Causation, Remoteness, and Mitigation Flashcards
what is the principle in relation to causation?
damages can only be recovered if they are caused by the breach
the claimant must establish a causal link between the defendant’s breach and its loss in order to recover damages
what must the claimant show to prove causation?
2 elements
(1) Factual Causation: the defendant’s breach must have caused the claimant’s loss as a matter of fact
(2) Legal Causation: the defendant must, as a matter of law, be held responsible for the loss which, as a matter of fact, was caused by the breach
how does the claimant show that the defendant’s breach was the factual cause of its loss?
C must show that D’s breach was a DOMINANT OR EFFECTIVE CAUSE of the loss for the loss to be recoverable
what might make the defendant’s breach which, as a matter of fact, caused the loss, lack legal causation?
if there was a novus actus interveniens which broke the chain of causation
the NAI must have been UNLIKELY TO HAPPEN in order to break the chain of causation
(it does not break the chain if it was likely to happen)
what is the principle in relation to remoteness?
Damages cannot be recovered if they are too remote from the breach
what damages are not too remote?
(Hadley v Baxendale 2 limb test)
Damages which are not too remote are for:
(1) losses which arise naturally from the breach according to the usual course of things (not from parties’ actual knowledge)
if this is not satisfied, then:
(2) losses which the parties contemplated, at the time of contracting, would probably result from the specific breach
(C must show D had sufficient actual knowledge of the particular and special circumstances to be aware of the risk of the losses in question)
is there a duty to mitigate?
technically no - but C must take ‘reasonable steps’ to minimise the effect of the breach
what happens if C fails to mitigate its losses?
losses attributable to a failure to mitigate are not recoverable
what ‘reasonable steps’ must C take to minimise the effect of the breach?
this is a question of fact in each case
this does not mean C must undertake litigation to minimise the effects of D’s breach
example: accepting the performance offered by the defendant under a new contract even when that performance amounts to a breach of the original contract
if D owes C liquidated damages, does C have to mitigate its losses?
No - because the amount is payable as a contractual right rather than as damages
