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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. This article will set out the three main types of remedies for a contract breach in New Zealand: 

  • monetary damages; 
  • performance of a specific contractual term; and 
  • urgent assistance from the court (known as urgent injunctive relief). 

Suing Someone for Money

The most common remedy that a court will issue for breach of contract is an order for monetary damages. That is, the court will issue a binding order which requires the party that breached the contract (the defendant)  to pay you (the plaintiff) monetary compensation, known as damages.

In principle, an award of 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 that the defendant will be required to pay above and beyond are your legal fees and, in some instances, interest. 

The sum of a damages order will depend on the type of contract, and the type of breach. Sometimes you will know the exact sum you are claiming in advance, and other times you will not.

Suing for a Predetermined Amount of Money

In some cases, you will be able to calculate the sum of a damages claim in advance. This type of claim is known as a ‘liquidated’ damages claim. Certain types of contracts, such as construction contracts, can even contain specific liquidated damages clauses, which set out a pre-agreed sum of damages that must be paid if certain deadlines are not met.

Another example is loan agreements: if a borrower defaults on their repayment obligations, you will be able to calculate the precise amount of monetary loss you have suffered.

Liquidated damages claims are generally more straightforward than unliquidated damages claims.

Suing for an Unknown Sum of Money

In many cases, you may not know the exact amount of loss you have suffered as a result of a breach. Calculating your financial loss is not always an exact science: it is up for debate in court. You will need to construct a legal argument to justify your position and provide evidence to substantiate it. There are various legal principles which you will need to consider when preparing such an argument. For example:

  • remoteness: the compensation for some (or all) of the loss you are claiming may be limited if the harm is too ‘remote’ from the breach of contract that occurred. It will be remote if the defendant would not have been able to foresee that their breach would result in loss; and
  • duty to mitigate loss: if you suffer loss as a result of 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.

The amount of damages (also known as ‘quantum of damages’) is often a controversial aspect of a court case. If you are not sure exactly how much money you are reasonably entitled to claim from someone, you should seek legal advice.

Suing Someone to Make Them Perform a Contract

If monetary damages do not seem like an appropriate remedy, you may be able to seek a court order for ‘specific performance’. This type of order will direct the defendant to carry out a specific task stated in a contract which it has otherwise failed or refused to do. For example, the: 

  • delivery of goods which are due under the contract;
  • delivery of certain documents, such as bank guarantees; or
  • completion of a property settlement. 

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.

Suing Someone for Urgent Relief

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 not appropriate, you can seek urgent relief (also known as ‘injunctive’ relief). Injunctions are available if you can prove to the court that you will suffer irreparable harm unless you make an urgent order. 

Common examples of injunctions include: 

  • preventing someone from continuing to breach a restraint of trade clause;
  • preventing someone from selling goods that breach intellectual property rights; and
  • temporarily freezing assets until you resolve a dispute.

These are usually temporary orders which prohibit the defendant from doing something. They can also be orders for specific performance. 

Key Takeaways

Suing someone for breach of contract is not as simple as just showing that there has been a material breach. You also have to think about what kind of remedy 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. If you are considering suing someone for breach of contract and want to understand what type of remedies you can seek, contact LegalVision’s New Zealand contract lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What remedies are available for a breach of contract?

The remedies that may be available for a breach of contract include monetary damages, performance of a specific contractual term, and urgent injunctive relief. The remedies available will vary depending on your circumstances.

What is a liquidated damages claim?

A liquidated damages claim is available in circumstances where you can calculate the sum of a damages claim in advance. Some contracts may include a specific liquidated damages clause which sets out the pre-agreed sum of damages to be paid if certain deadlines are not met. 

What is a court order for specific performance?

If a party fails or refuses to carry out a specific task stated in a contract, then you may be able to seek a court order for specific performance. This order will direct the party to carry out the task. Orders for specific performance are only available where an award of damages would be insufficient.

What is urgent injunctive relief? 

When there is a time-sensitive element to your situation, and monetary damages are not appropriate, you can seek urgent relief (injunctive relief). These are temporary orders which prohibit the defendant from doing something such as continuing to breach a restraint of trade clause or selling goods that breach intellectual property rights.

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