Remedies

In American and English jurisprudence, there is a legal maxim that for every right, there is a remedy. That is, lawmakers claim to provide appropriate remedies to protect rights. This legal maxim was first enunciated by William Blackstone: "it is a settled and invariable principle in the laws of England, that every right when with-held must have a remedy, and every injury it’s [sic] proper redress" 1 William Blackstone, Commentaries on the Laws of England 23.  There are two main types of remedies: legal remedies also known as damages; and equitable remedies.

Legal Remedies

A legal remedy is the means by which a court of law, usually in the exercise of civil law jurisdiction, enforces a right, imposes a penalty, or makes some other court order to impose its will. In Commonwealth common law jurisdictions and related jurisdictions (e.g. the United States), the law of remedies distinguishes between a legal remedy (e.g. a specific amount of monetary damages) and an equitable remedy (e.g. injunctive relief or specific performance). Another type of remedy is declaratory relief, where a court determines the rights of the parties to an action without awarding damages or ordering equitable relief.

Liquidated Damages

Damages are said to be liquidated (also referred to as liquidated and ascertained damages) when the amount of damages recoverable in the event of a specified breach (eg late performance) is agreed at the date of the contract. In such circumstances a liquidated damages provision will be included in the contract. When damages are not predetermined/assessed in advance then the amount recoverable is said to be 'at large' (to be agreed or determined by a court or tribunal in the event of breach).

At common law, a liquidated damages clause will not be enforced if its purpose is to punish the wrongdoer/party in breach rather than to compensate the injured party (in which case it is referred to as a penal or penalty clause). One reason for this, it could be said, is that the enforcement of the term would, in effect, require an equitable order of specific performance. However, courts sitting in equity will seek to achieve a fair result and will not enforce a term that will lead to the unjust enrichment of the enforcing party.

In order for a liquidated damages clause to be upheld, two conditions must be met. First, the amount of the damages identified must roughly approximate the damages likely to fall upon the party seeking the benefit of the term. Second, the damages must be sufficiently uncertain at the time the contract is made that such a clause will likely save both parties the future difficulty of estimating damages. Damages that are sufficiently uncertain may be referred to as unliquidated damages, and may be so categorized because they are not mathematically calculable or are subject to a contingency which makes the amount of damages uncertain.

For example, suppose Joey agrees to lease a storefront to Monica, from which Monica intends to sell jewelry. If Joey breaches the contract by refusing to lease the storefront at the appointed time, it will be difficult to determine what profits Monica will have lost, because the success of newly created small businesses is highly uncertain. This, therefore, would be an appropriate circumstance for Monica to insist upon a liquidated damages clause in case Joey does indeed fail to perform.

In the case of construction contracts, courts have occasionally refused to enforce liquidated damages provisions, choosing to following the Doctrine of Concurrent Delay when both parties have contributed to the overall delay of the project.

Punitive Damages

Punitive damages (termed exemplary damages in the United Kingdom) are damages not awarded in order to compensate the plaintiff, but in order to reform or deter the defendant and similar persons from pursuing a course of action such as that which damaged the plaintiff.  Punitive damages are often awarded where compensatory damages are deemed an inadequate remedy. They may be rationalized as preventing under-compensation of plaintiffs, allowing redress for undetectable torts and taking some strain away from the criminal justice system.  Because they usually compensate the plaintiff in excess of the plaintiff's provable injuries, punitive damages are awarded only in special cases, usually under tort law, where the defendant's conduct was egregiously invidious. Punitive damages cannot generally be awarded in contract disputes.

Punitive damages are a settled principle of common law in the United States.  They are a matter of state law, and thus differ in application from state to state. In many states, including California and Texas, punitive damages are determined based on statute; elsewhere, they may be determined solely based on case law. Many state statutes are the result of insurance industry lobbying to impose "caps" on punitive damages; however, several state courts have struck down these statutory caps as unconstitutional.

Punitive damages are a focal point of the "tort reform" debate in the United States, where numerous highly-publicized multi-million dollar verdicts have led to a fairly common perception that punitive damage awards tend to be excessive. However, statistical studies by law professors and the Department of Justice have found that punitive damages are only awarded in two percent of civil cases which go to trial, and that the median punitive damage award is between $38,000 and $50,000.

