Court of Appeal decision means injunction to prevent breach may be more readily obtained where damages limited by contract

The Court of Appeal has held that an interim injunction should be granted to prevent the defendant’s alleged breach, on the basis that damages would be an inadequate remedy due to a limitation clause in the relevant contract: AB v CD [2014] EWCA Civ 229. In doing so it has reversed the first instance decision refusing an interim injunction (click here for our post on the High Court decision).

This decision suggests that the court may be more inclined to grant an injunction preventing a breach of contract where the contract contains a provision excluding or limiting the liability of the contract breaker in the event of a breach.

However, as the court was keen to emphasise, that does not mean an injunction will be granted in all such cases. Where the claimant establishes that damages may not be an adequate remedy that merely “opens the door to the exercise of the court’s discretion” as to whether an injunction should be granted. In exercising that discretion, the fact that the restriction in question was agreed, and the likelihood and scale of any shortfall in the claimant’s compensation as a result of it, may be relevant. Neil Blake considers the decision below. Continue reading