breach of contractual terms and remoteness of damage Flashcards
types of contractual terms
some implied terms are classified by statute as being conditions or warranties e.g. sales of goods act 1979
goods title, descripition, quality, fitness for purpose, and correspondence with sample are all specified by conditions
s.11- exp. effect of division between condiiton and warranties
s.15(a) - buyer doesnt deal as consumer and implied terms in as 13-15 acre not conditions where breach is slight that it would be unreasonable for buyer to reject goods…breach is to be treated as breach of warranty not condition
innominate terms
not conditions or warranties - in between ASA “intermediate terms” - broken with either important or trivial consequences dep. on nature of breach, if the effect of breach = serious, act as condition and if minor acts as warranty
hong kong first shipping co ltd v kawasaki ltd 1962 - def. charted a ship from claimants for 24 months, contracts stated ship would be in every way fired for cargo service - repairs to ship needed and 1st voyage = delayed for 5 wks - def. wanted to terminate contract on grounds the claimants breached contract
Diplock LJ’s test: ‘there are…many contractual undertakings of a more complex character which cannot be categorised as being ‘conditions’ or ‘warranties’ … of such undertakings all that can be predicated is that sone breaches will and others will not give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract’
effect of breach not serious as still had 24 months just with delay, didnt lose benefits of whole contracts
contractual remedies
common law remedies (available as of right)
equitable remedies (awarded at the discretion of the courts)
most common remedy = damages - aim to put injured party in same posiiton if contract has been performed
damages - when contract breach a party ay suffer financial pecuniary loss and damages aim to compensate innocent party for their financial losses that result from not receiving the performabce bargained for
pecuniary loss - loss of profits they would have made the contract been performed as agreed
damages for non - pecuniary loss are generally not recoverable in contract- not financial loss e.g. mental distress - Addis v gramophone co ltd - claimant = employed as manager in india but wrongfully dismissed, stated he was disshonest - brought action that dismall = harsh and humiliating and ostracised by british community in calcutta - suffered mental distress and claimed damages - HoLs = covered for salry loss but not mental distress
exceptions for remedies
where the whole purpoes of contract = pleasure, relaxation and peace of mind e.g. holiday
jarvis v swans tours ltd: solicitor who booked 2wks winter sports holiday, described in brochure as house party, afternoon tea etc with welcome party, acc no welcome party, and house party = 13 holidat makers for first week and second week = solicitor alone - different from what brochure stated cost £63 - court awarded damages based on diff. between expectation interest and what acc got and what end to claim for loss of enjoyment - CoA agreed
contracts where major object is pleasure, relaxation and peace of mind - farley v skinner (no2) - F trying to buy house 50 miles from gatwick airport, and charter surveyor = S, asked S to make sure no noise from aircraft, negligent and falsely stated the property as unlikely to suffer from that, F bought house and spent lots of money renovating and found theres a lot of noise esp on weekend - not awarded financial loss damages but for mental distress - should be a modest amount
2 key Qs to be addresses when awarding damages:
1. Is the damage too remote?
2. How can the damage be quantified?
liquidated damages - damages estimated in contract itself
unliquidated damges - parties do not stipulate amount or how damage = quantified or assessed
remoteness of damage
injured party can recover damage for: lost which would arise naturally according to the usual course of tings, from the breach - objective test
losses as may reasonably be supposed to have been in the contemplation of the parties at the times when they made the contract as the probable result of breach of it - subjective test
victoria laundry v newman industries - claimants owned laundry shop, and needed large boiler to expand existing business and well paid lucrative - contracted to buy boiler second hand and made it clear need immediate use, when dismantled for delivery, damaged - delivery = delayed
launderers claimed loss of profits (16 a week for loss of notmal profits which rep. additional work if they had larger boiler) and 262 wk for loss of lucrative contract with government - courts agreede first one not lucrative as defendants didnt know about it
remoteness and assumption of responsibility
the achilleas - chartered ship and gave it back late to owner, owner of ship had to renegotiate future charters price, owners had to accept reduced rate of dollars per day with follow up charters of $8000 per day (total $1,340,000) charterer stated their liability limited to $158,000 (usual market rate) - court held $1340000 = too remote as charter didnt assume responsibility for that amount - where loses cannot be predicted - additional later on whether loss = remote or not
