Chapter 22
Obtaining an adequate remedy
22.1 Introduction:
Methods which can be used in an effort to ensure an effective remedy is achieved: the
contract can be structured in such a way as to entitle one party to terminate performance
and claim loss of bargain damages, or to make a claim in debt for the contract price.
^ Such remedies may provide a powerful incentive to the other party to refrain from
breaking the contract and to perform his obligations under the contract.
Alternatively, the parties may make provision in their contract for a sum if money to be
payable in way of damages in the event of breach.
An adequate remedy can be obtained by seeking an order of specific performance or an
injunction restraining a threatened breach of contract.
22.2 The entire obligations (or ‘entire contracts’) rule:
The ability of one contracting party to withhold performance of his obligations under the
contract gives to the other party an extremely powerful incentive to perform his contractual
obligations.
In some cases, there may be little practical difference between an entire contract and an
entire obligation. In others, the difference is clear. Where a construction contract makes
provision for payment upon the completion of distinct stages of the project, the completion
of each stage being a condition precedent to the right to claim payment, the obligation to
complete each stage may be said to be entire, even though the contract as a whole is not
entire.
Origin of the entire obligations rule can be tracked to Cutter v Powell [1795]-> Cutter agreed
with Powell to ‘proceed, continue and do his duty as second mate’ on a ship sailing from
Jamaica to England. Cutter died on the journey and his widow sued to recover the wages
which she alleged were payable in respect of the period of time in which Cutter had
satisfactorily performed his duties before his death. Action failed because Cutter was not
entitled to payment unless he completed the voyage. Rule= no completion, no pay. Gives a
powerful incentive to a contracting party to ensure the contract is carried out according to
its terms.
Can lead to the unjust enrichment of the innocent party.
Hardships of the rule are mitigated by its many exceptions. Principle exception= the rule
alleged not to apply where the party in breach has substantially performed his obligations
under the contract (Williams v Roffey Bros and Hoening v Isaacs [1952])
^ The innocent party must perform his obligations under the contract and content himself
with an action for damages for any loss suffered as result of the breach.
Doctrine of substantial performance has been criticised by Treitel on the ground that it is
‘based on the error that contracts, as opposed to obligations, can be entire.’ States that an
obligation is entire means that it must be completely performed before payment becomes
due and that in relation to entire obligations, there is no scope for any doctrine of
substantial performance. A court is required to identify with some care the obligation which
is alleged to be entire. The obligation to complete the work is generally entire but the
obligation to do so in a workmanlike manner generally is not.
Hoening v Isaacs where the builder had completed the work there was no need to resort to
any doctrine of substantial performance. The obligation to complete the work (which was
Obtaining an adequate remedy
22.1 Introduction:
Methods which can be used in an effort to ensure an effective remedy is achieved: the
contract can be structured in such a way as to entitle one party to terminate performance
and claim loss of bargain damages, or to make a claim in debt for the contract price.
^ Such remedies may provide a powerful incentive to the other party to refrain from
breaking the contract and to perform his obligations under the contract.
Alternatively, the parties may make provision in their contract for a sum if money to be
payable in way of damages in the event of breach.
An adequate remedy can be obtained by seeking an order of specific performance or an
injunction restraining a threatened breach of contract.
22.2 The entire obligations (or ‘entire contracts’) rule:
The ability of one contracting party to withhold performance of his obligations under the
contract gives to the other party an extremely powerful incentive to perform his contractual
obligations.
In some cases, there may be little practical difference between an entire contract and an
entire obligation. In others, the difference is clear. Where a construction contract makes
provision for payment upon the completion of distinct stages of the project, the completion
of each stage being a condition precedent to the right to claim payment, the obligation to
complete each stage may be said to be entire, even though the contract as a whole is not
entire.
Origin of the entire obligations rule can be tracked to Cutter v Powell [1795]-> Cutter agreed
with Powell to ‘proceed, continue and do his duty as second mate’ on a ship sailing from
Jamaica to England. Cutter died on the journey and his widow sued to recover the wages
which she alleged were payable in respect of the period of time in which Cutter had
satisfactorily performed his duties before his death. Action failed because Cutter was not
entitled to payment unless he completed the voyage. Rule= no completion, no pay. Gives a
powerful incentive to a contracting party to ensure the contract is carried out according to
its terms.
Can lead to the unjust enrichment of the innocent party.
Hardships of the rule are mitigated by its many exceptions. Principle exception= the rule
alleged not to apply where the party in breach has substantially performed his obligations
under the contract (Williams v Roffey Bros and Hoening v Isaacs [1952])
^ The innocent party must perform his obligations under the contract and content himself
with an action for damages for any loss suffered as result of the breach.
Doctrine of substantial performance has been criticised by Treitel on the ground that it is
‘based on the error that contracts, as opposed to obligations, can be entire.’ States that an
obligation is entire means that it must be completely performed before payment becomes
due and that in relation to entire obligations, there is no scope for any doctrine of
substantial performance. A court is required to identify with some care the obligation which
is alleged to be entire. The obligation to complete the work is generally entire but the
obligation to do so in a workmanlike manner generally is not.
Hoening v Isaacs where the builder had completed the work there was no need to resort to
any doctrine of substantial performance. The obligation to complete the work (which was
