11. Remedies Flashcards
What are the four types of damages?
- Expectation damages
- Reliance damages
- Non-monetary losses
- Nominal damages
What are the limitations to a party recovering damages from breach of contract?
1) causation
2) duty to mitigate losses
3) contributory negligence
4) remoteness
What is a key distinction to draw between the test for recoverable damage in contract, as contrasted from tort?
Tort - consider whether damage was reasonably foreseeable (wider)
Contract - whether damage was reasonably contemplated by parties at time of contracting (narrower)
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
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 four types of non-monetary losses for which damages can be awarded?
- Physical injury from the breach of contract
- Loss of amenity
- Loss of reputation
- Loss of profits or consequential loss
- Emotional distress if contract was itself to provide peace of mind or freedom from distress.
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
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 the exceptions to the general rule that damages are assessed at breach?
- 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.
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
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
When is contributory negligence available in contract?
where the defendant’s liability in contract is the same as its liability in negligence.
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 innocent party’s duty to mitigate?
The innocent party must take reasonable steps to mitigate their loss
As penalty clauses will be struck out, what will the innocent party’s recourse be?
The ordinary damages channels
When will a liquidated damages clause be considered a penalty?
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
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
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 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.
Only allowed where:
1) total lack of consideration by one party.
2) exceptional circumstance (legitimate interest - i.e. AG v Blake).
What must the innocent party show to claim restitution?
A legitimate interest in preventing the party in breach from retaining the value
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
On which party does the burden of proof lie to affirm a contract following a breach?
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.
What is the two-step remoteness test to establish whether losses claimed are recoverable?
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.
What is the rule of foreseeability?
Forseeability need only be of the type of damage and NOT its extent
- Parson (Livestock) Ltd v Uttley Ingham & Co Ltd (1978)
How are damages quantified in respect of the market rule?
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.
