:
1. Section 4 of SRA, 1950;
Specific Relief Act is given(b) by ordering a party to do the very act which is
under an obligation to do (Specific Performance).
(c) By preventing a party from doing that which he is
under an obligation not to do. (Injunction)
WHAT IS SP?
 Section 21(1) Specific Relief Act :
“The jurisdiction to decree specific performance is
discretionary
The court is not bound to grant any such relief
merely because it is lawful to do so;
But the discretion of the court is not arbitrary
but sound and reasonable, guided by judicial
principles and capable of correction by Court
of Appeal.”
When Specific Performance
available?
 As an equitable remedy, specific performance is
an order of Court requiring a party to perform
in terms the very obligations he undertook to
discharge on entering the contract.
The purpose of an order of specific performance is
to put the parties in the position, to perform
their obligation as what would have done by
them.
2. Situations where Specific
Performance may be granted
Section 11
(1)(a)
Section 11
(1)(b)
• When the act agreed to be done is in the performance wholly or
partly of a trust
• Illustration of Section 11(1), A holds a certain stock in trust for B. A
wrongfully disposes of the stock. The law creates an obligation on
A to restore the same quantity of stock to B, and B may enforce
specific performance of this obligation.
• When there exist no standard for ascertaining the actual
damage caused by the non performance of the act agreed to be
done (subject matter)
• Illustration of Section 11(1), A agrees to buy and B agrees to sell a
picture by a dead painter and two rare China vases. A may compel B
specifically to perform this contract, for there is no standard for
ascertaining the actual damage which would cause by its non
performances.
• When the act to be performed is
such
that
pecuniary
compensation for its nonperformance would not afford
adequate relief.
Section 11
(1)(c)
• Illustration (a) Section 11(1), A
contract to B to sell him a house for
RM 1,000. Then, he refused to
convey the said house. B is entitled
to a decree of SP, directing A to
convey the said house to him since a
monetary compensation would not
satisfies B.
 S. 11 (1) (C)
 “pecuniary compensation for its nonperformance would not afford adequate
relief.”
 GAN REALTY SDN BHD & ORS V NICHOLAS & ORS
[1969]
“ SP was granted to enforce a promise to sell certain shares
not available in the open market”.
DUNCUFT V ALBRECHT ( 1841)
“SP had been granted for an agreement for the sale of railway
shares, which were limited in numbers and not always to be
in the open market”.
Section
11
(1) (d)
• When it is probable that pecuniary compensation cannot
be got for the non performance of the act agreed to be
done.
• Illustration ;
• A made a contract with B for delivery of certain goods.
Unfortunately A becomes insolvent and C is appointed as his
assignee. B may compel C by SP to surrender the goods to
him because it is impossible for B to get any compensation
for the breach, since A is already insolvent.
Continue….
 5. Section 11(2),
 when there is a breach of a contract to transfer
immovable property cannot be adequately
relieved by compensation of money.
 Therefore, SP can usually enforce land transaction.
Zaibun Sa Binte Syed Ahmad v
Loh Koon Moy & Anor [1982]
 The P contracted to sell to B certain pieces of land
adjacent to some lands which B was carrying out for
mining operation. Later A refused to continue with the
contract. B sued A.
 The particular lands were important for use in
association with B’s tin mining operation, and
compensation by way of money i.e. damages would
not afford adequate relief.
 Thus, court granted SP.
 Privy Council considered S. 11 (1) (c ) and S.11 (2) and
affirming the decision of the Federal Court by ordering
SP of a contract for the sale of land.
 It was also pointed that although there was an
alternative claim for damages but the Judges viewed
that it was irrelevant to the exercised of their
discretion in that case.
3. Situations where Specific
Performance Cannot be Granted
1. Section 20 (1) : circumstances when a Specific
Performance cannot be granted:
(a) Where money compensation is an adequate relief;
(b) A contracts which is so dependent on the personal
qualifications or volition of the parties;
(c )A contract the terms of which the contract cannot
find with reasonable certainty.
