Contract Flashcards
What 3 things are required to form a binding contract?
Offer & acceptance
ICLR
Consideration
What’s the difference between a bilateral and unilateral contract?
Bilateral: both parties assume an obligation to each other
Unilateral: one party makes an offer in terms which call for an act to be performed by one or more other parties
What are the requirements for a valid offer?
- Clear & certain
- Display an intention to be bound (unequivocal acceptance)
What is an invitation to treat and 5 examples of it?
The 1st step in negotiations that can’t be accepted to form a binding contract
1. Ads (not where there is a unilateral offer)
2. Displays of goods
3. Invitation to tender
4. Auctions
5. Websites
When is agreement made for self-service shops?
Offeror = customer
Offeree = storekeeper
Agreement made when scanned through
When will an invitation to tender NOT be treated as an invitation to treat?
Where the ITT expressly contains an undertaking to accept the highest or lowest bid
It’s a form of unilateral contract
When would there be a binding contractual obligation to consider tenders?
Tender solicitor from specified parties known to them; absolute deadline for submission; requestor laid down absolute/non-negotiable conditions for submission
What happens with a ‘without reserve’ auction where the auctioneer refuses to sell to the highest bidder?
Could be sued for breach of unilateral contract: promise auction is without reserve
Highest bona fide bidder entitled to damages but NOT the goods (as this was dictated by a bilateral contract)
How can an offer come to an end?
- Rejection - counter-offer seen as a rejection
- Lapse - not in time prescribed or not within a reasonable time
- Revocation - any time before acceptance upon actual notice of it reaching the offeree (if by post, moment received by offeree)
For unilateral contracts, when can revocation take place?
Prior to completion of completed act
For ones made to the whole world, it’s effective where offeror takes reasonable steps to bring revocation to attention of all who may have read it
Where it’s been partly performed & they are willing/able to complete, revocation not effective
What are the requirements for valid acceptance?
- Only offeree can accept
- Acceptance is unqualified - mirror image
- Valid mode (if mode prescribed)
- Communicated to offeror - effective from time communicated: for post, time it was properly posted; for instantaneous means, when received by offeror
When does the postal rule apply?
Where acceptance delayed/lost in post
Does Not Apply: if not contemplated post would be used; incorrectly addressed; letters revoking offers; disapplied by offeror
If acceptance was not received and the offeree was at fault, what is the consequence? And if offeror at fault? And if nobody at fault?
Offeree: no contract
Offeror: contract prevails
Nobody: no contract
What is consideration and its 2 types?
An exchange between the parties
1. Executory: parties make promises to each other to perform something in the future
2. Executed: at start of contract, consideration has already been performed
What 7 rules/principles are there on consideration?
- Must not be past
- Must move from promise
- Need not be adequate
- Must be sufficient (must have some value)
- A pre-existing public duty
- A pre-existing contractual obligation owed to promisor
- A pre-existing contractual obligation owed to a 3rd party
What is the rule of ‘consideration must not be past’ and what is the exception?
If act/forbearance took prior to promise, can’t be exchange for that promise
Exception: where some prior act was provided by promisee at promisor’s request & always understand they’d be paid
(i) Act done at promisor’s request
(ii) Parties understood that the act was to be rewarded by some benefit
(iii) Benefit must have been legally enforceable had it been promised in advance
What is the principle of a ‘pre-existing contractual obligation owed to promisor’ in relation to consideration?
General Rule: when party promises additional payment for existing contractual obligations, not good consideration
Exception: factual consideration - nothing new promised but party still getting sth out of reshaped deal
What are the requirements for factual consideration?
- Entered into contract
- Before A has completed obligations, B doubts where A will complete his own
- B promises A extra payment so A performs on time
- B obtains in practice a benefit, or obviates a disbenefit
- B’s promise not due to economic duress or fraud
What is a ‘pre-existing contractual obligation to a third party’?
Performance will be sufficient consideration but party offering to do this is risking double liability
Is a debtor promising to pay part of a debt in return for release of remainder of liability good consideration?