In response to judges and juries which award high punitive damages verdicts, the Supreme Court of the United States has made several decisions which limit awards of punitive damages through the due process of law clauses of the Fifth and Fourteenth Amendments to the United States Constitution. In a number of cases, the Court has indicated that a 4:1 ratio between punitive and compensatory damages is broad enough to lead to a finding of constitutional impropriety, and that any ratio of 10:1 or higher is almost certainly unconstitutional.

In BMW of North America, Inc. v. Gore (1996), the Court ruled that punitive damages must be reasonable, as determined based on the degree of reprehensibility of the conduct, the ratio of punitive damages to compensatory damages, and any criminal or civil penalties applicable to the conduct. In State Farm Auto. Ins. v. Campbell (2003), the Court held that punitive damages may only be based on the acts of the defendants which harmed the plaintiffs.

Most recently, in Philip Morris USA v. Williams (2007), the Court ruled that punitive damage awards must be limited to the harm caused to the individual plaintiffs involved in the litigation at hand, although harm to others may be a criterion in determining the reprehensibility of the defendants' conduct.

Nominal Damages

On the other hand, nominal damages are very small damages awarded to show that the loss or harm suffered was technical rather than actual. Perhaps the most famous nominal damages award in modern times has been the $1 verdict against the National Football League (NFL) in the 1986 antitrust suit prosecuted by the United States Football League. Although the verdict was automatically trebled pursuant to antitrust law in the United States, the resulting $3 judgment was regarded as a victory for the NFL. Historically, one of the best known nominal damage awards was the farthing that the jury awarded to James Whistler in his libel suit against John Ruskin. In the English jurisdiction, nominal damages are generally fixed at £2.  Many times a party that has been wronged but is not able to prove significant damages will sue for nominal damages. This is particularly common in cases involving alleged violations of constitutional rights, such as freedom of speech.

Equitable Remedies

Equitable Remedies

Equitable remedies are the remedies developed and granted by the old courts of equity, such as the Court of Chancery in England, and still available today in common law jurisdictions.  Equity is said to operate on the conscience of the defendant, so an equitable remedy is always directed at a particular person, and his knowledge, state of mind and motives may be relevant to whether a remedy should be granted or not.

Equitable remedies are distinguished from "legal" remedies (which are available to a successful claimant as of right) by the discretion of the court to grant them. In common law jurisdictions, there are a variety of equitable remedies, but the principal remedies are:

injunction
specific performance
account
rescission
rectification
estoppel
certain proprietary remedies, such as constructive trusts or tracing
subrogation
in very specific circumstances, an equitable lien

The two main equitable remedies are injunctions and specific performance, and in casual legal parlance references to equitable remedies are often expressed as referring to those two remedies alone. Injunctions may be mandatory (requiring a person to do something) or prohibitory (stopping them doing something). Specific performance requires them to perform a contract, for example by transferring a piece of land to the claimant.

Ordering of an account is usually ordered where payment of damages would still leave the wrongdoer unjustly enriched at the expense of the wronged party. However, orders for an account are not normally available as of right, and only arise in certain circumstances.[4]

Rescission and rectification are remedies in relation to contracts (or, exceptionally, deeds) which may become available.

Constructive trusts and tracing remedies are usually used where the claimant asserts that property has been wrongly appropriated from them, and then either (i) the property has increased in value, and thus they should have an interest in the increase in value which occurred at their expense, or (ii) the property has been transferred by the wrongdoer to an innocent third party, and the original owner should be able to claim a right to the property as against the innocent third party.

Equitable liens normally only arise in very specific factual circumstances, such as unpaid vendor's lien.

Equitable principles can also limit the granting of equitable remedies. This includes "he who comes to equity must come with clean hands" (ie the court will not assist a claimant who is himself in the wrong or acting for improper motives), laches (equitable remedies will not be granted if the claimant has delayed unduly in seeking them), "equity will not assist a volunteer" (meaning that a person cannot litigate against a settlor without providing the appropriate consideration e.g Money) and that equitable remedies will not normally be granted where damages would be an adequate remedy. The most important limitation relating to equitable remedies is that an equitable remedy will not lie against a bona fide purchaser for value without notice.

Interestingly, damages can also be awarded in "equity" as opposed to "at law", and in some legal systems, by historical accident, interest on damages can be awarded on a compound basis only on equitable damages, but not on damages awarded at law.However, most jurisdictions either have ended this anachronism, or evinced an intention to do so, by modernising legislation.