Other Contractual Remedies Lecture

Introduction

Congratulations on reaching the final chapter of this module guide on contract law! Our final chapter covers alternative contractual remedies.

In the previous chapter we examined the remedy of damages. Damages generally compensate the claimant for loss caused by the breach. Sometimes damages might not be an appropriate remedy. Take the following situation:

• Party A sees an advertisement in the paper for the sale of a gold ring for £50;
• Party A realises that this gold ring once belonged to her Mother, and therefore holds great sentimental value;
• Party B agrees to sell the ring to Party A for £50;
• Party B then breaches the contract and refuses to sell the ring to Party A.

In this situation, damages would usually reflect the difference between the ring’s market value and the agreed price, but Party A was more interested in the ring for sentimental reasons. In this case, another remedy such as an order for specific performance might be more helpful. The court could order Party B to deliver the ring against payment of the agreed price.

The specific remedies considered here fall into two categories - positive and negative specific remedies. Positive specific remedies place a duty on the defendant to act or do something, whereas negative specific remedies place a duty on the defendant not to do something. Below are the different types of remedies available;

Positive specific remedies

• Action for an agreed sum
• Specific performance
• Mandatory injunction

Negative specific remedies

• Prohibitory injunction

An action for an agreed sum enforces a debt. Specific performance and injunctions are equitable remedies which the court has discretion to grant. This chapter will begin by examining the positive specific remedies in turn, before examining the negative specific remedy.

Positive specific remedies

Award of an agreed price

The award of an agreed price is a straightforward remedy to understand. It allows the innocent party to claim a specific amount of money from the party in breach. This is similar to the remedy of damages, but in damages the claim is calculated by reference to the loss, whereas an award of an agree price is the recovery of the money that is due under the contract. In other words, the award of an agreed price is a claim for the payment of a debt. There are two key elements of this remedy which often makes it more favourable than claiming damages or any other remedy:

1. The claimant does not need to prove they have suffered any loss. The fact that there is a sum owed under the contract which has not been paid is sufficient.
2. The claimant does not need to prove they have mitigated or attempted to mitigate the loss under the contract.

As we know from our previous chapter, proving a loss for damages can often be difficult with the requirements for actionable losses, causation and forseeability. This makes the award of an agreed price a popular choice in debt claims. Furthermore, the case of Overstone Ltd v Shipway [1962] 1 WLR 117 illustrates that an accrued debt can be recovered alongside damages for a distinct loss caused by the breach. The same loss cannot be recovered twice.

The requirements for a claim for the award of an agreed price

1. There must be a specific sum due under the contract.
2. The specific sum must be owed to the claimant.

The first requirement is fairly straightforward, and will require an examination of the contract. The second requirement is the one which is slightly more controversial. For a sale of goods, section 49 of the Sale of Goods Act 1979 provides for an action for the price where ownership has passed to the buyer or where payment is due on a day certain irrespective of delivery.

Whether or not the specific sum is ‘owed’ is a question of when the monies are due under the contract. The two alternatives are:

1. When the claimant has completed all of their contractual obligations.
2. At some time before the claimant has completed all of their contractual obligations.

Therefore, in order to establish whether a specific sum is owed the contract will need to be examined. As you can imagine, this rule can operate very harshly for both the claimant and the defendant. Consider these two examples. Assume Party B intends to occupy the house as their home. Section 106 of the Housing Grants, Construction and Regeneration Act 1996 excludes such a residential occupier’s contract from the statutory right to stage payments in section 109.

Situation 1:

• Party A is contracting with Party B for the construction of a house for £100,000.
• Party A has completed 80% of the work, when Party B breaches the contract.
• Under the contract, the £100,000 is due only when the construction of the house is completed.

If completion is a strict condition of payment, the £100,000 is not yet owed and a claim for the agreed price would fail.

Situation 2:

• Party A is contracting with Party B for the construction of a house for £100,000.
• Party A has completed 1% of the work, when Party B breaches the contract.
• Under the contract, the £100,000 is due upon beginning of the construction.

In this situation, the £100,000 is ‘owed’, and therefore Party A would be able to claim the full £100,000 from Party B, despite only 1% of the work being completed.

In situation 1, Party A may instead claim damages for the loss caused by Party B’s breach. In situation 2, the payment fell due at the start of work.

Three points are important in circumstances such as situation 1:

Firstly, the contract must be construed to see whether complete performance is a strict condition of payment. Where substantial performance is enough, minor defects may leave the price payable subject to a deduction for the defects, as seen in Hoenig v Isaacs [1952] 2 All ER 176.