No
Exceptions: introducing new element into payment; payment of a lesser sum by a 3rd party; practical benefit argument
What is promissory estoppel?
Protecting a party’s reliance on a non-bargain promise, commonly used for debts
(i) Acts as a shield, not a sword
(ii) Clear, unequivocal promise that strict legal rights won’t be fully enforceable
(iii) Change of position in reliance on the promise (need not show detriment)
(iv) Inequitable to allow promisor to go back on the promise
What is ICLR?
An intention to enter into a contract with legal ramifcations
When are assumptions as to ICLR made?
Commercial: there’s intention
Domestic: no intention
Both can be rebutted
What does the term ‘subject to contract’ mean?
Not binding until formal execution
What is capacity?
Persons over 18 years old, of sound mind & not suffering from factor ruling out capacity e.g. drunkeness
What is the rule on minors and capacity, and exceptions?
Person not bound by contract entered into under age of 18 even if other side didn’t know or they lied
1. Contract concerns necessaries (if for their benefit, pay a reasonable price)
2. Contract of employment, apprenticeship or education (if for their benefit)
When does someone lack capacity>
Where they’re unable to make a decision for themselves at time contract is made
What is the effect of entering a contract with someone lacking capacity?
Person w/o capacity still remains liable to pay a reasonable price for necessaries
In any other case, position is binding unless (i) person prove they didn’t understand what they were doing and (ii) other side knew this
How does drunkeness affect capacity?
If so drunk, can’t understand what they’re doing, have to pay reasonable price for necessaries but not bound by any other contract they make
What is privity of contract?
No person can be sued or sue on a contract unless they are a party to it
What 4 methods are there for circumventing privity?
- Agency: principal named & clear agent acting on their behalf; authorised to act as agent; consideration moved from principal
- Assignment
- Actions in tort
- Other judicial attempts
What is the albazero principle?
A contracting party can recover in relation to losses suffered by a 3rd party, if 3rd party has no other means of recourse
What is the effect of the Contracts (Rights of Third Parties) Act 1999?
Clear exception to privity by allowing 3rd parties to enforce a contract term they are not a party to
Can do where contract provides they can, OR, contract attempts to convey a benefit on them & doesn’t appear that parties didn’t intend a 3rd party could enforce it
To enforce a term, how must a 3rd party be identified?
Expressly in the contract by name, as a member of a class, or as answering a particular description (need not be in existence at time contract entered)
Where does the Contracts (ROTP) Act not apply?
Where parties did NOT intend a term to be enforceable by a third party e.g. with an ‘exclusion of third party rights’ clause
What remedies are available to third parties?
Any remedy available as if he had been a party to the contract
When can contracting parties not vary/rescind a contract without permission from a third party?
(a) 3rd party communicated assent
(b) promisor aware 3rd party relied on the term
(c) promisor can reasonably be expected to have foreseen 3rd party would rely on the term & 3rd party has relied on it
Unless express provision in the contract
What are the 3 types of statements that can be made during negotiations?
Mere Puffs (no legal significance)
Representations: statements of fact/law which parties don’t intend to be binding but help induce making of the contract
Term: statements of fact parties intend to be binding
Can a statement be both a representation and a term?
Yes
How does one determine whether something is a representation or a clause?
Determine whether parties intended to be bound: what would a reasonable person understand to be the intention of the parties, having regard to all the circumstances?
If yes, statement = term
If no, could be representation or mere puff
Where a statement is made to induce the other party to enter the contract, presumption that it’s binding but can be rebutted
What factors should be considered to determine if a something is a representation or a term?
Importance of the statement: injured party considered it so important, it wouldn’t have entered into the contract but for it
Timing of Statement: if made at time of contracting, more likely to be a term
Reduction of Contract into Writing
Special Knowledge/Skill of Person Making the Statement
Assumption of Responsibility
What 2 types of terms are there?
Express: statements made by parties by which they intend to be bound
Implied: law deems they exist
What different ways are there to demonstrate an intention to be bound?