(d) A contract which is in its nature revocable
(e) A contract made by trustees either in excess of their
powers or in breach of their trust
Continue…..
(f)A contract made by or behalf of a corporation created
for special purposes.
(g) A contract the performances of which involves the
performance of a continuous duty exceeding over a
longer period than three years from its date
(h)A contract of which material part of the subject
matter supposed by both parties to exist, has, before it
has been made, ceased to exist.
2. Section 21(2)(a) of CA. 1950
 Where the circumstances under which the contract is
made are such as to give the Plaintiff an unfair
advantage over the Defendant, Though they may be no
fraud or misrepresentation on the Plaintiff’s part
Illustration:
A contract to sell B certain land. To protect the land from
floods, it is necessary for its owner to maintain
expensive embankment. B does not know of that
circumstances and A conceals it from B. A cannot
enforce the contract by SP.
3. Section 21(2)(b) of CA, 1950.
 Where the performance of a contract would involve
some hardship on the defendant which he did not
foresee, whereas its nor performance would involve no
such hardship on the Plaintiff.
Furthermore, in s. 18 (3):
 Specific Relief Act gives power to the court to
award compensation in addition to SP if SP alone
NOT SUFFICIENT to satisfy the justice in the case.
 LEE HOY & ANOR V CHEN CHI [1971]
“the grant of compensation under this section is
permissible only if SP is pleaded but not
otherwise”.
3. INJUNCTION
What is
INJUNCTION
When
INJUNCTION
CANNOT be
GRANTED
Types of
INJUNCTION
1. WHAT IS INJUNCTION?
 An order of Court to restrain the doing,
continuance or repetition of some wrongful
conduct which is against the contract.
 Condition precedents for the grant of an
injunction:
 The Plaintiff must have interest to protect;
 Damages must be shown not to be adequate
remedy i.e. the Plaintiff will suffer irreparable harm if
the injunction is not granted;
 That is danger unless restrained,
 the Defendant will breach the contract or
continue with the breach
 Section 4(c) Specific Relief Act,
By preventing a party from doing that which he is
under an obligation not to do
• Section 50 Specific Relief Act
Preventive relief is granted at the discretion of
the court by injunction, temporary or
perpetual
A. Temporary injunction
• Section 51(1) Specific Relief Act
 “Temporary injunctions are such as are to continue
until a specified time, or until the further order of the
court.
 They may be granted at any period of the suit”
 Synonymous with Interlocutory or Interim
Injunction
 The purpose is to preserve the “status quo” of the
parties, pending resolution of a legal action.
 American Cyanamid Co v Ethicon
Basic principles of temporary
injunction/interlocutory injunction:
“An interlocutory injunction is granted to
maintain the status quo, if there were
serious questions to be tried.”
b. Perpetual Injunction
 Section 51(2) Specific Relief Act
 Perpetual injunction can only be granted after the
full trial and upon the merits of the case; the
Defendant is permanently/ perpetually prohibited
from doing the act or asserting a right which the
injunction was granted.
 To prohibit the Defendant permanently and
granted after a full hearing.
 Also known as Prohibitory Injunction whereby
direct the Defendants named therein not to do
something or to cease doing something.
 Neoh Siew Eng & Anor v Too Chee Kwong
Plaintiffs the tenants.
The Defendant was the landlord
One of the terms of the agreement would be
that the Defendant as the landlord and the
registered consumer in respect of water supply
to pay RM2 and the Plaintiff to pay the amount
in excess
Continue….
 The Plaintiff had an uninterrupted flow of water.
 The water works found that common pipe was badly
corroded. The Defendant also did not take any action to
change the pipes that was corroded badly.
 Held:
 Granted a Perpetual injunction by ordering the
Defendant to keep all the communications pipes on
and in proper repair and to comply all regulations of
the Waterworks Department so that the water supply
to the rented premises by plaintiff would not be
disconnected.