Secondly, an issue may also arise where the defendant prevents the work being completed. For example, in our construction examples, if the defendant prevented the claimant from accessing the land to continue the building. If completion is a condition of the right to payment, English law does not automatically treat it as fulfilled because Party B wrongfully prevented it. Unless the contract provides otherwise, Party A can claim damages for the loss caused by the prevention (King Crude Carriers SA v Ridgebury November LLC [2025] UKSC 39).

Thirdly, the defendant may agree to pay a reasonable sum for work accepted as partial performance. Acceptance cannot be inferred simply because an owner keeps unfinished work on their land and has no real choice about taking its benefit (Sumpter v Hedges [1898] 1 QB 673).

Recovery limitation

Another important part of the claim for an agreed price is the limitation on recovery. Where the defendant repudiates the contract, the claimant may in some circumstances keep it in force, perform and claim the agreed price when due.

Case in focus: White & Carter (Councils) Ltd v McGregor [1962] AC 413

In this case, the claimant was an advertising contractor who contracted with the owner of a garage, the defendant, to display advertisements for the garage on litter bins for three years. On the day the contract was formed, the defendant changed their mind and informed the claimant they would be terminating the contract. Despite this attempted cancellation, the claimant went ahead and displayed the advertisements, and sued the defendants for the full price of the contract.

Surprisingly, the courts decided that the claimants were allowed to recover the full price of the contract. Under its terms, failure to pay the first instalment when due brought the remaining instalments forward after four weeks. The courts justification was that although the defendant repudiated the contract, the claimant was entitled to choose whether or not to terminate the contract. In this case, the claimant opted to keep the contract in force. Due to the fact the claimant is not required to mitigate the loss, this meant the claimant could continue to perform their obligations despite being aware that the performance was unwanted by the defendant. It is important to note that the decision was three against two, and the dissenting judges submitted that the claimant acted unreasonably by ignoring the defendant’s wishes, and that the claim should have been limited.

In White & Carter v McGregor, Lord Reid, who decided with the majority, explained two qualifications. These qualifications limit the ability of the claimant to claim the remedy of the agreed sum. They concern sums the claimant seeks to earn after repudiation. A debt which has already fallen due is a separate matter.

The cooperation qualification

If the price is conditional on performance which the claimant cannot complete without the defendant’s cooperation, affirmation alone cannot earn the price. The claimant may instead claim damages for the breach. If payment is independent of the prevented work, the position may be different. In Ministry of Sound (Ireland) Ltd v World Online Ltd [2003] EWHC 2178 (Ch), the court allowed the claim for an instalment to proceed but declined to give summary judgment.

The legitimate interest qualification

This qualification is the more debated of the two. In White & Carter v McGregor, Lord Reid asked whether the innocent party had:

“no legitimate interest, financial or otherwise, in performing the contract rather than claiming damages”

The party in breach must establish the absence of a legitimate interest. It is insufficient to show that a claim for damages would have been cheaper for that party.

Case in focus: The Alaskan Trader [1983] 2 Lloyds Rep 645

In this case, the contract was for a charter of the ship for a term of 24 months. After one year the ship had a serious engine failure. The defendant informed the claimant that they no longer wanted the ship, but the claimant went ahead with expensive repairs on the ship, which cost $800,000 and took 5 months. Following, the defendant again maintained that they did not want the ship. The owners declined to accept the charterers’ repudiation and kept the ship ready with a full crew. The charterers sought repayment of hire paid under protest for the rest of the term.

The court upheld the arbitrator’s finding that the owners had no legitimate interest in keeping the ship fully crewed at the charterers’ disposal. The owners could claim damages, but could not retain the hire for that period.

The decision in The Alaskan Trader turned on the cost of keeping the ship ready for use when she could have been laid up.

The exception applies only in an extreme case, where damages are adequate and insisting on performance would be wholly unreasonable (The Aquafaith [2012] EWHC 1077 (Comm)).

Award of other agreed sums

The award of other agreed sums refers to where there is a contractual provision within the contract which specifies an amount of money the will be paid in the event there is a breach of the contract.

This remedy was covered in the previous chapter as part of ‘damages’. So you should refer to that chapter to refresh your memory in relation to the award of other agreed sums.

Specific performance

The second of the positive specific remedies we will cover is specific performance. It is a discretionary order requiring a party to carry out a contractual obligation. A familiar example is an order to complete the sale of land. In a consumer contract, section 58 of the Consumer Rights Act 2015 also permits an order enforcing a trader’s statutory obligation to repair or replace goods or digital content, or to repeat a service. Contracts of personal service raise particular difficulties.