- Signed written contract (except for docs singed not intended to have any contractual effect or if a clause was orally misrepresented)
- Incorporation by notice: must clearly bring terms to other’s attention; doc giving notice must be intended to have contractual effect
- Incorporation by Course of Dealing: must be consistent over a period of time and have been regular
- Other ways of agreeing: in conversation or terms set out in writing and other party agrees
What are entire agreement clauses?
A clause providing that a particular document(s) constitutes the entire agreement
Unlikely to be effective in excluding liability for misrepresentation
What are the 2 types of implied terms?
- Terms Implied in Fact: give effect to presumed but unexpressed intentions of the parties, asking what would the reasonable person understand the contract to mean (business efficacy, trade customs, course of dealing)
- Terms Implied in Law: by common law or by statute
What implied terms are there under SGA 1979?
S12 Title: seller has right to sell the goods
S13(1) Description: goods will comply with their description
S14(1) Satisfactory Quality: that a reasonable person would regard satisfactory
S14(3 Fit for Particular Purpose
S15 Bulk of Goods must Correspond with Sample
How are the implied SGA terms classified?
All as conditions
What is a breach of s13-15 SGA subject to?
S15A: where breach is so slight it would be unreasonable for buyer to reject/repudiate, breach is treated as breach of warranty, so only damages allowed
Burden of proof on seller
How can a seller’s liability under SGA be excluded or restricted?
By agreement of parties, subject to UCTA 1977
S12 title cannot be excluded/restricted
Others can subject to reasonableness
What does the SGSA provide for?
Transfer of property in goods
Hire of Goods
Supply of services
Only B2B
What implied terms are there under SGSA for hire & transfer of goods?
Title/Right to transfer possession
Description
Quality or fitness
Sample
What implied terms are there under SGSA for supply of services?
S13 Care and Skill: supplier will carry out service
S14 Time of Performance: supplier will carry out service w/in a reasonable time
S15 Consideration: pay a reasonable charge
How is S13 care and skill under SGSA classified?
As an innominate term
What 3 parts are there to the CRA?
Goods
Digital Content
Services
What implied terms are there under CRA for goods?
Satisfactory quality
Reasonably fit for purpose (which consumer makes known to trader)
Match description
What remedial options are there for consumers for contracts for goods under CRA?
- Short term right to reject - 30 days
- Right to repair/replacement: unless impossible or disproportionate; within a reasonable time & w/o signif inconvenience to consumer
- Right to price reduction or final right to reject (only where 2 is not possible)
What implied terms are there under CRA for digital content?
Satisfactory quality
Reasonably fit for purpose
Match any description
What remedial options are there for consumers for contracts for digital content under CRA?
- Right to repair/replacement (same conditions as others)
- Right to Price ReductionL only where consumer can’t require repair/replacement or not done so w/in a reasonable time
- Right to receive a refund (14 days)
What implied terms are there under CRA for services?
Reasonable care and skill
Reasonable price to be paid
Provided in a reasonable time
What remedial options are there for consumers for contracts for services under CRA?
- Right to Require Repeat Performance: within reasonable time & without signif inconvenience
- Right to Price Reduction: only where repeat performance impossible/disproportionate or done w/in reasonable time etc
What is the 3-stage test to determine where a party can rely on an exemption clause?
- Incorporation: is it part of the contract - normal rules
- Construction: does the clause cover the alleged breach & resulting loss
- Statutory Controls: UCTA 1977 or CRA 2015
How is construction determined?
Exclusion clauses construed contra proferentum: if there’s any doubt as to meaning/scope of clause, ambiguity resolved against party seeking to rely on it
Less common for commercial contracts
For attempts to exclude liability for negligence, must use clear words
What guidelines are followed to determine construction when excluding liability for negligence?
a) does clause expressly say negligence?
b) are words wide enough to cover negligence?
c) are they too wide? could head of damage be based on some ground other than negligence
What is the difference between a condition and a warranty?
Condition: important term going to root of the contract
Warranty: less important term not going to root
How does one distinguish between a condition and a warranty?
Ask whether parties intended, at time of contracting, that any breach of the relevant term could result in the innocent party terminating?
