Effect of pandemic on performance of contracts and remedies to the cases of breach

There would hardly be be any walk of life which has gone unaffected by the Covid-19 pandemic. It’s effect of the performance of contracts has also attracted legal questions and practical balancing of interests. In deciding whether a sum stipulated to be paid in case of breach of contract is liquidated damages or penalty to secure performance of the contract, intention of party is an important factor in determining but not always controlling one. Substantially, remedies are given by actions in cases of performance of contracts. The nature of the contract determines the kind of remedies. The article demonstrates the structure of damages, penalty-default theory as derived from Hadley v. Baxendale. It also analyses the effects brought in by the Covid-19 pandemic over the award of damages. By this article, the authors aim to analyze the two most crucial aspects of the Indian Contract Act ie. Performace, frustration and award of damages. The article attempts to scrutinize the dimensions and ways in which these words can be interpreted and applied. In this paper, the author will rely on critical and comparative analysis. For certain empirical demands of the topic, already published data and information will be relied on and acknowledged.

Can Blockchain Solve the Hold-up Problem in Contracts?

A vexing problem in contract law is modification. Two parties sign a contract but before they fully perform, they modify the contract. Should courts enforce the modified agreement? A private remedy is for the parties to write a contract that is robust to hold-up or that makes the facts relevant to modification verifiable. Provisions accomplishing these ends are renegotiation-design and revelation mechanisms. But implementing them requires commitment power. Conventional contract technologies to ensure commitment – liquidated damages – are disfavored by courts and themselves subject to renegotiation. Smart contracts written on blockchain ledgers offer a solution. We explain the basic economics and legal relevance of these technologies, and we argue that they can implement liquidated damages without courts. We address the hurdles courts may impose to use of smart contracts on blockchain and show that sophisticated parties' ex ante commitment to them may lead courts to allow their use as pre-commitment devices.

Agreed payment for non-performance under the Unidroit Principles and Arab region laws

This article deals with parties’ pre-estimation of the amount of compensation for non-performance (liquidated damages, penalty clause). It discusses this agreed payment in terms of definition, validity, invocation, and possibility of adjustment upon the application of either party. The article presents the provisions of this legal institution in the Unidroit Principles, the Egyptian Civil Code, and the Jordanian Civil Code. It, first, draws a comparison between these laws in the Arab region and, second, considers them in relation to the Unidroit Principles to conclude with a solution that best serves the parties’ interests.

Liquidated damages for failure to pay or delayed payment of remuneration to subcontractors — comments on the background of the resolution of the Supreme Court of 30 June 2020, III CZP 67/19

The subject of this work is the issue of the admissibility of stipulating liquidated damages for failure to pay or delayed payment of remuneration to subcontractors in the light of article 483 par. 1 of the Civil Code, which allows stipulating contractual penalties only in non-pecuniary obligations. The basis for the considerations is the content of the resolution of the Supreme Court of June 30th, 2020 (III CZP 67/19), which took a firm position in the ongoing legal discourse. This publication is a comparison on the basis of the previous jurisprudence and the doctrine of the relationship between liquidated damages defined in article 483 par. 1 of the Civil Code, and liquidated damages provided for in the Act of 29th January 2004 — Public Procurement Law.

14. Damages for breach of contract

Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas on the law curriculum. Where there is breach of contract, the aggrieved party is entitled to the remedy of damages as of right. Contractual damages aim to compensate the claimant for losses suffered rather than punish the defendant. To achieve compensation the claimant is put in the position he would have been in if the contract had been properly performed and the breach had not occurred. In other words, the aim is to protect the expectation of performance (known as the ‘expectation interest’ or the ‘performance interest’). This may involve any difference in value between the promised and the actual performance, loss of profits, or reimbursing the claimant for any expenditure that had been wasted due to the breach. A claimant may not be fully compensated for his losses as a result of the remoteness rule, which limits recovery of losses and/or the duty to mitigate (minimize) loss. Damages may also be apportioned, in some circumstances, for the claimant’s own contributory negligence in contributing to his own loss. In general, non-pecuniary losses are not recoverable in a claim for breach of contract, but there are cases where a modest sum may be awarded for the disappointment resulting from not receiving the promised performance. The parties may include an agreed damages clause in their contract but in the event of breach only a liquidated damages clause will be enforceable; a penalty clause will not be enforceable beyond the claimant’s actual loss.

