{"id":202191,"date":"2021-02-10T13:18:56","date_gmt":"2021-02-10T00:18:56","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=202191"},"modified":"2024-11-22T18:32:10","modified_gmt":"2024-11-22T05:32:10","slug":"remedies-for-contract-breach","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/commercial-contracts\/remedies-for-contract-breach\/","title":{"rendered":"What are the Remedies for Contract Breach in New Zealand?"},"content":{"rendered":"\n<p>When you sue someone for breach of contract, there are different types of remedies (solutions) that you can seek. The remedies available to you will vary depending on your circumstances and the terms of any relevant contract. This article will set out the four main types of remedies for a contract breach in New Zealand:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>remedies in your contract;<\/li>\n\n\n\n<li>monetary damages;&nbsp;<\/li>\n\n\n\n<li>performance of a specific contractual term; and&nbsp;<\/li>\n\n\n\n<li>urgent assistance from the court (known as urgent injunctive relief).&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Negotiations<\/h2>\n\n\n\n<p>Taking legal action and suing your breaching party is time-consuming and costly and impacts commercial relationships. Before taking such a step, negotiate directly with the other party to find a feasible solution. Especially consider this in cases of minor breaches and where you wish to continue working with the breaching party moving forward. You should consider why they may not be upholding their obligations and try to find a practical remedy \u2013 you may also amend the contract to make it easier for your contracting partner to uphold their duties moving forward.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Checking Your Contract<\/h2>\n\n\n\n<p>Reviewing your contract when taking legal action is essential to understand what you can claim. Under the <em>Contract and Commercial Law Act 2017<\/em>, if your contract provides a remedy in case of a breach of contract or misrepresentation, that remedy can take effect.&nbsp;<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>For example, your contract may state that if one party fails to fulfil their obligations, that party must provide compensation to cover the loss. Your contract may also allow you to terminate due to a breach, limiting further losses. To best understand where you stand when suing someone, it is best to get the advice of your contract lawyer, who can help review the clauses.<\/p>\n<\/div>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+64800005570\" class=\"not-prose\">0800 005 570<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex justify-center text-left 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That is, the court will issue a binding order that requires the party that breached the contract (the defendant) to pay you (the plaintiff) monetary compensation, known as damages.<\/p>\n\n\n\n<p>In principle, an award of compensatory damages is supposed to focus on compensation rather than punishment. That is, the payment of damages ought to put you in the financial position that you otherwise would have been if the defendant had performed their contractual obligations in the first place. The only costs the defendant will be required to pay above and beyond are your legal fees and, in some instances, interest.&nbsp;<\/p>\n\n\n\n<p>The sum of a damages order will depend on the type of contract and breach. There are two types of monetary damages \u2013 \u2018liquidated damages\u2019, where you are suing for a predetermined amount of money, and \u2018unliquidated damages\u2019, where you do not know the loss you have suffered due to a breach.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Suing for a Predetermined Amount of Money (Liquidated Damages)<\/h3>\n\n\n\n<p>Sometimes, you can calculate the sum of a damages claim in advance. This type of claim is known as a \u2018liquidated\u2019 damages claim. Certain contracts, such as construction contracts, can even contain specific liquidated damages clauses, which set out a pre-agreed sum of damages that a party must pay if they do not meet specific deadlines.<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>Another example is loan agreements. Suppose a borrower defaults on their repayment obligations. Accordingly, you can calculate the precise amount of monetary loss you have suffered. Liquidated damages claims are generally more straightforward than unliquidated damages claims.<\/p>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Suing for an Unknown Sum of Money (Unliquidated Damages)<\/h3>\n\n\n\n<p>In many cases, you may not know the loss you have suffered due to a breach. Calculating your financial loss is not always an exact science. Instead, it is up for debate in court. Therefore, you must construct a legal argument to justify your position and provide evidence to substantiate it.&nbsp;<\/p>\n\n\n\n<p>You will need to consider various legal principles when preparing such an argument, including the remoteness of the loss and the efforts taken to mitigate the loss:<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Remoteness<\/h4>\n\n\n\n<p>The compensation for some (or all) of the loss you are claiming may be limited if the harm is too \u2018remote\u2019 from the breach of contract that occurred. It will be remote if the breaching party would not have been able to foresee that their breach would result in loss.<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>For example, you hire a taxi to take you to a business meeting where you plan to sign a $100,000 contract. The taxi arrives late, causing you to miss the meeting. The client then signs with someone else. You cannot claim the lost $100,000 contract \u2013 this is too &#8220;remote&#8221; because the taxi driver had no way of knowing about the important contract or that their delay would cost you this significant business opportunity.<\/p>\n<\/div>\n\n\n\n<h4 class=\"wp-block-heading\">Duty to Mitigate Loss<\/h4>\n\n\n\n<p>If you suffer a loss due to a breach of contract, you are expected to take reasonable steps to reduce or mitigate that loss. In other words, if you do not take active steps to improve your situation, your ability to recover may be limited by the court.