Test for specific performance

The court generally considers specific performance where damages would be inadequate. In Ryan v Mutual Tontine Westminster Chambers Association [1893] 1 Ch 116, the court declined to enforce a covenant to provide a resident porter. In Beswick v Beswick [1968] AC 58, damages would not give the widow the promised weekly payments, and she obtained specific performance as administratrix of her husband’s estate. The limits of the remedy were considered in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd.

Case in focus: Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1997] UKHL 17

In this case, the defendant owned a number of supermarkets. Unfortunately, they decided to close some of the loss-making supermarkets. One of the supermarkets was located in a shopping centre. The contract for this particular lease required the defendant to keep the premises open for retail trade during the usual business hours. Therefore, the closure of the supermarket broke this clause. The claimant attempted to get a specific performance remedy to force the defendant to keep the supermarket open.

The House of Lords refused to grant the remedy of specific performance due to a number of reasons:

1. Forcing the defendant to keep the supermarket open could require them to trade at a loss for years.
2. The obligation was not precise enough; there would be question as to exactly what was meant by keeping the supermarket open, the defendant could have chosen to re-open the supermarket with no stock and one staff member which would result in further litigation.
3. The lease had a period of 19 years remaining. This meant that disputes over compliance could recur for years unless the lease was assigned or the premises sublet.
4. The cost to the defendant of complying might be out of all proportion to the benefit to the claimant.
5. It is not in the public interest to force the defendant to continue business at a loss where there is an alternative remedy available

The risk of repeated proceedings to enforce an imprecise trading obligation mattered as well as the harm the order could cause to the defendant.

The case of Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd clearly shows the usual reluctance to order a business to keep trading. There must be a holistic assessment of the circumstances, particular as to the harm specific performance may cause the defendant and whether or not another remedy may be more appropriate.

One particular circumstance in which the remedy of specific performance seems favourable is in a contract where the claimant would be unable to obtain a substitute for the promised performance. We touched on one example at the start of the chapter; the ring with sentimental value. Usually, where the goods under a contract are either unique or cannot be obtained from anyone else but the defendant, specific performance may be appropriate. Section 52 of the Sale of Goods Act 1979 gives the court discretion to order delivery of specific or ascertained goods. Here are a few examples:

• The sale of a particular property.
• The sale of a particular sculpture made by a famous artist.
• A football boot worn in a specific match signed by a famous footballer.

The case of Sky Petroleum Ltd v VIP Petroleum Ltd [1974] 1 All ER 954 is also worth considering. In this case, an interim injunction restrained the defendant from withholding petrol supplies pending trial. Despite the petroleum not being a unique item, the oil crisis meant that the claimant could not obtain supplies elsewhere and its business was at risk.

Bars to specific performance

There are a number of bars to the remedy of specific performance. The claimant must be ready and willing to perform their own essential obligations. The courts have discretion whether or not to award the remedy, and the following factors may count against it.

Where the obligation is not precise

The obligation which is being imposed upon the party in breach must be precise enough. If there is a lack of precision, the courts will be unable to grant a remedy of specific performance because they will not know exactly what they should be forcing the breaching party to do. The result of granting the specific performance for an imprecise term would be further litigation to determine the actual obligations, therefore the courts like to avoid this.

Where the obligation would require constant supervision from the court

We touched on this bar to specific performance earlier in the case of Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd. The concern was the prospect of repeated applications to the court over how the business was run. The question the courts will ask is whether the order requires a defined result or the carrying on of activities. Compliance with an order to achieve a result is generally easier to determine.

Where the contractual obligation involves a personal service

If the contractual obligation involves a personal service, the courts are unlikely to grant an order for specific performance. The main justification for this is that it is difficult to force unwilling parties into a personal relationship. In a contract of employment, section 236 of the Trade Union and Labour Relations (Consolidation) Act 1992 bars an order of specific performance or an injunction that would compel an employee to work or attend for work.

An employee may exceptionally obtain an injunction against an employer where the working relationship remains viable and damages are inadequate. See Hill v CA Parsons & Co Ltd [1972] Ch 305. In Tesco Stores Ltd v USDAW [2024] UKSC 28, the injunction prevented dismissal for the purpose of taking away retained pay. It left Tesco free to dismiss for other reasons.

Where the claimant has acted unconscionably

The specific performance remedy requires that the claimant ‘comes with clean hands’. Inequitable conduct connected with the relief sought may justify refusal. In Shell UK Ltd v Lostock Garage Ltd the relief in question was an injunction to enforce a petrol supply tie ([1976] 1 WLR 1187).