Situations where Injunction
cannot be Granted
 Section 54(f)Specific Relief Act
….to prevent the breach of contract the performance of
which would not be specifically enforced.
It means that, any contract that can not be enforced
by SP, may also cannot be subjected to an
Injunction in order to prevent the breach of it.
Exception:
• Section 55 Specific Relief Act
Notwithstanding s.54(f) where a contract comprises an
affirmative agreement to do a certain act, the
circumstances that the Court is unable to compel
Specific Performance of the affirmative agreement
shall not preclude it from granting an Injunction
to perform the negative agreement…..
By virtue of this exception, any contract which
consists of both positive and negative agreement,
Injunction can be granted in order to prevent the
breach of the negative agreement.
Continue….
 Illustration (c) Section 55
 A contracts with B to sing for twelve month at B’s
theatre and not to sing in public elsewhere. B
cannot obtain specific performance of the contract
to sing, but he is entitled to an injunction
restraining A from singing at any other place of
public entertainment.
Pertama Cabarate Nite Club Sdn
Bhd v Roman Tam
 The appellants were the owners of a night club in
Kuala Lumpur.
 The respondent were a well known singer from Hong
Kong. The respondent had agreed to appear and sing
at the appellant's night club for a few days.
 Clause 15 of the said contract provided that if the
respondent breached any of its term, the appellant can
terminate the contract, and in that event of such
termination, respondent was not to perform in Kuala
Lumpur for three months (fixed period) thereafter.
Continue….
 The respondent declined to honor his contract and began
performing at another night club.
 The appellant sued for ex parte interim injunction
 Held:
The Federal Court decided that, the Defendant is not a
resident in the country, and had signed a contract of
singing for the Plaintiff on certain dates.
The defendant had also given a negative undertaking
not to sing elsewhere in Kuala Lumpur for a certain
period.
Federal Court decided that as illustration (c) Section
55, the fact that the Court was unable to compel
specific performance but the Court can grant an
injunction to compel performance of the negative
undertaking.
4. QUANTUM MERUIT
 Where a Plaintiff sues for unspecified amount for
services rendered , he is said to sue on a quantum
merit (as much as he has earned).
 Claim for reasonable remuneration.
 S. 71 of the CA, 1950.
“ a person who is interested in the payment of
money which another is bound by law to pay, and
who therefore pays it, is entitled to reimbursed by
the other”
When Quantum merit applicable?
 When there is an express or implied agreement to
provide a service but no agreement as to price
 When the parties have not performed the terms of
their contract but a new contract can be inferred from
their conduct to have replace the original, a quantum
merit award may be available for the value of the work
done under the new implied contract.
 Where a contract is terminated by breach after one
party has performed his obligations, the party not in
default may elect to accept the breach and sue on a
QM for the value of work done.
 A QM is also available to a party who is prevented from
completing his obligations by the other party.
De Bernady v Harding
 The P was an agent of the D. An agreement provided
that P was to be paid for his work and for expenses he
might incur. Before the P could complete his agency
function, the defendant terminated the agency. T he D
paid the expenses incurred by the P but refused to pay
for the work.
 Held;
 The P could recover on a QM his expenses as well as
payment for work he has done.
5. Rescission of Contract
 Section 40
When a party to a contract has refused to perform,
or
Disabled himself from performing, his promise in
its entirely
The promisee may put an end to the contract,
unless he has signifies by word or conduct his
acquiescence in its continuance
 Section 66
Any person who received any advantage under the
agreement or contract is bound to restore it, or to
make compensation for it, to the person from whom
he received it.
Note: This Notes and Copyright therein is the property of Madam Norazla Abdul Wahab and
is prepared for the benefit her students enrolled in the MGM3351 course for their individual
study. Any other use or reproduction by any person without consent is prohibited.