Part VIII Remedies For Default, 27 Debt and Other Agreed Sums

This Part mostly concerns judicial remedies for breach of contract (the self-help remedy of forfeiture of a deposit is noted at [27.109]). The chapter sequence reflects both the division between Common Law (chapters 27 and 28) and Equity (chapter 29) but, more importantly, the practical importance of the judicial remedies, debt mattering more than damages, and in turn damages more than specific performance or injunctions. And so chapter 27 concerns ‘Debt’ (but agreed damages, ie liquidated damages clauses, are treated in the same chapter because the sum payable is, by definition, fixed or calculable in advance; but technically, agreed damages are damages and not a cause of action sounding in debt). Chapter 28 concerns damages, that is, compensation. Damages is a branch of the law which continues to generate a mass of intricate case law. Finally, chapter 29 concerns the equitable remedies of specific performance, injunctions, account of profits, and declarations. It is a fundamental principle that specific performance can be granted only if the Common Law remedies (debt and damages) are inadequate on the relevant facts. Chapter 27: The predominant claim for contractual default is the action for debt, to compel payment. Statistically this is the front-runner amongst remedies for breach. The availability of interest is also noted in this chapter.

Time for Completion

This chapter discusses how construction contracts provide for the time by which the contract works are to be completed and the consequences if a contractor fails to complete on time. The development of the law on liquidated damages is reviewed, and the current position on the penalty doctrine and of the contra preferentum rule in this context are considered. Recent jurisprudence regarding the meaning of ‘completion’ is presented.

Exclusion and Limitations of Liability

This chapter outlines several types of clauses in construction contracts and contracts with professionals in which the contractor or the professional seeks to exclude or limit its liability for breach of contract and negligence. It includes clauses that exclude liability for defective performance and damages. It also considers clauses that appear in standard forms, such as the current edition of the FIDIC forms and the contracts issued by the Institution of Civil Engineers and the Institution of Mechanical Engineers. This chapter discusses the relative rarity of clauses that exclude all liability for defective performance but which can be common in high-value contracts when they are allied with clauses that require the contractor to repair and replace defective work. It looks at contractors that have the obligation to remedy defects, which can be limited to liquidated damages in respect of delay are not limited to cases where the cause if failure to remedy defects. It also considers the position of consumers who are subject to such clauses.

11. Damages

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter examines the principles by which contractual damages are assessed. The discussions cover the aim of contractual damages, the difference between damages in contract and in tort; the relationship between the expectation interest and the reliance interest; cost of cure and difference in value; remoteness of damage; foreseeability and assumption of risk; non-pecuniary losses; mitigation; contributory negligence; and penalties, liquidated damages and forfeiture.

Opinions of Shaikh Ali Al- Qaradaghi in the Issues of Debt Arrears in IFIs A Comparative Study with Institutional Ijtihād

Almost all the transactions done by Islamic financial institutions comprise of debts which are measured in local or foreign currencies. This study aims at presenting and discussing opinions of Sh. Shaikh Ali Al- Qaradaghi in issues related to debt arrears settlement as faced by IFIs and prioritizing its usage. The study will discuss the overall principles of debts in general, and about the bad debts in particular. Also, the study discussed standards and Shari’ah pronouncements about debts and arrears settlement issued by organizations and Shari’a boards which focus on issuing pronouncements and standards in the Islamic financial industry. Also, the study discussed opinion of Sh. Ali AlQaradaghi about debts arrears and comparing it with opinions of ijtihād organizations as per the sequence arranged by the researcher. The study found that difference in opinions is existing while dealing with a procrastinating debtor, but for insolvent debtor, so there is no difference of opinion between Shaikh Ali and other except Shariah Standards of Bank Negara Malaysia with no different treatment between a procrastinating and insolvent debtor. The study further arrived at that acceleration of installments and alternatives to bad debts are based on four aspects: acceleration of remaining installments, compensation due to harm of inflation during the arrears, imposing financial penalty, and liquidated damages. This is concerning all the ijtihād bodies. However, Shaikh Ali’s view goes around two aspects: acceleration of remaining installments and compensation due to harm caused by hyperinflation. The study found that there is 71% homogeneity in all the solutions between the opinions of Shaikh Ali and other bodies, and 50% homogeneity for the solution of compensation for harm of inflation. The researcher presented some recommendations, and some of the important ones are working towards unifying the alternatives at least in one country, subsequential treatment of treating bad debt starting from partial acceleration of installments in tandem with the harm of inflation, and finally going for harm of inflation which can be adopted by those who take the view of Shaikh Ali.