Remedies to Contract Breaches

Breach of contract is a legal cause of action in which a binding agreement is not performed, without lawful excuse, by one or another more of the parties. Failure to perform can take several forms:

  • Late performance
  • Non-performance (i.e. when a defaulting party refuses to perform what he has promised to do)
  • Defective performance (i.e. the defaulting party fails to fulfill a promised objective or end-state)
  • Doing the very thing the defaulting party has promised not to do
  • Preventing oneself from fulfilling a contractual obligation.

Singapore Contract Law provides an innocent party with four main remedies for breach of contract:

  1. Monetary Compensation (Damages): A money damage award is a sum of money awarded to the claimant as compensation for financial losses caused by a breach of contract. Parties injured by a breach are entitled to the benefit of the bargain they entered, or the net gain that would have accrued but for the breach. Factors such as measure of damages, contributory negligence, penalties, deposits, part payments and forfeitures are taken in consideration.
  2. Termination of Contract: All contracting parties are discharged from contractual obligations once a contract is terminated. But not every breach of contract entitles the innocent party to terminate the contract. Whether or not the right of termination is available depends on how the term is classified in law.
  3. Specific Performance: A legal order may be sought to compel the defaulting party to perform its contractual obligations to the claimant. However, specific performance is only awarded in exceptional cases, typically where damages are an inadequate remedy.
  4. Injunction: A injunction may be awarded to the claimant to restrain the defendant from starting or continuing a breach of a negative contractual undertaking (prohibitory injunction) or to compel performance of a positive contractual obligation (mandatory injunction). Like specific performance, injunctions are only awarded in exceptional cases, typically where damages are inadequate to remedy the breach of contract.