Liquidated Damages and Discretionary Remedies

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What is the term for a court's order to perform a positive obligation in a contract?

Specific Performance (correct)

Accounting

Rectification

Rescission

What type of obligation is commonly found in contracts for the sale of a business?

Rectification obligation

Positive obligation

accounting obligation

Negative obligation (correct)

What is the purpose of a restrictive covenant in a contract of employment?

To ensure an employee works for a rival employer

To prevent an employee from setting up a rival business

To ensure an employee gets a certain amount of salary

To restrict an employee from working for a rival employer in the same area (correct)

What is the term for a court's order that a party do the very thing they undertook to do in a contract?

Literal Performance Signup and view all the answers

What is not a type of literal performance mentioned in the lecture?

Rectification Signup and view all the answers

In the common law, what is the secondary remedy?

Specific Performance or Injunction Signup and view all the answers

What type of damages are provided for in a contract?

Liquidated Damages Signup and view all the answers

What is the purpose of liquidated damages?

To enforce literal performance of the contract Signup and view all the answers

What is the difference between liquidated damages and unliquidated damages?

Liquidated damages are specified in the contract, while unliquidated damages are determined by the court Signup and view all the answers

What will be discussed in the next two lectures?

Specific Performance and Liquidated Damages Signup and view all the answers

What is the primary remedy for a breach of contract in the common law?

Damages Signup and view all the answers

What is the purpose of equitable remedies in a breach of contract?

To seek the performance of the contract Signup and view all the answers

What is an injunction in the context of contract law?

An order that prohibits a party from certain actions Signup and view all the answers

What is the purpose of an order of specific performance?

To compel a party to perform a contract Signup and view all the answers

What is literal performance in the context of contract law?

The court ordering a party to do exactly what they undertook to do Signup and view all the answers

What is the nature of liquidated damages?

A combination of damages and literal performance Signup and view all the answers

In what context can liquidated damages clauses be considered valid?

When the court exercises its discretion Signup and view all the answers

What is the primary objective of understanding liquidated damages clauses?

To understand how to establish their validity Signup and view all the answers

What is the significance of the Cavendish Square Holdings v Makdessi case?

It changed the law regarding liquidated damages clauses Signup and view all the answers

What is an example of a situation where a liquidated damages clause might be used?

A construction contract to build a factory Signup and view all the answers

What is the effect of a breach of contract in Example 1?

A further sum of £500 is payable Signup and view all the answers

Why is the clause in Example 2 not subject to the penalty jurisdiction?

Because the extra £500 is not a sum payable on a breach of contract Signup and view all the answers

What was the significance of the case of Cavendish Square Holdings v Makdessi in 2015?

It reformed the law on contractual penalties Signup and view all the answers

What is the penalty jurisdiction?

A court's power to review and amend contractual penalties Signup and view all the answers

What is the purpose of the penalty rule?

To determine the validity of a contractual clause Signup and view all the answers

What is the primary effect of an injunction in a contract dispute?

To prohibit certain conduct Signup and view all the answers

In what circumstances would an injunction not be granted in a contract dispute?

When an order for specific performance would not be granted Signup and view all the answers

What is the underlying assumption of an award of damages in a contract breach?

That substitutes are available Signup and view all the answers

What is the purpose of an examination question that asks about the adequacy of damages as a remedy for a breach of contract?

To test the student's understanding of the nature of damages as a remedy Signup and view all the answers

What is the significance of the Warner Bros v Nelson case in the context of employment contracts?

It demonstrated the effectiveness of an injunction in enforcing a negative covenant Signup and view all the answers

In the case of Cavendish v Makdessi, what was the reason for the validity of the clause?

The purchaser had a legitimate interest in protecting the business they bought. Signup and view all the answers

What was the outcome of appeal number 1 in the case of Cavendish v Makdessi?

The clause was valid due to the purchaser's legitimate interest. Signup and view all the answers

What is the comparison between appeal number 1 and appeal number 2 in the Cavendish v Makdessi case?

Appeal number 1 involved a multimillion-pound sale of a business, while appeal number 2 involved a £85 payment for parking. Signup and view all the answers

What is the purpose of a clause that forces the seller to pay a large sum of money if they breach the agreement?

To protect the purchaser's legitimate interest in the business. Signup and view all the answers

What is the main test for the validity of a clause?

The party seeking to enforce the clause must have a legitimate interest, and the sum in the clause must be proportional to the protection of that legitimate interest. Signup and view all the answers

What is the consequence if the seller breaches the agreement in the case of Cavendish v Makdessi?

The seller has to pay a large sum of money. Signup and view all the answers

What is the main difference between appeal number 1 and appeal number 2 in the Cavendish v Makdessi case?

The amount of money involved. Signup and view all the answers

Why was the clause enforcing the promise not to compete valid in the Cavendish v Makdessi case?

Because the purchaser paid full value for the business. Signup and view all the answers

What is the purpose of a clause that requires the seller to pay a large sum of money if they breach the agreement?