The order for specific performance has a disproportionate adverse effect of the defendant

Where forcing an order of specific performance would be extremely unfair and cause hardship to the defendant, the courts are unwilling to grant the remedy.

Case in focus: Patel v Ali [1984] 1 All ER 978

In this case, the defendants contracted to sell their house. Completion was delayed after Mrs Ali’s husband became bankrupt. Mrs Ali had been healthy when the sale was agreed, but subsequently had a leg amputated due to cancer. With three children, she became heavily reliant on relatives and neighbours nearby. The purchasers sought specific performance to complete the sale.

The courts ruled that forcing Mrs Ali to move from her house would result in disproportionate hardship. Despite this being no fault of the claimant, the fact there was such hardship for the defendant meant the remedy was denied.

Where the claimant has delayed too long in seeking specific performance

If the delay between the breach and the claimant seeking specific performance is long enough, and to grant specific performance would be unjust, the court will not grant an order for specific performance. The question is what makes enforcement inequitable after the delay, for example prejudice to the defendant. Section 36 of the Limitation Act 1980 preserves the court’s power to refuse equitable relief for acquiescence.

Mandatory injunctions

The last of the positive specific remedies to examine is the mandatory injunction. A mandatory injunction can be used where a party to a contract breaches a negative covenant.

A negative covenant is a term in a contract which imposes an obligation on one of the parties to refrain from doing something. Such covenants often concern land. For example, Party A pays Party B £1,000 to promise not to build a garage on their land. If the Party B then went ahead and build a garage on the land, this would be a breach of the negative covenant. The courts may then grant the remedy of a mandatory injunction to make Party B remove the garage.

In the garage example, there are two features which make a mandatory order relevant:

1. The breach of a negative covenant in a contract
2. To remedy the breach some positive action will need to be taken (in our example, removing the garage)

The court has discretion whether to require the work. In Sharp v Harrison [1922] 1 Ch 502 the court declined to order the removal of a window where undertakings protected the claimant. Under section 50 of the Senior Courts Act 1981 the High Court and Court of Appeal may award damages in addition to, or instead of, an injunction or specific performance.

Negative specific remedies

Prohibitory injunctions

The only negative specific remedy is the prohibitory injunction. This remedy can restrain a threatened or continuing breach of a negative obligation. For example, one party may contract with another to not play loud music at their property.

For a final injunction to enforce a negative contractual promise, consider:

1. Is there an actual or threatened breach of an enforceable negative obligation?
2. Are there circumstances, such as oppression, which would make it unjust to restrain the breach?

The court will ordinarily restrain a clear breach of an express negative promise without requiring separate proof that damages are inadequate (Araci v Fallon [2011] EWCA Civ 668). For an interim injunction where the right is disputed, the court generally considers whether there is a serious issue to be tried, the adequacy of damages for either side and the balance of convenience (American Cyanamid Co v Ethicon Ltd [1975] AC 396). If we take our example of a party contracting to not play loud music at their property, it is easy to see how damages would not be an adequate remedy. What value would you put on the promise to not play loud music?

The courts may refuse a prohibitory injunction where it would be oppressive. In the case of Jaggard v Sawyer [1995] 1 WLR 269, the defendant’s house was only accessible by breaching a negative obligation. The claimant sought a prohibitory injunction to prevent the defendant breaching the negative obligation. The courts refused to grant the injunction, as it would mean the defendant could not access their house, which was seen as disproportionately oppressive. Damages were awarded instead.

Secondly, where the remedy of specific performance would have been refused, and the prohibitory injunction essentially forces the defendant to perform the contract, the courts are unlikely to grant a prohibitory injunction. This causes an issue in relation to contracts for personal services. As we know, the remedy of specific performance is not usually applicable to those types of contracts. An enforceable promise not to work for someone else may nevertheless be restrained if that leaves a genuine choice not to work for the claimant.

Case in focus: Warner Brothers Pictures Inc v Nelson [1937] 1 KB 209

In this case, the defendant was a famous actor who contracted with an American film company, the claimant, to perform exclusively for them. The defendant then moved to England and wanted to work for another film company. The claimant sought a prohibitory injunction.

The court considered whether an injunction would in practice force the defendant to work for the American company. Within its jurisdiction, it restrained her from working in film or stage productions for others without the company’s consent, but left her free to take other work. The injunction lasted for the remainder of the contract or three years, whichever was shorter.

This concludes the final chapter of the contract law module guide. You should now have a full understanding of the law of contract. To reconcile you should refresh your knowledge by reference to the hands-on examples for each chapter. Good luck!

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