To avoid contract disputes and the dominos effect of a badly written contract, it is important to hire a contract lawyer in advance to professionally draft your contracts. That would be the most efficient preventive measure to ensure that you are legally protected years ahead. However, if there has been a breach of contract, this is what you need to know. Broadly speaking, the remedies for breach of contract are threefold.
A monetary award in Canadian dollars or damages is the standard remedy for breach of contract. When calculating this award, the importance lies in considering the recognizable heads of damages under which these awards will be granted. They are found in common Law, also known as Case Law rendered by judges through cases or “decisions”.
For a fair monetary award, judges apply the compensation principle which stipulates that the amount of damages awarded in each circumstances should be equal (so far as an amount of money can be) to what is required to compensate the innocent party for the loss it has suffered as a result of the breach. In essence, the principle is attempting to place the Plaintiff (the victim) in the same situation, with respect to damages, as if the contract had been performed.
Is the requested compensation based on lost profits? Or additional expenses incurred because of the breach? Judges will want to take a look at that.
To avoid Defendants from having an incentive to postpone payment remedies, judges accept calculating compensation considering the period from the breach until the day of judgment.
Issues and obstacles that Plaintiffs will face:
A consumer’s disappointment is compensable even if there was no financial loss suffered. If the cost of replacing the contracted item is out of all proportion to the financial loss suffered, yet the consumer was disappointed for a certain reason, the disappointment could be compensated.
This is compensable if the promisee was promised peace of mind or enjoyment. An unreasonable denial of coverage by an insurance company could for example cause such harm. However, a major or important object of the contract in question must be to give pleasure, relaxation or peace of mind; or where an object of the contract is to secure a psychological benefit, just as they may be awarded where an object of the contract is to secure a material one.
If a breach of contract deprives a party of the loss of a chance, courts are prepared to compensate a party for that loss (Parabola Investments Ltd. v. Browallia Cal Ltd, 2011 Q.B. 477 (CA)). The importance here is the chance that is lost, which will be calculated as a percentage of the actual gain coming from the positive entitlement to the opportunity. A chance is not the actual opportunity secured. This is an important difference.
Judges use Equity and set aside the hard Law when they decide to remedy an injustice that the Law does not do so. Courts are prepared to apply discretionary power (also known as “equitable remedies” that are outside the strict rules of Law) and order a “specific performance”, the “forced performance of a contract” or an “injunction”.
This remedy is available on a judge’s discretionary basis only when monetary awards are inadequate or inappropriate. Inadequacy could be for example the impossibility of duplicating the product or object in the contract anywhere else. A judge’s order of specific performance obliges the defendant to perform their obligation under the contract. The concept of mitigation mentioned above applies here too.
The obstacle to this remedy is that judges also look at whether specific performance would cause the performer any hardship. Hardship could negate specific performance on a case-by-case basis.
An injunction is a temporary or permanent order that a party refrain from some activity.
In exceptional cases, courts are prepared to grant a proprietary remedy, which is a transfer or recognition of some property rights in some asset, for breach of contract.
According to the Supreme Court case Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, at paras. 49 and 91, in order to successfully seek these remedies, one must first prove a breach of contract which is broken down to proving:
Next comes dealing with and compensating the loss, which entails proving:
A Contract Lawyer specializing in Contract Drafting and Contract Disputes prevents you from facing most of the issues by leveraging their legal expertise when drafting a protective contract for you. It is important to invest in legal when drafting an agreement. Contract lawyers foresee these legal issues and find preventive ways around them which will save you a significant amount of money on the long term.
Invest in Contract Lawyers. Rana Charif is a Toronto Contract Lawyer who has drafted hundreds of commercial contracts, business partnership contracts, employment contracts, licensing contracts, and more. She is a highly accomplished lawyer who works with a standard of excellence, see her bio here. Whether it is for drafting your contracts or representing you and giving you legal advice on solving contract disputes, Rana will be here for you and leverage top legal talent to serve you best.
Book a consultation now with a Contract Lawyer in Toronto, Ontario.
June 29, 2021
Business Law, Employment Law, Litigation