That hierarchy is the shape a strong answer follows. Damages come first, because they are the common-law default. Everything else — specific performance, injunction, rectification, rescission — is equitable, discretionary and secondary, granted only where damages will not do the job.
The compensatory aim and the three heads of loss
The governing rule in Ireland is Finnegan J's in the Supreme Court in Duffy v Ridley Properties Ltd [2008] IESC 23 Supreme Court (IE): "where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with regard to damages, as if the contract had been performed." The rule originates in Robinson v Harman (1848) 1 Ex 850; 154 ER 363 Court of Exchequer (E&W). That is the expectation interest — forward-looking, giving the plaintiff the benefit of the bargain rather than merely restoring it to the position it occupied before contracting.
There are three recognised heads, and the plaintiff elects between them subject to a strict bar on double recovery:
- Expectation loss — the profit performance would have produced.
- Reliance loss — wasted expenditure incurred in reliance on the contract.
- Restitutionary loss — return of a benefit conferred on the defendant, such as a prepayment.
The election is usually illustrated by Anglia Television v Reed Eng, where an actor pulled out of a television film at the last minute, the production was abandoned, and profits on a film never made were unprovable, so the company claimed its wasted production expenditure instead. What a plaintiff cannot do is claim lost profit and wasted expenditure together, which would compensate the same loss twice. Note that no Irish decision has yet settled the election, the ceiling on reliance damages, or where the onus lies — so argue it from principle rather than asserting a rule.
Reliance damages have a ceiling of their own. They cannot put a plaintiff in a better position than performance would have, so where the contract was a losing one anyway the wasted expenditure flows from the plaintiff's own bad bargain rather than from the breach. The onus of proving that lies on the defendant.
Remoteness: the limbs of Hadley v Baxendale
Not every loss caused by a breach is recoverable. The foundational test is Hadley v Baxendale (1854) 9 Ex 341 Eng, adopted in Ireland by Finlay P in Hickey & Co Ltd v Roches Stores (Dublin) Ltd (No 2) [1980] ILRM 107 IE — where the Irish standard was put as "only such matters as were not unlikely to occur, excluding matters likely to occur only in a small minority of cases or being very unusual" — and applied in Lennon v Talbot (Ireland) Ltd (unreported, High Court, 20 December 1985) IE. It is conventionally broken into limbs: loss arising naturally, in the usual course of things, from the breach; loss reasonably supposed to have been in the contemplation of both parties at the time of contracting as the probable result of breach; and loss arising from special circumstances actually communicated to the defendant. In Hadley itself a mill shaft was delivered late and the mill's lost profits were irrecoverable: not a natural consequence, since a spare shaft could be assumed, and the special need had never been mentioned.
Victoria Laundry v Newman Industries [1949] 2 KB 528 Eng is the cleanest illustration of the split. The launderer recovered its ordinary lost profits from a late boiler, those being within the contemplation of anyone selling equipment to a laundry, but not the loss of an exceptionally lucrative Government dyeing contract of which the seller knew nothing.
The point routinely missed is that the relevant knowledge is knowledge at the time of contracting, not at the time of breach: a special exposure mentioned in passing, or only after the deal is struck, does not enlarge liability. Nor is remoteness a question of amount. Parsons v Uttley Ingham [1978] QB 791 Eng holds that once the kind of loss is contemplated — illness in pigs from defective feed — an unforeseeably large loss of that kind is still recoverable, so a loss bigger than expected and a loss of a different kind than expected are not the same objection.
Mitigation and the date of assessment
A plaintiff must take reasonable steps to mitigate; loss that could reasonably have been avoided is not recoverable. A negligent failure to mitigate is deemed to be contributory negligence by section 34(2)(b) of the Civil Liability Act 1961, so it ordinarily reduces the award rather than defeating the claim. The Irish cases to cite are Pagnell Ltd (t/a Snap Printing) v O.C.E. Ireland Ltd [2015] IECA 40 Ireland in the Court of Appeal and McCord v Electricity Supply Board [1980] ILRM 153 Supreme Court (IE) in the Supreme Court.
The standard is reasonableness, and it is not an unduly harsh one, because it was the defendant who created the difficulty. It is judged on the circumstances as they appeared at the time rather than with hindsight, so a plaintiff need not accept a substitute arrangement on materially worse terms, nor embark on an expensive and uncertain course with no assurance of success. What the duty will not excuse is a refusal on principle to take a cheap step that would have avoided most of the loss. The statutory route is worth knowing precisely: section 2(1) of the Civil Liability Act 1961 defines a "wrong" as including a breach of contract, and section 34(1) apportions where damage was caused partly by the plaintiff's own want of care and partly by the defendant's wrong — so the apportionment reaches contract by definition rather than by analogy. Where fault cannot be apportioned between them, liability is divided equally (section 34(1)(a)). The Act does not reach a claim in debt.
Damages are normally measured at the date of breach, but that is a rule of convenience rather than an absolute one: a court may take account of supervening events known by the date of assessment which show that the loss would have been reduced or extinguished in any event.
When equity steps in
The gateway to the equitable remedies is the inadequacy of damages. Specific performance compels a party to perform, and is the usual remedy where the subject matter is unique — pre-eminently contracts for the sale of land, where no sum of money buys the purchaser the same thing. Ordinarily available goods can also qualify if they become critically scarce, so that no substitute can in practice be bought.
Three bars recur. Equity will not make an order requiring constant supervision, so an obligation to keep a service continuously in operation is not specifically enforced, although a clear one-off obligation of the same kind is. Contracts of personal service are almost never specifically enforced, since courts will not compel unwilling people to work together; an injunction enforcing a negative covenant may indirectly encourage performance, but it is refused where its practical effect is compulsion. Exceptionally, in Earley v Health Service Executive (No. 2) [2017] IECA 207 Court of Appeal (IE) the Court of Appeal granted an injunction restoring an employee's role where any other remedy would have been purely theoretical.
Third, the remedy is discretionary and never available as of right. The discretion is guided by settled factors: delay or laches; the plaintiff's own readiness and willingness to perform; hardship amounting to injustice, which must generally be external to the contract and exist at the time of contracting; mutuality and clean hands; and the possibility of performance, which is why an order is refused against a purchaser with no means of paying at all.
Related Contract notes: discharge and frustration · misrepresentation · all free Contract notes.
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How are contract damages measured in Ireland?
Compensatorily. The aim, from Robinson v Harman and endorsed in Hickey v HSE, is to place the plaintiff so far as money can in the position performance would have achieved. The plaintiff elects between expectation, reliance and restitutionary loss, and cannot recover overlapping heads twice.
What is the difference between expectation and reliance damages?
Expectation damages give the profit performance would have produced; reliance damages give back expenditure wasted in reliance on the contract, which is the practical route where profits cannot be proved (Anglia Television v Reed). Reliance is capped by the bad-bargain rule: it cannot put the plaintiff in a better position than performance would have.
When is a loss too remote to recover?
When it neither arises naturally from the breach nor was in the parties' contemplation at the time of contracting, and no special circumstances were communicated (Hadley v Baxendale; Victoria Laundry). Remoteness concerns the kind of loss, not its size — an unexpectedly large loss of a contemplated kind is recoverable (Parsons v Uttley Ingham).
When will a court order specific performance instead of damages?
Only where damages are inadequate, typically because the subject matter is unique — above all contracts for the sale of land, or goods that have become critically scarce. It is discretionary and can be refused for want of readiness to perform, delay, hardship, want of mutuality or clean hands, a need for constant supervision, or because the contract is one of personal service.
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