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CONTRACTS PROJECT

Mohammed Ziyad R.v 610 3rd semester

Balance of Convenience

THE NATURE OF EQUITY Equity plays a strange role in English and American jurisprudence , separate for m , and yet a part of , the general law . Equity in its substantive aspect consi sts of a body of principles which are essentially of a body of principles dealin g with relief from hardship ; principles dealing with relief from hardship ; pri nciples which are ofcourse merely a part of the largr concept of fairness and j ustice upon which all law is us based , Early law , which is primarly concerned with rules designed for general application , allows little room for variation i n individual cases , and relief from hardship emanates from an authority externa l to the law itself . Viewed at this stage of the evolution of law , equity corr ects the law by applying , in circumstances where the ordinary rules would lead to unwarranted hardship , considerations of what is fair and just . In this sens e ,equity constitutes a body of principles separate from the general rules it so metimes supplements or supersedes . As law advances haltingly towards humanitari an ideals , It become concerned with the harshness of its effects in particular situations . Equitable solutions devised to meet the requirements of justice are received into the general law , and ,the goals of law have become identified wi th the goals of equity , equity denotes the general rules themselves , which the refore require no correction inorder to bring about just results under all circu mstances . Viewed at this stage of evolution of law , equity is an integral part of a unitary legal system and becomes synonymous with justice. In England the chancellor , some time toward the middle of the fourtennth centur y , established his own court to handle applications for relief addressed to him as the delegate of the royal prerogative . The step was a natural one . Since t he time time of Edward I , cases had been assigned by the Chancellor , as the Se cretary of the Kings council , to the three courts he court of exchequer . Somet iomes , commencing in the reign of Edward III, the writs were made returnable be fore the chancellor himself Up to the time of Edward II the common law courst ap plied in the cases before them a considerable body of equitable mprinciples . s the common law became relatively inflexible , equity reappeared as a separate sy stem . There are nany reasons for this phenomenon . The jealousy of the parliame

nt , itself not yet altogether secure inits recently acquired authority , towar d the growing authority of the courts , had created an atmosphere which dictated a policy of self restraint on the part of the common law courts in accepting n ovel types of cases , and the system of common law writs was being rigidifiesd m. the rules were at hand in fixed and final form , and cases were to be fitted to the rules . The Adequacy of Legal Remedy The doctrine that the relief of equity is only to be called into operation in ca ses of emergency , where there is no other adequate remedy available , is direct ly opposed to the fundamental concept of our law that one has no right to pay da mages instead of performing his obligation . This principle has been performing his obligation .This principle has been stated by the Supreme court to the effe ct that the jurisdiction of courts of equity to decree the specific performance of agreements is of a very ancient date , and rests on the ground of the inadeq uacy and incompleteness of the remedy at law . Its exercise prevents the intol erable travesty of justice involved in permitting parties to refuse performa nce of their contracts at pleasure by electing to pay damages for the breach . Story urged that there is no reasonable objection to allowing a person who has been injured by the breach of a contract for the sale of chattel the electio n of damages or specific performance. Only when the equitable remedy is too seve re , or there are practical difficulties of enforcement , should specific perfor mance be denied solely on the ground that an adequate remedy exists at law . Oft en damages are just as severe a remedy Contrary to however to the feeling of the forgoing opinions of jurists , it has become well settled that equitable relief will be granted only where no adequate remedy at law is thought to exist . A complete fusion of legal and equitable principles such as this study advocates would not by any means require the conclusion that either type of remedy , spec ific enforcement or damages , should be granted at the plaintiffs election .The e ffect of the remedies is very different , and there are situations in which only one type of remedy is at all appropriate . Usually the difference will lie in t he relative severity of the remedies on the defendant . Other important consider ations which may be involved in the courts determination of the appropriate reme dy are the effect of one type , or the other , on interest of the third parties or of the public , and the practicability of enforcement of a decree for specif ic performance . In contracts the necessity for continous supervision .or lack o f specific enforcement as an extraordinary remedy .