<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>For example, a tenant breaks their one-year commercial lease after just 3 months. The landlord makes no effort to find a new tenant and leaves the property empty for the remaining 9 months, then tries to sue the original tenant for all 9 months of unpaid rent. A court would likely reduce the damages because the landlord failed to mitigate their loss by not advertising the property or trying to find a new tenant.<\/p>\n<\/div>\n\n\n\n<p>The amount of damages (also known as \u2018quantum of damages\u2019) is often controversial in a court case. You should seek legal advice if you are unsure exactly how much money you are reasonably entitled to claim from someone.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Suing Someone to Make Them Perform a Contract<\/h3>\n\n\n\n<p>If monetary damages do not seem like an appropriate remedy, you may be able to seek a court order for \u2018specific performance\u2019. This order will direct the defendant to carry out a specific task stated in a contract that it has otherwise failed or refused to do. For example, the:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>delivery of goods that are due under the contract;<\/li>\n\n\n\n<li>delivery of certain documents, such as bank guarantees; or<\/li>\n\n\n\n<li>completion of a property settlement.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>A court will only make an order for specific performance in circumstances where an award of damages would be insufficient. As a result, this type of order is much less common than monetary damages.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Suing Someone for Urgent Relief<\/h3>\n\n\n\n<p>In some situations, you will require urgent assistance from the court. If there is a time-critical element to your situation, and monetary damages are inappropriate, you can seek urgent relief (also known as \u2018injunctive\u2019). <a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/legally-binding-agreement-new-zealand\">Injunctions are available<\/a> if you can prove to the court that you will suffer irreparable harm unless you make an urgent order.&nbsp;<\/p>\n\n\n\n<p>Common examples of equitable remedies include:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>preventing someone from continuing to breach a restraint of trade clause;<\/li>\n\n\n\n<li>preventing someone from selling goods that breach intellectual property rights; and<\/li>\n\n\n\n<li>temporarily freezing assets until you resolve a dispute.<\/li>\n<\/ul>\n\n\n\n<p>These are usually temporary orders which prohibit the defendant from doing something. They can also be orders for specific performances.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key Takeaways<\/h2>\n\n\n\n<p>Suing someone for breach of contract is not as simple as just showing that there has been a <a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/material-breach-contract\/\">material breach<\/a>. You also have to think about what contract breach remedies you are seeking. In most contractual disputes, the remedy will be monetary damages, which aim to compensate you as the injured party rather than punish the other party. However, in some instances, you can also seek specific performance or urgent injunctive relief. Further, if your contract states a remedy is available in case of a breach, this can take effect.&nbsp;<\/p>\n\n\n\n<p>If you are considering suing someone for breach of contract and want to understand what type of remedies you can seek, our experienced <a href=\"https:\/\/legalvision.co.nz\/contract-lawyers-lp\">contract lawyers<\/a> can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on <a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a> or visit our <a href=\"https:\/\/legalvision.co.nz\/membership\/%5C\">membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1670289580749\"><strong class=\"schema-faq-question\"><strong>Can I claim monetary damages for a breach?<\/strong><\/strong> <p class=\"schema-faq-answer\">You can sue a party for damages, and this can be for an unknown or pre-determined amount. The damages claimed should only cover the amount of loss you have suffered.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1670289589468\"><strong class=\"schema-faq-question\"><strong>What if my contract states a possible remedy?<\/strong><\/strong> <p class=\"schema-faq-answer\">If your contract states a remedy, the court can let this take effect. However, you should review your contract to understand what the remedy entails and whether it applies to your current situation.\u00a0<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"3bc3beddae\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/202191\" \/>            <input value=\"https:\/\/legalvision.co.nz\/commercial-contracts\/remedies-for-contract-breach\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"What are the Remedies for Contract Breach in New Zealand?\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>When you sue someone for breach of contract, there are different types of remedies (solutions) that you can seek. The remedies available to you will vary depending on your circumstances and the terms of any relevant contract. This article will set out the four main types of remedies for a contract breach in New Zealand:&nbsp;<a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/remedies-for-contract-breach\/\">Continue reading <span class=\"sr-only\">&#8220;What are the Remedies for Contract Breach in New Zealand?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13388,"featured_media":215578,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"1571,959,1669,219097,208601,1182","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[3],"tags":[25,54,242,504,983],"class_list":["post-202191","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-contracts","tag-small-business","tag-medium-business","tag-breach-of-contract","tag-injunction","tag-contract-breach"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What are the Remedies for Contract Breach? 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