REMEDIES FOR BREACH OF CONTRACTS

On Employment / Labour Law for residents in Canada  

Contract law in Canada is, for the most part, governed by the common law of the provinces and territories or, in the case of Québec, by the civil law as set out in the Québec Civil Code. Except for certain contracts that must be in writing or signed under seal, Canadian law recognizes the enforceability of promises, oral or written, provided there is "consideration" flowing from the promisee to the promisor or a mutuality of promises.

If there has been contract breach and the contract is broken, the injured party has recourse to the following:

1.    Damages

 
2.    Specific Performance

3.    Injunction

4.    Restitution

Damages

The general rule for recoverable loss in breach of contract cases and in common law tradition, the courts will award damages to place the aggrieved parties in the same position they would have been in had the contract been performed.

In some contracts, the parties may choose to specify a liquidated sum of damages in the event of breach. Damages in most cases is the preferred remedy and is generally money to be paid by one person to another as compensation for a loss sustained by the latter in consequence of an injury committed by the former.

Specific Performance

Specific performance is a decree by the court to compel a party to perform his contractual obligations.  As a general principle, Canadian courts will not compel the performance of a contract. However, where it can be established that damages will be an inadequate remedy, Canadian courts have the power to order specific performance of a contract or to issue injunctions preventing the temporary or permanent breach of an agreement. In some contracts, the parties may choose to specify a liquidated sum of damages in the event of breach. Statutory limitation periods will impact upon enforceability depending upon when the breach occurred.

Therefore, Specific performance is exceptional and ordered only when an award of damages would be "inadequate." This type of remedy has been called "coercive" and is obviously directed at getting the faulty party to fulfill their obligation. It is also a creation of equity which means it is very much a discretionary power of the court and it is subject to the tenets of equity, especially that which says that "he who comes to equity must come with clean hands."

Injunctions

An injunction is another coercive legal remedy which can be used in some breach of contract cases where a direct order is required to stop a party from continuing an ongoing breach.

One of the features of coercive remedies such as specific performance and injunctions, is that the failure of the defendant to comply, results in a form of contempt of court and gives the plaintiff access to enforcement in the form of fine or imprisonment.

Cancellation of a Contract

The cancellation of the contract between the parties; this is done to bring the parties as far as possible to the position the parties were before they entered into a contract. This is an equitable remedy and is discretionary by the courts.