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What Are the Remedies for Contract Breach in New Zealand?

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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 four main types of remedies for a contract breach in New Zealand: 

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

Negotiations

Taking legal action and suing your breaching party is time-consuming and costly. Before taking such a step, try to negotiate with the other party. Especially consider this in cases of minor breaches. Understand why they may not be upholding their obligations and try to find a feasible solution. Another option is to amend the contract to make it easier for your contracting partner to uphold their duties. 

Checking Your Contract

It is essential to review your contract when taking legal action to understand what you can possibly claim. Under the Contract and Commercial Law Act 2017, if your contract provides a remedy in case of a breach of contract or misrepresentation, that remedy can take effect. 

For example, your contract may state that if one party fails to fulfil their obligations, that party  must provide compensation to cover the loss. 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. 

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Suing Someone for Money

The most common remedy 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 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. 

The sum of a damages order will depend on the type of contract and 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 can calculate the sum of a damages claim in advance. This type of claim is known as a ‘liquidated’ 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.

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.

Suing for an Unknown Sum of Money

In many cases, you may not know the amount of 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 will need to construct a legal argument to justify your position and provide evidence to substantiate it. You will need to consider various legal principles when preparing such an argument.

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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.

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 that it has otherwise failed or refused to do. For example, the: 

  • delivery of goods that 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 inappropriate, 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 equitable remedies 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 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. 

If you are considering suing someone for breach of contract and want to understand what type of remedies you can seek, you can contact our experienced contract lawyers to assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at  0800 005 570 or visit our membership page.

Frequently Asked Questions

Can I claim monetary damages for a breach?

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. 

What if my contract states a possible remedy?

If your contract states a remedy, then 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. 

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