damages as an inadequate remedy

Whether damages are an inadequate remedy or not is a question relevant in assessing whether a litigant is entitled to equitable remedies before a court exercising its jurisdiction in equity.

Damages will be considered an adequate remedy where the innocent party would reasonably be able to enter into a substitute contract for the same or similar products or services at a similar price. In these circumstances, damages would be measured by the difference between the price of the substitute contract and the contract with the party in breach. For instance, a sale of shares, commonly available goods and services in a competitive market are unlikely to warrant grant of an order. On the other hand, contracts for real property have historically been granted the remedy, and it makes sense for this to be extended to other property rights such trade marks, patent rights and other items of property that are not readily available elsewhere and are unique.

A court will more likely to be persuaded where the remedy is appropriate in the circumstances and consideration of whether damages are likely to be an adequate remedy for the type of contract before the court. Ultimately it is whether the claimant should be confined to their remedy in damages. It will be for the claimant to show that damages are not an adequate remedy. 

Damages may be an inadequate remedy where:

1. The value of security cannot be readily ascertained;
2. The claimant’s loss is difficult to prove or quantify;
3. Particular items of loss may not be recoverable at law; or
4. The claimant will not be able to recover damages from the defendant;
5. damages suffered may be nominal, and the defendant would be unjustly enriched.

Section 52 of the Sale of Goods Act makes the remedy available for specific or ascertained goods, that is, where the goods unique.

Usage: A Court may exercise its discretion to order equitable relief where it finds damages are an inadequate remedy in the hands of the successful litigant.

Related Words: equitable relief; court of equity; damages; injunction; search order; freezing injunction; financial loss.