11. Remedies

Question 1

What are the four types of damages?

Answer 1

1. Expectation damages
2. Reliance damages
3. Non-monetary losses
4. Nominal damages

Question 2

What is the intent behind the expectation measure of damages?

Answer 2

To put the party back in the position they would have been in had the contract been performed

Question 3

What is another term for expectation damages?

Answer 3

Loss of bargain damages

Question 4

In one of what two ways are expectation damages calculated?

Answer 4

1. The cost of curing the defects, or
2. Difference in value between what was actually provided and what should have been provided under the contract

Question 5

When might reliance damages be used?

Answer 5

When expectation damages are too speculative

Question 6

What does reliance damages seek to compensate?

Answer 6

Expenses incurred in reliance on the contract up to the time of breach

Question 7

What are the three types of non-monetary losses for which damages can be awarded?

Answer 7

1. Physical injury from the breach of contract
2. Loss of amenity
3. Loss of reputation

Question 8

Are damages for injuries to feelings generally allowed?

Answer 8

No

Question 9

When does loss of amenity arise and to whom is it available only?

Answer 9

Where the purpose of the contract was enjoyment, e.g. a holiday, a consumer may be awarded damages

Question 10

Are punitive damages generally awarded in contract cases?

Answer 10

No

Question 11

What are nominal damages?

Answer 11

A trivial sum, such as £1, in damages, in situations where there technically is a breach, but no actual loss

Question 12

What is the general rule for when damages are assessed?

Answer 12

Damages are generally assessed at the date of breach

Question 13

What are some exceptions to the general rule that damages are assessed at breach?

Answer 13

1. Innocent party was not aware of the breach for a period of time
2. Difficulty in finding alternate performance

Question 14

However, when is remoteness considered?

Answer 14

When the contract was entered into

Question 15

In order to not be too remote, and therefore unrecoverable, damages should have one of what two criteria?

Answer 15

Damages should:

1. Fairly and reasonably be considered to arise naturally from the breach, or
2. Have been in the contemplation of both parties as a probable result of breach

Question 16

On the exam, how might remoteness be tested?

Answer 16

Innocent party enters into a one off arrangement, not in their ordinary course of business

Question 17

What is the difference between the rules on remoteness in contract and tort?

Answer 17

Contract: Whether loss was a serious possibility or not unlikely + must flow naturally from breach or be in the contemplation of the parties

Tort: Whether loss was reasonably foreseeable (a lower bar)

Question 18

What is the test for causation in contract?

Answer 18

Whether the breach was the effective cause of the loss

Question 19

Will a reasonably expected intervening event break the chain of causation in contract?

Answer 19

No

Question 20

Is the party in breach still liable if the breach is one of two effective causes of the loss?

Answer 20

Yes

Question 21

When is contributory negligence available in contract?

Answer 21

When the liability is the same both in contract and in tort, i.e. there would be a duty in tort even if there was no contract

Question 22

Is contributory negligence contract a complete defence?

Answer 22

No, only partial

Question 23

What is the measure of damages when looking at expectation interest?

Answer 23

1. Diminution in value
2. Cost of remedying the defect
3. The value of loss of amenity

Question 24

What is the measure of damages if the buyer has a claim for non-delivery of goods or delivery of non-conforming goods?

Answer 24

The estimated loss resulting directly and naturally from the seller’s breach

Question 25

If there is a market for the goods, what is the starting point for calculating damages?

Answer 25

Difference between the contract price and the market price of the goods when they ought to have been delivered

Question 26

What rules apply when the seller attempts delivery but the buyer breaches by refusing to accept?

Answer 26

Similar rules to when they seller is in breach

Question 27

What is the innocent party’s duty to mitigate?

Answer 27

The innocent party must take reasonable steps to mitigate their loss and cannot recover losses that are a direct consequence of a failure to mitigate

Question 28

What is required for a liquidated damages clause to be valid?

Answer 28

The damages must be based on a genuine pre-estimate of the innocent party’s loss

Question 29

As penalty clauses will be struck out, what will the innocent party’s recourse be?

Answer 29

The ordinary damages channels

Question 30

When will a damages clause be considered a penalty?

Answer 30

When the damages are out of proportion to the obligation breached

Question 31

How can an innocent party save a clause which looks like a penalty?

Answer 31

By demonstrating that the clause:

1. Protects a legitimate business interest and that the damages are proportionate to that interest, and
2. Is not extravagant, exorbitant, or unconscionable

Question 32

What is a debt claim?

Answer 32

A claim for an amount due under a contract, rather than damages

Question 33

What are the two advantages of a debt claim over a damages claim?

Answer 33

1. No need to consider remoteness or causation
2. No duty to mitigate

Question 34

Are equitable remedies available as of right?

Answer 34

No, they are discretionary

Question 35

What is specific performance?

Answer 35

An order requiring the party in breach to carry out their obligations in full

Question 36

What statute gives specific performance a statutory basis?

Answer 36

Sale of Goods Act 1979

Question 37

In what five situations would specific performance not be granted?

Answer 37

1. Undue hardship on party in breach
2. Consideration is inadequate + another factor e.g. undue hardship or unfairness
3. No mutuality (innocent party still has unperformed obligations)
4. Contract for employment or personal services
5. Order would require court supervision

Question 38

In what circumstances can an injunction be used related to an employment contract?

Answer 38

To restrain a breach of a negative term, provided it does not compel performance

Question 39

What is rescission and what is the effect?

Answer 39

Cancellation of a voidable contract, as if the contract never existed

Question 40

When must the grounds for rescission occur?

Answer 40

At the time or before the contract is entered into

Question 41

In what instance would equitable remedies not be available?

Answer 41

If it would be unfair to the defendant

Question 42

What three defences to equitable remedies are available?

Answer 42

1. Unconscionable behaviour (unclean hands)
2. Waiver
3. Unreasonable delay (delay defeats equity)

Question 43

What is the primary aim of restitution?

Answer 43

To prevent unjust enrichment based on value acquired during a contract, after the contract has been set aside

Question 44

What must the innocent party show to claim restitution?

Answer 44

A legitimate interest in preventing the party in breach from retaining the value

Question 45

What are the terms given to the proportionate payment or return of money in a services context and a goods context, respectively?

Answer 45

Services: quantum meruit
Goods: quantum valebat

Question 46

What three remedies, in addition to those under the general law, are available to consumers under the Consumer Rights Act 2015?

Answer 46

1. Right to reject defective goods within 30 days, for a full refund
2. Right to require to trader to repair/replace at the trader’s expense (if not rejected or if 30 days has passed)
3. Right to have price reduced or to reject (even after 30 days) if repair/replacement is not successful, too expensive, or cannot be carried out in a reasonable time