What are the respective consequences for breach of condition or warranty?
Condition: right to repudiate & damages
Warranty: only damages
What is the starting point for determining the classification of a term?
Has term been classified by (i) statue (ii) the parties or (iii) previous judicial decision
If not, look at contract to determine if it goes to root
If can’t determine, apply test for innonimate term
What is the test for an innominate term?
Does breach deprive the innocent party of substantially the whole benefit from the contract?
If yes = condition
If no = warranty
What vitiating factors are there?
Misrepresentation
Mistake
Unfair Contract Terms
Duress & Undue Influence
Illegality
What are the requirements for an actionable misrepresentation?
- Unambiguous: must be clear
- False: not if substantially correct
- Statement of fact
- Addressed to Claimant
- Induces C to Enter into Contract
What is a statement of fact NOT?
Statement of opinion
Statements of intention
Silence
How does one determine if a misrepresentation ‘induced C to enter contract’?
Ask: was the representation material? Did it relate to an issue that would’ve influenced a reasonable person - if yes, inducement inferred & burden shifts to D to rebut this
OR representee shows it personally was induced by statement
Where is there no inducement for misrepresentation?
Statement not actually communicated to representee
Statement did not affect representee’s decision to enter
Statement known to be untrue to representee
What is the position on inducement where representee made their own investigations?
If they relied on their own investigations, not the misrepresentation, cannot bring a claim
Is there a duty to check a misrepresentor’s statement?
No but if they didn’t where court considered it reasonable to, or they carried out a negligent investigation, defence of contributory negligence may be possible
The more commercial they are, the likelier court will consider it reasonable
When may statements of opinion form a claim for misrepresentation?
If representor considered to have a greater knowledge than representee, than the implied statement that there are facts which justify opinion can mislead
When can statements of future intention form a claim for misrepresentation?
Where representor states they intend to do something but at that time, they knew they couldn’t or had no intention to do so - they misrepresented their existing intention
When can silence form a claim for misrepresentation?
- Half-Truths: technically true statements but misleading
- Continuing Representations: at beginning of negotiations, statement is made but becomes false prior to entering the contract, representor must correct the representation
- Contracts uberrimae Fidei: duty to disclose material facts in some contracts where one party is in a particularly strong position to know material facts
What is the effect of misrepresentation on a contract?
Makes contract voidable - must take action to rescind
What are the different categories of misrepresentation and their definitions?
- Fraudulent: made knowingly or w/o belief in truth, or recklessly (flagrant disregard for truth) - failure to disclose must be deliberate/dishonest
- Negligent: representor fails to show reasonable grounds to believe, or did believe up to time contract was made, that statement was true - an easier claim but treated liked fradulent
- Representor proves they had reasonable grounds to believe in truth and did so until time of contract
What remedies are there for misrepresentation?
Rescission: put parties back in position before contract - only awarded where this is possible
Damages: greatest for fraudulent, but neg will often match; C must mitigate; damages in lieu of rescission available for neg/innocent
Indemnity: covers expenses for obligations assumed due to contract - not granted where damages given
Are exemption clauses allowed for misrepresentation?
Only if it is reasonable
What is an operative mistake?
Prevents a contract from taking legal effect - contract void from outset
What are the 3 categories of mistake?
- Common Mistake: both parties suffering from same mistake
- Mutual Mistake: both parties mistaken but about different things
- Unilateral Mistake: 1 party mistaken and other knows
What are the requirements for common mistake?
Must be sufficiently fundamental to affect validity of contract
Mistake about quality of goods does not void contract
Will not operate where: mistake not sufficiently fundamental; one party is at fault; contract makes provision for this issue
What is the test for mutual mistake?
What a reasonable 3rd party would believe the agreement to be, based on words and conduct of themselves
What are the rules regarding unilateral mistake of identity?
Where seller intended to deal with person in front of them & that’s what happened, NOT void for mistake, voidable for misrepresentation
Where seller can show that identity, not attributes, was of vital importance = VOID for mistake
What happens where a fraudulent buyer sells goods onto a 3rd party?
