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IAI Actuarial Core Principles · Business Management · Implied terms, exclusion of liability, contractual remedies and damages

Sunrise Actuarial Services Pvt Ltd agreed to sell its proprietary mortality-modelling software to Kaveri Life Insurance for a fixed price, with delivery in March. The software is a unique, custom-built product with no equivalent in the market. Sunrise then refuses to deliver because a rival offered a higher price. Kaveri wants the software itself, not money. Which remedy is most appropriate?

Specific performance is the most appropriate remedy. The software is unique and custom-built, so money damages cannot put Kaveri in the position it bargained for. Courts grant this equitable order where damages are inadequate, compelling Sunrise to deliver the software as promised.

  1. ASpecific performance, because damages would be inadequate for a unique itemCorrect
  2. BRescission of the contract and restitution of any money paid
  3. CLiquidated damages irrespective of any clause in the contract
  4. DQuantum meruit for work Kaveri has already done
  5. A declaration that the contract is void for uncertainty

Explanation

Specific performance is an equitable remedy granted when damages are not an adequate remedy, as with a unique, custom-built item. Kaveri wants the item itself and the contract is valid and enforceable. Rescission would only end the contract and would not give Kaveri the software.

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