Restraining Injunctions Introduction During the course of a dispute, it may be expedient for a party to seek an inter im remedy in the form of an injunction. Interim inunctions are by their nature ancillary to the main dispute , but may be essential in circumstances where a party wishes to preserve the sta tus quo until the dispute has been settled, or finally determined by the court. Restraining injunctions are a form of interim court order. They are often sought where the other party, if unrestrained, may cause irreparable or immeasurable d amage by continuing in the conduct which has led to the dispute. Such injunction

s may become permanent if the claimant is successful at trial. In commercial dis putes a court can make orders to restrain, For example: The publication of obvious and defamatory lies; The infringement of copyright, trademark or other intellectual property rights; The wrongful use of confidential information and trade secrets; An ongoing breach of contract; Activities which constitute a nuisance; Dealings with particular customers or suppliers. Breach of the injunction can amount to a contempt of court, punishable by a fine and/or imprisonment.In an emergency, an injunction can be obtained very quickly without giving notice to the other party. Urgency arise s most often where the other party would take advantage if given notice of the application or where fur ther damage would result from any delay in making the application. Freezing inju nctions are often made in this way. General Rules The usual purpose of an injunction will be to preserve the status quo until the parties rights have been determined. In general terms, when exercising its disc retion, the court will need to be persuaded that there is good reason why the de fendant s rights should be restricted before the court knows whether the applica nt will succeed at trial. The applicant does not have to prove its underlying cl aim atthe injunction hearing, but it must show that it has a good arguable case. The court will not pre-judge the litigation, but must be persuaded that there is a serious question to be considered. If this is established then the court has discretion whether to grant the order. Balance of Convenience Once satisfied that the underlying claim should be taken seriously, the court wi ll exercise its discretion, according to what it regards as "the balance of conv enience". The court will weigh the likely inconvenience or damage which would be suffered by the applicant if an injunction is not granted, against the likely i nconvenience or cost for the defendant if an injunction is granted. The court ca nnot assume that one or other party will ultimately win the case; it is therefor e effectively balancing the risks of injustice. A key factor in the court s balancing exercise is whether any potential injustic e could be adequately compensated by damages. If the adverse effect of the injun ction on the respondent is measurable in financial terms then the court will be more content to restrict the respondent s rights by granting the injunction. (Th e court will, however, require an undertaking from the applicant to pay financia l compensation together with evidence of its ability to pay if it transpires the injunction was wrongly granted see "Undertaking as to damages"). Conversely, if the applicant s inconvenience in failing to obtain an injunction could be adequ ately compensated by damages, then the court will be more likely to refuse the i njunction. Financial compensation is unlikely to be a sufficient remedy for an injustice if: The other party is unlikely to be able to pay for any damage that arises; or If compensation would be very difficult to assess (for example, if the injustice would result in damage to business reputation); or If the effect of the injustice would be irreparable (for example, deprivation of the right to vote at a meeting). Procedure Usually an application for an injunction is made by giving the other party notic e of the application. However, if thereis a real emergency, or if it is necessar y to do so in the interests of justice, an application for an injunction is made initially without notice to the other side. Any order made at the without notic

