11. Remedies Flashcards
What are the four types of damages?
- Expectation damages
- Reliance damages
- Non-monetary losses
- Nominal damages
What is the intent behind the expectation measure of damages?
To put the party back in the position they would have been in had the contract been performed
What is another term for expectation damages?
Loss of bargain damages
In one of what two ways are expectation damages calculated?
- The cost of curing the defects, or
- Difference in value between what was actually provided and what should have been provided under the contract
When might reliance damages be used?
When expectation damages are too speculative
What does reliance damages seek to compensate?
Expenses incurred in reliance on the contract up to the time of breach
What are the three types of non-monetary losses for which damages can be awarded?
- Physical injury from the breach of contract
- Loss of amenity
- Loss of reputation
Are damages for injuries to feelings generally allowed?
No
When does loss of amenity arise and to whom is it available only?
Where the purpose of the contract was enjoyment, e.g. a holiday, a consumer may be awarded damages
Are punitive damages generally awarded in contract cases?
No
What are nominal damages?
A trivial sum, such as £1, in damages, in situations where there technically is a breach, but no actual loss
What is the general rule for when damages are assessed?
Damages are generally assessed at the date of breach
What are some exceptions to the general rule that damages are assessed at breach?
- Innocent party was not aware of the breach for a period of time
- Difficulty in finding alternate performance
However, when is remoteness considered?
When the contract was entered into
In order to not be too remote, and therefore unrecoverable, damages should have one of what two criteria?
Damages should:
- Fairly and reasonably be considered to arise naturally from the breach, or
- Have been in the contemplation of both parties as a probable result of breach
On the exam, how might remoteness be tested?
Innocent party enters into a one off arrangement, not in their ordinary course of business
What is the difference between the rules on remoteness in contract and tort?
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)
What is the test for causation in contract?
Whether the breach was the effective cause of the loss
Will a reasonably expected intervening event break the chain of causation in contract?
No
Is the party in breach still liable if the breach is one of two effective causes of the loss?
Yes
When is contributory negligence available in contract?
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
Is contributory negligence contract a complete defence?
No, only partial
What is the measure of damages when looking at expectation interest?
- Diminution in value
- Cost of remedying the defect
- The value of loss of amenity
What is the measure of damages if the buyer has a claim for non-delivery of goods or delivery of non-conforming goods?
The estimated loss resulting directly and naturally from the seller’s breach
If there is a market for the goods, what is the starting point for calculating damages?
Difference between the contract price and the market price of the goods when they ought to have been delivered
What rules apply when the seller attempts delivery but the buyer breaches by refusing to accept?
Similar rules to when they seller is in breach
What is the innocent party’s duty to mitigate?
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
What is required for a liquidated damages clause to be valid?
The damages must be based on a genuine pre-estimate of the innocent party’s loss
As penalty clauses will be struck out, what will the innocent party’s recourse be?
The ordinary damages channels
When will a damages clause be considered a penalty?
When the damages are out of proportion to the obligation breached
How can an innocent party save a clause which looks like a penalty?
By demonstrating that the clause:
- Protects a legitimate business interest and that the damages are proportionate to that interest, and
- Is not extravagant, exorbitant, or unconscionable
What is a debt claim?
A claim for an amount due under a contract, rather than damages
What are the two advantages of a debt claim over a damages claim?
- No need to consider remoteness or causation
- No duty to mitigate
Are equitable remedies available as of right?
No, they are discretionary
What is specific performance?
An order requiring the party in breach to carry out their obligations in full
What statute gives specific performance a statutory basis?
Sale of Goods Act 1979
In what five situations would specific performance not be granted?
- Undue hardship on party in breach
- Consideration is inadequate + another factor e.g. undue hardship or unfairness
- No mutuality (innocent party still has unperformed obligations)
- Contract for employment or personal services
- Order would require court supervision
In what circumstances can an injunction be used related to an employment contract?
To restrain a breach of a negative term, provided it does not compel performance
What is rescission and what is the effect?
Cancellation of a voidable contract, as if the contract never existed
When must the grounds for rescission occur?
At the time or before the contract is entered into
In what instance would equitable remedies not be available?
If it would be unfair to the defendant
What three defences to equitable remedies are available?
- Unconscionable behaviour (unclean hands)
- Waiver
- Unreasonable delay (delay defeats equity)
What is the primary aim of restitution?
To prevent unjust enrichment based on value acquired during a contract, after the contract has been set aside
What must the innocent party show to claim restitution?
A legitimate interest in preventing the party in breach from retaining the value
What are the terms given to the proportionate payment or return of money in a services context and a goods context, respectively?
Services: quantum meruit
Goods: quantum valebat
What three remedies, in addition to those under the general law, are available to consumers under the Consumer Rights Act 2015?
- Right to reject defective goods within 30 days, for a full refund
- Right to require to trader to repair/replace at the trader’s expense (if not rejected or if 30 days has passed)
- 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
