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 are the limitations to a party recovering damages from breach of contract?

Answer 2

1) causation
2) duty to mitigate losses
3) contributory negligence
4) remoteness

Question 3

What is a key distinction to draw between the test for recoverable damage in contract, as contrasted from tort?

Answer 3

Tort - consider whether damage was reasonably foreseeable (wider)
Contract - whether damage was reasonably contemplated by parties at time of contracting (narrower)

Question 4

What is the intent behind the expectation measure of damages?

Answer 4

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

Question 5

In one of what two ways are expectation damages calculated?

Answer 5

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 6

When might reliance damages be used?

Answer 6

When expectation damages are too speculative

Question 7

What does reliance damages seek to compensate?

Answer 7

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

Question 8

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

Answer 8

1. Physical injury from the breach of contract
2. Loss of amenity
3. Loss of reputation
4. Loss of profits or consequential loss
5. Emotional distress if contract was itself to provide peace of mind or freedom from distress.

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

What are nominal damages?

Answer 10

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

Question 11

What is the general rule for when damages are assessed?

Answer 11

Damages are generally assessed at the date of breach

Question 12

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

Answer 12

• If to follow the rule would give rise to injustice, the court has power to fix such other dates as may be appropriate in the circumstances.
• Anticipatory breach - damages are assessed according to when victim could have reasonably arranged for alternative contract.

Question 13

However, when is remoteness considered?

Answer 13

When the contract was entered into

Question 14

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

Answer 14

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 15

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

Answer 15

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 16

What is the test for causation in contract?

Answer 16

Whether the breach was the effective cause of the loss

Question 17

When is contributory negligence available in contract?

Answer 17

where the defendant’s liability in contract is the same as its liability in negligence.

Question 18

Is contributory negligence contract a complete defence?

Answer 18

No, only partial

Question 19

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

Answer 19

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

Question 20

What is the innocent party’s duty to mitigate?

Answer 20

The innocent party must take reasonable steps to mitigate their loss

Question 21

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

Answer 21

The ordinary damages channels

Question 22

When will a liquidated damages clause be considered a penalty?

Answer 22

When the damages set out are out of proportion with the obligation breached, and does not seek to protect party’s legitimate interest.

*only struct down in relation to secondary obligations

Question 23

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

Answer 23

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 24

What is a debt claim?

Answer 24

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

Question 25

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

Answer 25

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

Question 26

In what five situations would specific performance not be granted?

Answer 26

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 27

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

Answer 27

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

Question 28

What three defences to equitable remedies are available?

Answer 28

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

Question 29

What is the primary aim of restitution?

Answer 29

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

Only allowed where:
1) total lack of consideration by one party.
2) exceptional circumstance (legitimate interest - i.e. AG v Blake).

Question 30

What must the innocent party show to claim restitution?

Answer 30

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

Question 31

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

Answer 31

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

Question 32

On which party does the burden of proof lie to affirm a contract following a breach?

Answer 32

Burden of proof = on the contract breaker to show that the innocent party did not have a legitimate interest in affirming.

• Only in exceptional circumstances will affirmation not be allowed.

Question 33

What is the two-step remoteness test to establish whether losses claimed are recoverable?

Answer 33

Hadley v Baxendale test
1) Is the loss of the type ordinarily or naturally arising from the breach of contract? (objective)
Or
2) If not, special circumstances where defendant had knowledge that such losses could arise (subjective).

note limitation set out in Achilleas for certain industries- even if loss is forseeable, not recoverable if it is not a loss of the kind party assumed responsibility for.

Question 34

What is the rule of foreseeability?

Answer 34

Forseeability need only be of the type of damage and NOT its extent

• Parson (Livestock) Ltd v Uttley Ingham & Co Ltd (1978)

Question 35

How are damages quantified in respect of the market rule?

Answer 35

Relevant under SGA
* Where there is an available market for the goods, and party refuses to deliver these, measure of damages would be difference between contract price and current price of goods on the market at the time it should hav been delivered.