In relation to remedies for breach of contract explain:（a) the difference between liquida

参考答案：This question requires an explanation of two aspects the law relating to damages for breach of contract. Every failure to performa primary obligation is a breach of contract. The secondary obligation on the part of the contract-breaker, by implication of thecommon law, is to pay monetary compensation to the other party for the loss sustained by him in consequence of the breach (PhotoProductions Ltd v Securicor Transport Ltd (1980)). Such monetary compensation for breach of contract is damages. There are,however, two distinct aspects to this general concept that have to be considered.(a) Liquidated damages and penalty clausesIt is possible, and common in business contracts, for the parties to an agreement to make provisions for possible breach bystating in advance the amount of damages that will have to be paid in the event of any breach occurring. Damages under sucha provision are known as liquidated damages. They will only be recognised by the court if they represent a genuine pre-estimateof loss, and are not intended to operate as a penalty against the party in breach. If the court considers the provision to be apenalty, it will not give it effect, but will award damages in the normal way.In Dunlop v New Garage and Motor Co (1915), the plaintiffs supplied the defendants with tyres, under a contract designed toachieve resale price maintenance. The contract provided that the defendants had to pay Dunlop ￡5 for every tyre they sold inbreach of the resale price agreement. When the garage sold tyres at less than the agreed minimum price, they resisted Dunlop’sclaim for ￡5 per tyre, on the grounds that it represented a penalty clause. On the facts of the situation, the court decided thatthe provision was a genuine attempt to fi x damages, and was not a penalty. It was, therefore, enforceable.In deciding the legality of such clauses, the courts will consider the effect, rather than the form, of the clause as is seen inCellulose Acetate Silk Co Ltd v Widnes Foundry (1925) Ltd (1933). In that case, the contract expressly stated that damagesfor late payment would be paid by way of penalty at the rate of ￡20 per week. In fact, the sum of ￡20 was in no way excessiveand represented a reasonable estimate of the likely loss. On that basis, the House of Lords enforced the clause in spite of itsactual wording.(b) The duty to mitigate lossesThis rule relates to the rule that the injured party in the situation of a breach of contract is under a duty to take all reasonablesteps to minimise their loss. The operation of the rule means that the buyer of goods that are not delivered, as required underthe terms of a contract, has to buy the replacements as cheaply as possible. Correspondingly, the seller of goods that are notaccepted in line with a contractual agreement has to try to get as good a price as they can when they sell them.In Payzu v Saunders (1919), the parties entered into a contract for the sale of fabric, which was to be delivered and paid forin instalments. When the purchaser, Payzu, failed to pay for the fi rst instalment on time, Saunders refused to make any furtherdeliveries unless Payzu agreed to pay cash on delivery. The plaintiff refused to accept this and sued for breach of contract. Thecourt decided that the delay in payment had not given the defendant the right to repudiate the contract. As a consequence, hehad breached the contract by refusing further delivery. The buyer, however, should have mitigated his loss by accepting theoffer of cash on delivery terms. His damages were restricted, therefore, to what he would have lost under those terms, namely,interest over the repayment period.In Western Web Offset Printers Ltd v Independent Media Ltd (1995), the parties had entered into a contract under whichthe plaintiff was to publish 48 issues of a weekly newspaper for the defendant. In the action, which followed the defendant’srepudiation of the contract, the only issue in question was the extent of damages to be awarded. The Court of Appeal decidedthat as the claimant had been unable to replace the work due to the recession in the economy and, therefore, had not beenable to mitigate the loss, it was entitled to receive the full amount that would have been due in order to allow it to defray theexpenses it would have had to pay during the period the contract should have lasted.However, in relation to anticipatory breach of contract the injured party can wait until the actual time for performance beforetaking action against the party in breach. In such a situation, they are entitled to make preparations for performance, and claimthe agreed contract price, even though this apparently confl icts with the duty to mitigate losses (White and Carter (Councils) vMcGregor (1961)).