Common Law

Question 1

What is contract law?

Answer 1

The legally enforceability of the promise with rights, responsibilities and consequences. It allows the freedom to contract and regulates the contract.

Question 2

What is the remoteness of damages rule?

Answer 2

The damages must not be too remote, they must arise naturally and certainly as a result of the breach. They must be in reasonable contemplation of the parties at the time the contract was made.

Question 3

What does the contracting party have an obligation to do?

Answer 3

To notify the party of particular ‘unlikely’ quantifiable risks. The other party then contemplates their price and terms before signing the contract.

Question 4

What does C have a legal right to once D has breached their contract?

Answer 4

A legal right to remedies for the damages.

Question 5

What are common law remedies?

Answer 5

These compensate for damages.

Question 6

What are equitable remedies?

Answer 6

These are rare and are for specific performance.

Question 7

What is specific performance?

Answer 7

An order by the court telling the defendant to fulfil their promise, the remedy of specific performance would compel you to complete the contract.

Question 8

What social relationship does contract law try to regulate?

Answer 8

Economic exchange.

Question 9

What is the market economy?

Answer 9

Not planned, rather the result of trillions voluntary choices to take part in economic exchanges, with the belief that it will benefit oneself.

Question 10

What does the law of contracts attempt to do?

Answer 10

1) Regulate the market economy, voluntary exchange, motivated by surplus, to maximise one’s own self-interest.

2) Deal with issues where there is a breach of contract.

Question 11

What are secondary obligations?

Answer 11

This brings legal security, stating terms of exchange in the form of a legally binding contract. In the event of a breach the secondary obligation is crystallised and becomes manifested, meaning the defendant must provide a remedy.

Question 12

What is usually the remedy for breach of contract?

Answer 12

The default remedy is compensatory damages. These are intrinsically compensatory, the amount is intended to compensate for the loss the breach has caused. The quantification is governed by what is necessary to compensate for the loss.

Question 13

What will D who breached the contract, not be punished for?

Answer 13

> Mistreating the claimant.
Profits/benefits they made when breaching the contract.

Question 14

What interest has the law of contracts historically had?

Answer 14

A restitution interest.

Question 15

What is D only liable for?

Answer 15

The losses they have caused.
The things which were in your reasonable contemplation at the time of the agreement.

Question 16

What must C prove?

Answer 16

The breach caused the loss.
If the claimant can prove losses to the standard of certainty, the losses are recoverable.

Question 17

After proving cause in fact, what test must C pass to be entitled to reclaim all of their losses ?

Answer 17

The test of cause in law because D is liable only to those losses which he had in his reasonable contemplation at the time of the agreement.

Question 18

What are proximate losses?

Answer 18

Losses which are within D’s reasonable contemplation. These losses are recoverable.

Question 19

What are remote losses?

Answer 19

Losses D caused which are beyond the defendant’s capability.
These are not recoverable.

Question 20

What is the expectation interest?

Answer 20

Net value of what the innocent party would have received if the contract had been performed.

Question 21

What is the reliance interest?

Answer 21

Extent to which the innocent party is worse off as a result of relying on the contract (lesser amount).

Question 22

What are nominal damages?

Answer 22

The bit of money given by court to show breach of contract, but no real loss of money (or no loss proven).

Question 23

What are substantial damages?

Answer 23

These are awarded in respect of the actual losses suffered by the claimant. causation must be proved.

Question 24

What are certain losses?

Answer 24

When the claimant is in a worsened financial position than if the deal had gone ahead as normal.

Question 25

What are speculative losses?

Answer 25

The expected amount of future loss, under circumstances which cannot be certain. Determined on a balance of probabilities.

Question 26

What is mitigation?

Answer 26

The innocent party is required to take reasonable steps to minimise avoidable losses. They cannot recover for any loss which could have been reasonably mitigated.

Question 27

What is the orthodox analysis?

Answer 27

Ø When the expectation method would be less, the claimant cannot choose the reliance method as it is a limited portion of expectancy.

Question 28

Why can the expectation interest be difficult to prove?

Answer 28

It is sometimes impossible for C to prove what profits would’ve been made if the contract was performed.

Question 29

When can the claimant not claim a reliance measure?

Answer 29

When it would shift a loss to D.

Question 30

What is the restitution interest?

Answer 30

Requires the party in breach of the contract to give back gains he has made from his breach.

Question 31

What is the cost of cure?

Answer 31

Amount of money it would cost to pay someone else to complete unfinished/defective performance.
This can sometimes be the same as difference in value.

Question 32

What is the but for test?

Answer 32

The claimant must say ‘I would not have suffered the loss, but for the breach’

Question 33

What losses are only recoverable?

Answer 33

Unavoidable losses.

Even losses that are certain/proximate will not be recoverable if they are avoidable.

Question 34

What is the first rule of contract?

Answer 34

1) Put the claimant in the position as if the contract had been performed.