Legal and Equitable Remedies for Tort and Contract Matters

Posted: February 09, 2017



Individuals and businesses enter into contracts in which they expect the other party to perform their obligations spelt in the party in good faith, otherwise termed as bona fide. In most of the cases, the businesses perform their obligations with the expectation that the other party will replicate. However, there occurs exceptions where the other party may fail to meet their contractual obligations. There are legal procedures and principles that have been enacted to protect parties that are signatories to agreements from being affected by failure of the other parties to meet their contractual obligations. Legislative and judicial institutions in the country have liaised to ensure that for every legal wrong capable of being commuted, there is a legal remedy for the same. Apart from contracts, individuals are expected to go around their businesses in normal life without having to negatively affect the lives of those around them. This means that we have to be aware of the consequences of all our actions, whether they are intentional or not. Courts have the responsibility of ensuring that the remedies are applied appropriately in a manner that redresses the actions or non-actions of the parties in an agreement and those actions that fall under tort. This paper will cover various aspects of law and how they are brought together to address tort and contract matters as studies under this unit. Most of the cases that involve contractual and tort matters are usually handled separately from criminal proceedings. This is due to the fact that cases involving these matters have two parties where justice must start with ensuring that the offender party meets the losses suffered by the non-offending party. Therefore, the main differences between case proceeding involving tort and contracts and those that fall under criminal law is that the former first seeks reimbursement of the offended parties. However, there are cases where proceedings involving tort and contractual matters can be classified under criminal proceedings. This is especially where there is extensive damage that cannot merely be met through reimbursement, for instance where tort or breaking of contract terms results in death.

Difference Between Legal and Equitable Remedies, Their Historical Development and Application Today

The American legal system, just like most justice systems in the contemporary world, was formed based on the traditions of the English common law. Under this law, there existed different courts to deal with law and equity matters. The court that dealt with equity matters addressed issues to do with breach of contract and redress for the parties affected by this breach of contract. Individuals would first consult the courts of law. If they felt dissatisfied with the decisions of this court, they would move to the court of equity. The early American legal system established chancery courts that used to address matters to do with equitable remedies. With time, these courts were scrapped but the current courts handle proceedings on both equitable and legal issues and remedies. Legal remedies can be divided into two broad categories; consequential and compensatory damages. Both of these are in form of monetary reimbursements that are meant to ensure that the party that lost due to dishonour of an agreement are placed back to the position that they would have been in case the laws governing the contract were fulfilled. For instance, if an individual secures a government contract to supply one thousand metric tons of grain for the army that is on a mission in the middle east over a period of one year and the government cancels this contract after withdrawal pf the army just after the firm supplies half of the grain, the individual can recover the money that lost in the process of trying to buy, transport, store and process grain for the government. On the other hand, if the individual only avails half of the grain and fails to deliver the rest citing reasons like shortages due to poor harvest, the government can move to court and request that the firm compensates it for the extra charges that they had to occur while trying to source for the remaining grain elsewhere to sustain the mission. Compensatory damages help the party to recover what was lost due to the unfulfilled contract. Determination of these damages is done by all the parties involved. In case there occurs disagreements between the offender and the offended the court may come in through an expert who helps the two parties settle on the optimal amount of compensation that the offender must pay to restore the offended party back to their position before the action or non-action of the offender necessitated the remedy. On the other hand, consequential damages are indirectly related to the broken contract. There are also other punitive damages that may be imposed on the wrongdoer for the breach of contract. These are not based on the economic loss experienced by the other party and are meant to make the party that broke the agreement to act as an example. However, there are mostly applied under criminal lawsuit and less in the contract ones.  In fact, scholars have argued that punitive damages should not be classified under remedies since their main aim is not to return the offended party to their initial position but to punish them for their wrongdoing. Equitable remedies are usually related to the concept of fairness and are not based on the economic losses. Equitable remedies may also not necessarily be in form of economic value. For instance, courts may release an order demanding that the non-performing party moves with speed to fulfil the obligation under a contract which it initially failed to meet. Most of the equitable remedies put in place by the courts are meant to reverse the original breach of contract. Equitable remedies are also divided into two; mandatory and prohibitory injunctions. An injunction is an order or process initiated by a judicial authority meant to restrain a party from commencing or continuing with an action or a non-action that threatens the legal rights of another party. An injunction may require an offending party to undertake a certain action as part of fulfilling the new rules under the contract. On the other hand, a prohibitory injunction is an order by the court that bars an offending party from executing a certain action that may negatively impact the agreement to which it is a subject. Once an individual violates an injunction, they will be charged for contempt of court. A party can only be charged with contempt of court if there is evidence that they had knowledge of the injunction. It is usually the role of the court and the plaintiff to ensure that the offending party in a tort or a contractual agreement is informed of the ongoing proceedings. This party is usually expected to have a representative during the proceedings where it may make contributions in its favour. The party may be present during the ruling or may be notified through the recommended channels. The case the becomes a criminal one that is usually punished by imprisonment, fine or both under ordinary circumstances.

