BetterLawNotes-5 (2)

CONTRACT LAW

A prohibitory injunction is an order by the court that the defendant refrain from doing some act. As such, its availability is not subject to the same restrictions as its mandatory counterpart.

Lumley v Wagner (1852) 1 De GM & G 604

W agreed to sing at L’s theatre, Her Majesty’s, Drury Lane, for two nights a week and, for a period of three months, not to use her talents at any other theatre. Subsequently W agreed to sing for Mr Gye at Covent Garden and refused to sing at L’s theatre. Held: L was entitled to an injunction restraining W from breaching her promised not to sing elsewhere.

Warner Bros Pictures Inc v Nelson [1937] 1 KB 209

The actress, Bette Davis, agreed to render her services as an actress exclusively to WB for a period of one year, renewable at WB’s option and that she would not during that period provide such services to any other person. During the relevant period Bette Davis agreed to appear for another film company. Held: WB were entitled to an injunction, for a period not exceeding three years, restraining her from appearing for the other company.

Araci v Fallon [2011] EWCA Civ 668

D, a leading jockey, had agreed with C that he, D, would ride C’s horse, Native Khan, in the 2011 Derby at Epsom if requested by C to do so and would not ride any other horse in that race. C asked D to ride Native Kahn in the race, but C refused. The judge refused a prohibitory injunction on the ground that damages would be an adequate remedy. The CA allowed D’s appeal [and granted the injunction]: D was entitled, in the absence of special circumstances, to the relief sought. Here there were no special circumstances.

‘Where the Defendant is proposing to act in clear breach of a negative covenant, in other words to do something which he has promised not to do, there must be special circumstances . . . before the court will exercise its discretion to refuse an injunction.’ (Jackson LJ).

The courts will not award a prohibitory injunction where to do so would amount in effect to a decree for specific performance and the relevant contract is not one amenable to literal enforcement.

Page One Records Ltd v Britton [1968] 1 WLR 157

The Ds were the members of the pop group, The Troggs. They appointed C to act as their manager for a period of five years. C sought an injunction restraining the Ds from breaching the terms of his appointment by engaging a third party to act as their manager. Held: the injunction was refused.

Warren v Mendy [1989] 1 WLR 853

The boxer Nigel Benn appointed W to act as his manager. W sought an injunction against M restraining M from inducing Benn to breach his contract with W by appointing M to act as his manager. Held: the injunction was refused.

A nice issue arises where the claimant seeks a prohibitory injunction restraining the defendant from breaching the contract but where the contract contains an agreed damages clause. Is the claimant confined to the monetary remedy?

Bath and North East Somerset DC v Mowlem [2004] EWCA Civ 722

When its contractor, D, refused to comply with an architect’s instruction, C engaged another contractor to do the particular work. D prevented the substitute contractor from gaining entry to the site. C obtained an injunction preventing D from refusing access. D appealed to the CA, arguing that the injunction should have been refused as the contract between C and D contained an agreed damages clause, and that the clause provided C with an adequate remedy. The CA upheld the injunction.

AB v CD [2014] EWCA Civ 229

CD granted a licence to AB enabling AB to exploit certain IP rights owned by CD. The licence contained a clause which limited CD’s liability in damages in various respects. When CD sought to terminate the licence, AB claimed that it was not entitled to do so and sought an injunction restraining CD from so doing. The judge refused the injunction on the ground that the damages clause provided an adequate remedy. The CA allowed AB’s appeal.

‘Where a party to a contract stipulates that if he breaches his obligations his liability will be limited or the damages he must pay will be capped, that is a circumstance which in justice tends to favour the grant of an injunction to prohibit the breach in the first place.’ Laws LJ.

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