Chapter 15

1. 'The action for the agreed sum is the best evidence that contract law protects an innocent party's performance interest.' Discuss.

See chapter 15.

The overriding question is the extent to which contract law protects an innocent party's performance interest.

Is the action for the agreed sum the best evidence of contract law's commitment to this aim? Explain.
What about elsewhere in the law of remedies for breach of contract (i.e. the limited availability of specific performance or injunction orders, and limitations on damages)?
What do these limitations reveal of the law's commitment to the protection of the performance interest? What other considerations qualify this stated aim?
Is there evidence of a shift towards greater protection of an innocent party's performance interest?

2. 'Co-operative Insurance Society Ltd v. Argyll Stores (Holdings) Ltd (1998) has tipped the balance too far in favour of the contract breaker.' When does and when should specific performance and injunctions be available?

See 15.2.

This question invites you to critically analyse the restrictions on the availability of specific performance and injunctions using the Argyll Stores case as a focal point for discussion.

Is each limitation on the availability of specific remedies justifiable? Keep in mind the counter-arguments in favour of specific remedies.
How, if at all, is each limitation illustrated by the Argyll Stores case?
How are all the relevant factors weighed to reach a conclusion in the Argyll Stores case?
Do you agree with the outcome?
How, if at all, might the law in this area be improved?

3. 'Contract parties enter contracts to get performance and not damages for non-performance. Therefore, specific performance, and not damages, should be the main remedy for breach.' Discuss.

See 15.2, especially 15.2.4.

This question overlaps with question 2. Some questions you may wish to consider:

What can be put forward to justify the current law which treats damages, and not specific performance, as the primary remedy for breach?
Critically analyse these justifications. Do you find them persuasive? Can they explain the major features of the law on damages and on specific performance?
Is there nevertheless a shift towards greater protection of the performance interest in the law on damages (e.g. Panatown)?

4. Explain and distinguish each of the following, giving examples:

An exemption clause and a penalty clause.
A penalty clause and a liquidated damages clause.
A deposit and a part payment.

See 15.3.

This is a fairly straightforward question requiring you to compare and contrast the definitions of the clauses in (a) and (b), and the payments in (c). What legal controls are there on the enforceability of clauses in (a) and (b)? When can restitution be claimed of the payments made in (c)?

5. Should parties have greater freedom to agree on the consequences of breach?

See 15.3.

This question invites you to assess the legal controls on the enforceability of agreed remedies clauses. Some issues you may consider include:

What are the main types of remedies for breach? Give examples of how parties can expressly stipulate for them (don't forget exemption clauses)?
What restrictions are there on such agreed remedies (you may have to sketch the restrictions on exemption clauses in broad outlines)? Are the restrictions justifiable? Do you have any suggestions for improving the law?
Note that parties can agree remedies indirectly by careful drafting of primary (obligation) terms. Give some examples. To what extent, if at all, are they controlled by the law? How do these controls compare with the law's control of secondary terms? What conclusions can you draw from your answers?

6. Are the following terms in a contract between Nick and Olga enforceable? What further facts do you need to know?

(a) A term stipulating that 'if Olga breaches clause 8 then Nick can specifically enforce the term or is entitled to the sum of £50,000 as Nick chooses.'

See 15.2.5 and 15.3.2.

The first option is effectively an agreement for specific performance. To what extent are such agreements enforceable? The second option is an agreed sum. What is the test of its enforceability? Might courts retain X's exercise of the discretion? If so, on what basis?

(b) A term stipulating that 'On the occurrence of circumstances specified in clause 8 Olga must pay Nick £50,000.'

See 15.3.2.

What rules, if any, constrain the enforceability of such a clause? The answer is not the same as in (a).

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Oxford University Press, Online Resource Centre, Chapter 15.

Chapter 15

1. 'The action for the agreed sum is the best evidence that contract law protects an innocent party's performance interest.' Discuss.

2. 'Co-operative Insurance Society Ltd v. Argyll Stores (Holdings) Ltd (1998) has tipped the balance too far in favour of the contract breaker.' When does and when should specific performance and injunctions be available?

3. 'Contract parties enter contracts to get performance and not damages for non-performance. Therefore, specific performance, and not damages, should be the main remedy for breach.' Discuss.

4. Explain and distinguish each of the following, giving examples:

An exemption clause and a penalty clause.

A penalty clause and a liquidated damages clause.

A deposit and a part payment.

5. Should parties have greater freedom to agree on the consequences of breach?

6. Are the following terms in a contract between Nick and Olga enforceable? What further facts do you need to know?

(a) A term stipulating that 'if Olga breaches clause 8 then Nick can specifically enforce the term or is entitled to the sum of £50,000 as Nick chooses.'

(b) A term stipulating that 'On the occurrence of circumstances specified in clause 8 Olga must pay Nick £50,000.'