Causation, remoteness, mitigation and contributory negligence

Question 1

Damages can only be recovered if…

Answer 1

they are caused by the breach.

Question 2

Damages cannot be recovered if…

Answer 2

they are too remote from the breach.

Question 3

Damages can be reduced if…

Answer 3

C failed to take reasonable steps to mitigate its losses.

Question 4

What must C establish for causation?

What two things must be assessed?

Answer 4

a causal link between D’s breach of contract + its loss in order to recover damages.

This means assessing:

(a) FACTUAL CAUSATION
- Whether IN FACT breach by D caused loss suffered by C; +

(b) LEGAL CAUSATION
- Whether as a matter of law D should be held responsible for it

Question 5

How have courts treated factual causation?

Answer 5

‘common sense approach’

D’s breach = a ‘dominant’ or ‘effective’ cause of the loss if that loss is to be recoverable.

Question 6

Will claim pass if legal causation hasn’t passed?

Answer 6

NO - you need it

Question 7

What is novus actus interveniens

Answer 7

intervening event which will be treated as having broken the chain of causation.

Question 8

If the intervening event was ‘likely to happen’ will it break the chain of causation?

Answer 8

generally no it won’t

Question 9

Key case on remoteness in contract?

Answer 9

Hadley v Baxendale

Question 10

What are the two limbs of Hadley v Baxendale

Answer 10

damages sought must be:

(1) fairly + reasonably viewed to have resulted naturally from the breach; or

(2) reasonably contemplated by both parties @ time of making the contract

Question 11

What steps should the injured party take…

Answer 11

‘reasonable steps’ to minimise the effect of the breach.

Question 12

Is there an obligation to mitigate?

Answer 12

No BUT

losses attributable to a failure to do so = not legally recoverable.

= innocent party can’t seek compensation for loss from its own failure to behave reasonably after the breach.

Question 13

What are ‘reasonable’ steps?

Answer 13

Q of fact - set out in case law

Question 14

Reasonable steps: Pilkington v Wood

Answer 14

no expectation for C to embark ‘a complicated and difficult piece of litigation’ in order to minimise effects of D’s breach.

Question 15

Reasonable steps: Payzu v Saunders

Answer 15

can be to accept performance offered by D under a new contract even when that performance amounts to a breach of the original contract.

If Ds offer of performance remains the best substitute performance = seems unreasonable not to go to that source.

Question 16

Reasonable steps: Banco de Portugal v Waterlow & Sons

Answer 16

C’s actions ‘ought not be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty’.

= no duty to mitigate a claim for a payment of a debt. incl claim for liquidated damage = bc amount is payable as a contractual right rather than as damages.