Specific performance is another form of equitable remedy that is usually ordered by the court. In this case, the court will require a party to perform the act stated in the contract instead of awarding damages to the offended party. However, this order is usually given under special circumstances where the offended party proves that the late action of the offender does not have a negative impact on the expected results of the contract. The concept of specific action usually overlaps with mandatory injunctions. However, there is a slight difference between the two where mandatory injunctions do not necessarily constitute fulfilling an obligation that was failed by the offending party. This means that, under mandatory injunctions, the court will order the offender to fulfil other actions that were not necessarily part of the covenant. Therefore, mandatory injunctions encompass a broad concept that gives the court freedom to order for the implementation of any action that it sees fit in an effort to ensure that the offended party gets justice. This means that specific performance falls under mandatory injunctions. For instance, if Don gives Jack one hundred thousand dollars to buy him a new car and Jack instead buys a used car at ninety thousand dollars deciding to keep the extra ten thousand dollars to himself and the case is brought before the court, a court has several options under the mandatory injunction. The court may decide that Jack returns ten thousand dollars to Don. It may also decide that Don returns the used car to Jack and that Jack obtains a new car as agreed in the initial contract. In this case, both decisions can be classified as mandatory injunctions. The second decision also falls under specific action. Specific action is usually more preferred than the other remedies that involve actions that were not initially part of the contract. However, there are cases when performing the initial contractual obligation is not regarded as a remedy. For instance, when a health insurance company fails to meet the costs of treatment of one of its clients after an accident and the client moves to court after treatment, the court can decide that the company reimburses the client for the expenses that they incurred in the treatment process rather than paying the hospital directly.

How Punitive Legal and Compensatory Damages are Computed

Punitive damages are commonly applied in cases involving tort. They are intended to punish the offenders to discourage them and any other party that may have an intention of committing the crime again. Under tort, punitive damages are awarded in extreme cases where there exists proof that offender was careless or acted intentionally in a manner that compromised that physical or financial safety of the affected party. In this case, the actions or non-actions of the offender should be greater than mere negligence. For instance, battering or assault is considered an intentional action that is performed with absolute disregard to the wellbeing and tights of the offended party. In most cases, instances that lead to charges that lead to punitive damages being awarded in the contemporary society have monetary losses tied to them. Punitive damages are not usually awarded alone. In many cases, the court first determines the compensatory damages and then accompanies the ruling with the punitive damages. In cases where the actions of the offender are as a result of mere negligence, the court will most likely award the offended party compensatory damages alone. In addition, the decision on whether to award punitive damages or not lies with the court and it may decide either to do so or not to do so as it sees fit. However, individuals who file complaints with the court can be invited to make contributions towards the calculation of punitive charges at the advanced stages. However, it is preferable that the initial submission of the plaintiff or the defence contains claims to these damages. For instance, an individual who loses their ability to work through an accident can be asked to present their previous payslips and salary expectations if they were able to work. In deciding the compensation, the court will also look at the needs of the dependents of the affected party and may award punitive compensation that ensures that the dependents are well taken catered for until they become independent. Most punitive damages are made proportionate relative to the compensatory damages awarded to the offended party. In most cases, punitive damages are less than the compensatory damages. However, there exists a special type of punitive damages known as treble damages. The rebel damages award is awarded triple the amount of damages that the plaintiff was initially entitled to as compensation. There are states in the US that have statutes that approve this kind of damages. The Clayton Antitrust Act and RICO under the United States law were enacted to enforce a three level enforcement scheme that awards the offended party the right to apply for double and triple damages. However, these damages cannot be automatically awarded by the court unless the plaintiff specifically requests it to do so. There are also states where the statutes that award double and treble damages require that the plaintiff or their defence proves that the action or non-action of the offender is a result of utter negligence or was committed on purpose. In summary, there are three major requirements that need to be fulfilled before a double or treble punitive action can be ordered; there must exist specific statutes that award this kind of damages to the offended party. The plaintiff must also request for the double or treble damages in the initial filing of the lawsuit. The plaintiff must also have proof of wrongdoing by proving that the offender acted out of utter negligence ort intention to cause harm.

