Causation + remoteness Flashcards
Causation
The claimant must establish a causal link between the defendant’s breach of contract and its loss in order to recover damages.
This means assessing:
(a) Whether in fact the breach by the defendant has caused the loss suffered by the claimant (known as factual causation) - treated in a broad way; and also
(b) Whether as a matter of law the defendant should be held responsible for it (legal causation) - if there are any NAI. If the intervening event was ‘likely to happen’, it generally will not be held to break the chain of causation.
Remoteness of damage in contract
Test in Hadley v Baxendale
Loss of a type ordinarily and naturally arising from the breach
or
The particular defendant had sufficient actual knowledge of the particular and special circumstances to be aware of the risk
most rationales point towards the remoteness rules limiting the recoverable losses to those losses that a contracting party would or should have been aware of as being likely to flow from the breach
Who has the burden of proving duress?
The party who alleges the contract.
What is the effect of a voidable contract?
The contract is valid and binding unless it is rescinded by the innocent party.
What is duress?
Violence or illegitimate threats or pressure which coerce the party into entering into the contract
What would be considered legitimate commercial pressure?
Threat to take business elsewhere.
Selling to competitor or not giving discount in the future.
What must be established for economic duress to be found?
There must be pressure whose practical effect is lack of practical choice which is illegitimate and a significant cause inducing claimant to enter into contract.
What will the court consider to see if there has been illegitimate pressure?
Whether there has been actual or threatened breach of contract.
If the threat was made in good or bad faith
Whether the victim protested at the time
promissory estoppel general principles
There must be a pre-existing contractual relationship. This was suggested in the High Trees House case itself.
There should be a clear and unambiguous promise evidenced by either words or conduct (see Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1972] AC 741).
The party to whom the promise was made must have relied on the promise although this does not have to be to their detriment (see Alan v El Nasr [1972] 2 All ER 127).
The doctrine can only be used ‘as a shield and not a sword’ (see Combe v Combe [1951] 2 KB 215).
What this means is that it can only be used as a defence and cannot form the basis of an action or to create new rights.
privity of contract
a contract can only create rights and obligations that bind those who are parties to the contract. (see Tweddle v Atkinson [1861] 25 JP 517).
This is in keeping with the general principle that a contract is an agreement which is entered into freely by those who are party to it.
What are the key common law exceptions of privity of contract
agency, collateral contracts, assignment, claiming damages on behalf of another and the related equitable exception of the constructive trust.
What is agency?
one party (the agent) makes a contract on behalf of another party (the principal). The agent will act as an intermediary with the other party to the contract, but when it is formed the contract will be with the principal and not the agent.
The principal will therefore, in effect, be a third party during any negotiations but will be directly bound by the contract once it is concluded.