e hearing will only take effect for a few days until the return hearing at which the court will hear argument and evidence from both sides. All applications for injunctions must be supported by evidence either an affidavit (if the applicati on is for a freezing injunction) or a witness statement, setting out the facts r elied upon and attaching all relevant documents. If an application is made witho ut notice to the other party, then prejudicial facts must also be disclosed see below "Duty of full and frank disclosure". All key documents should be included in the evidence. The affidavit or statement will be sworn or signed (as the case may be) by the applicant, or an officer of the applicant company it will no t be sworn or signed by the solicitors. The evidence will usually have to be pre pared quickly. Great care must be taken, therefore, to avoid mistakes. The usual result of such a mistake is that the injunction will be discharged and costs, a nd even damages, awarded against the applicant. If an injunction is obtained or contested with the help of untrue evidence, then the person who swore the affida vit or signed the statement could be charged with the criminal offence of perjur y. BALANCE OF CONVENIENCE TEST In the proceeding for temporary injunction, court applies the balance of conveni ence test. All applications for interlocutory injunctions are subjected to this test. The only exceptions to this general rule are cases where there is a plain a nd uncontested breach of a clear covenant not to do a particular thing. Injuncti on would not be granted if damages are adequate remedy and the defendant is in a position to pay that. Granting a mandatory injunction is subject to the balance of convenience test and thus may be rejected if the prejudice suffered by the def endant if the injunction is granted would be more that that would be suffered by the defendant if it is withheld. Contracts which are negative in nature or those which contain negative stipulati ons can be enforced by injunctions. In deciding whether to restrain breach of a negative stipulation court is not normally concerned with Balance of Convenience or inconvenience. In such cases, an injunction is granted as a matter of course . But being an equitable remedy it can be refused if it would cause any particula r hardship to the defendant which would be oppressive to him. In applying this test the court takes into account the nature of the breach. The court compares the amount of mischief done or threatened to the plaintiff and w eighs the same against that will be inflicted ob granting the injunction on the defendant. The court may then grant a temporary injunction if it can see that th e comparative mischief or the inconvenience which is likely to arise from withho lding the injunction will be greater than that which is likely to arise from gra nting it. According to Halsburys laws of England the court must weigh two matters where Bal ance of Convenience lies: The first is to protect the plaintiff against injury by violation of his rights f or which he could not be adequately compensated in damages recoverable in the ac tion if the uncertainty were resolved in his favour at the trial. The second mat ter is the defendants need to be protected against injury resulting from having b een prevented from exercising his own legal rights..if the uncertainty were resol ved in the defendants favour at the trial. On consideration of Balance of Convenience, if it cannot be shown that irreparab le injury would be caused to the defendant by not granting an injunction, the i njunction can be refused by the Court. When injunctions are sought to prevent br each of contract, the balance of convenience is in favour of the plaintiff who s eeks performance of the contract and makes out a prima facie case. Negative co venants in letters of intent can be specifically enforced by the court contract as concluded. But if the terms of the contract are disputed, injunction may be r efused on the ground of comparative convenience. In Gujarat Bottling Co v Coca Cola Co ,the Supreme Court laid down the tests for exercise of discretion in granting temporary injunction. The court said that th e decision as to granting or not granting a temporary injunction should be taken at a time when the right asserted by the plaintiff and its alleged violation ar

e contested. Temporary injunctions are granted before the right is asserted by t he trial. Temporary injunction is granted to prevent injustice being done to the plaintiff before asserting the right. The object of such an injunction is to pro tect the plaintiff against injury by violation of his rights for which he could not be adequately compensated in damages recoverable in the action if the uncert ainty was resolved in his favour in the trial. The need for such protection has however to be weighed against the corresponding need to the defendant to be prot ected against injury from having his been prevented from exercising his own lega l rights for which he could not be adequately compensated. The court should weig h one convenience against the other and determine where the Balance of Convenien ce lies. In Gramaphone Co of India Ltd v Baleswar , an artiste entered into a contract wi th the plaintiff company to be its exclusive artiste. He breached the contract a rendered music for another company. The court decided that the Balance Of Conve nience do not lie in favour of granting an interlocutory injunction to prevent t he respondents act and that if the plaintiff won the case, he could be adequately compensated in terms of money. In Daily Mirror Newspaper Ltd v Gardner, wholesalers had threatened the plainti ff newspaper of a boycott for a week and then started sales again. A prima facie actionable wrong could be shown. The Balance of Convenience was in favor of the plaintiff and interlocutory injunction was granted since the defendants sought to induce the wholesalers to reduce orders on only a day or twos notice. It was h eld that, the fact that the defendants did not know the terms of the plaintiffs c ontract with the wholesalers, was no defense. In Fellowes v Fisher , a solicitor sought an injunction against his conveyancing clerk for breach of covenant service. It was observed that if the injunction wa s granted, the clerk would lose his job and his option of finding a job with ano ther solicitor would be difficult while the action was pending. Balance of Conve nience was thus against granting an injunction. Thus we see that the court exercises its discretion in deciding whether or not t o grant an injunction based on the Balance of convenience.

Bibliography 1. Edwin Peel, Trietal Law of Contract, (12th edn, 2007), Thomson Reuters ( legal) Ltd, London 2. Pollock and Mulla, Indian Contract Act and Specific relief Act ,(12th, e dn),(Volume 2), Butterworths India, New Delhi 3. Avatar Singh, Contract and Specific Relief, (10th edn, 2008), Eastern Bo ok Company, Lucknow 4. Equity and Orgin of Equity 5. Manupatra 6. Westlaw