The concept of double and treble standards has not penetrated the federal legal system as much as it has at the state level. Under the federal law, an individual can claim these damages only under two statutes; Clayton Antitrust Act and RICO. Under the Clayton law of 1914, actions that are deemed as unhealthy to a competitive market are prohibited. Losses to a party that result from the spelt actions allow the plaintiff to apply for more compensation than their absolute vale. The Racketeer Influenced and Corrupt Organizations Act makes providences on criminal punishments and civil actions against actions performed by criminal organizations. It was meant to seal the loophole that existed where leaders of organizations would order their subordinates to commit certain crimes then go scot-free because they do not have direct links to most evidence. Under this act, the plaintiff is allowed to recover treble actions.

The Concept and Goals of Restitution, Specific Performance, And Injunctions.

Restitution is a concept that was first applied in the English law under tort. The concept was then imported to courts in the United States. This has seen it expand beyond its contractual origin. It is usually applied to day where a party is deemed to have derived benefits from another party but the latter has no capability or channels to collect the benefit because of defects or lack of terms that may enable it to so, especially where the formers actions are a breach of contract or tort. However, the expansion of the law into criminal cases has not affected its application in tort and contracts. The traditional application of restitution was to correct defects in the proceedings of a contract where one party fails in its obligations leading to a loss by the other party and a gain by the offender.

Restitution is the process of restoring something that was lost to the owner. It occurs when an offending party is instructed to return the specified value of property that was transferred to them by the non-offending party. In this case, the restitution process is specific and it may not involve a long legal process. The case is usually solved once the offended party confirms with the court or the arbitrator that the offending party has returned the exact property given to them as ordered. For instance, if an arbitrator finds out that a firm supplying building materials to a contractor used to supply eight hundred tonnes of concrete on one thousand kilogram invoices ten times in a row, the arbitrator may decide that the supplier brings in two thousand kilograms to restore the supplied quantity to what it should be. Another form of restitution, substitutionary restitution, is where the arbitrator may the offending party to reimburse the non-offending party an amount of money equal to the amount that the offending party benefitted by breaching the contract. In this example, the court may order that the contractor calculates the value of the concrete that was not supplied by the supplier as per the agreement then pay the total amount less the figure or demand that the supplier pays the contractor this amount in case they have already made the payment. Restitution figures are computed on the basis of the reasonable monetary value of the goods given or the services performed. Therefore, restitution is a complex process that allows both parties to carry out a latitude of analysis procedure and agree to what a reasonable value is. In case there is a threat of conflict arising from this analysis, the court may bring in a third party that acts on its behalf such as a quantity surveyor, a property valuing agency or a land survey agency.

Before a court can impose a restitution order, there must be enough proof that one party benefitted from the misdoings of another one. In addition, this action involves a breaching and a non-breaching party. Both forms of restitution are meant to ensure that the non-offender party remains unaffected by the actions of the offender. However, there are cases where this may fail to happen, for instance, where the non-actions or actions of the offender in regard to the contract led to loss of lives, for instance, negligence by medics. In this case, there can be no exact compensation that will return the victim to the initial state before breaking the terms of the agreement. In addition, proceedings in regard to such a case may be classified under criminal cases. In this case, the court will have to term the form of payment given to the victims as compensation. From this example, we learn that restitution may not be applicable to all cases involving tort and contracts.


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