Where fraudster has voidable title, & title has not avoided at time of sale, 3rd party acquires good title where bought in good faith so C can’t take goods back
Where void for mistake, it’s void & ineffective from outset so 3rd party must return goods even if bought in good faith
What is presumed where parties contract face to face?
Seller intended to deal with person in front of them - difficult to rebut
What are the rules on exemption clauses on UCTA for different types of breaches/liability?
Liability for Death/PI from Negligence: void, cannot do so
Other losses from Negligence: valid if reasonable
Breach of Statutory Implied Terms (S13-15 SGA): valid if reasonable
Breach of Contract: doesn’t apply if term is in a negotiated contract; valid if reasonable for terms in a party’s ‘standard terms’
What is the reasonableness test under UCTA?
Term is fair & reasonable to be included in light of circumstances known/ought reasonably, or in contemplation of the parties when contract made
Guidelines:
- Bargaining powers
- Where customer received an inducement to agree to the term or had similar contract opportunities with other persons
- Customer knew/ought reasonably of existence/extent of term
- Reasonable at time to expect compliance is practicable
- Goods manufactured, processed or adapted to special order
What are the rules on exemption clauses on CRA for different types of breaches/liability?
Death/PI from Negligence: cannot do so, not binding on customer
Breach of Statutory Implied Terms of Goods & Digital Content: not binding
Breach of SIT on Services - attempts to entirely exclude: not binding; restrict/limit liability = not binding if prevents recovery of price paid
Terms other than exemption clauses: not binding if unfair
Are use of parallel/secondary contracts to avoid CRA permitted?
Generally, no
What are the 3 types of dures?
- Duress to the Person: actual or threatened violence; one factor influencing decision to enter contract (need not be decisive)
- Duress to Property: seizure or damage to owner’s property (or threat) - but for duress, agreement would not have been entered into
- Economic Duress: pressure with (a) lack of practical choice for victim (b) which is illegitimate (c) is a significant cause inducing C to enter contract (but for test)
What considerations are there to determine if pressure is illegitimate for economic duress?
Has there been actual or threatened breach of contract?
Has person exerting pressure acted in good or bad faith?
Did victim protest at time?
Has victim affirmed or sought to rely on it?
If there’s doubt as to whether an act amounts to duress or undue influence, what should a C do?
Bring action on both grounds
What is undue influence?
Where a person’s consent to a transaction was produced in such a way that consent ought not to be treated as expression of their free will
What are the 2 types of undue influence?
- Overt Acts of Improper Pressure or Coercion - where behaviour is deceitful/fraudulent, it’s a factor in inducing C; if not decietful, but for test applies
- Relationship where 1 has influence over the other which could be taken advantage of
What relationships is there an irrebuttable presumption of influence?
Parent and child
Guardian and ward
Trustee and beneficiary
Solicitor and client
Doctor and patient
What relationships are there where there is no presumption of influence?
Parent and adult child
Husband and wife
Influence will need to be positively shown
What are the requirements to show undue influence where there is a relationship where 1 has influence over the other?
- Relationship of trust and confidence (if not irrebuttably presumed)
- Transaction which requires explanation
Burden then shifts to D to show no UI
What is the remedy for undue influence?
Rescission (but can be lost if contract affirmed, and equitable principles apply)
What are 4 methods of discharging a contract?
Performance
Agreement
Breach
Frustration
What is discharge by performance and 4 exceptions?
Complete performance of obligations - a promisor who performs part doesn’t discharge
1. Acceptance of Partial Performance: defaulting party paid on quantum merit basis
2. Substantial Performance: defaulting party obtains contract price with deduction to reflect cost of remedying defect
3. Divisible Obligations: performing party paid for each part performed
4. Wrongful Prevention of Performance by Other Party: entitled to payment despite not completed; innocent party can sue for damages or claim a quantum meruit
What is the meaning of ‘substantial performance’?
Does defect go to root of the contract?
What is the defence for failure to perform?
Tender of Performance: promisor shows they unconditionally offered to perform their obligations in line with contract terms but promisee refused
Doesn’t discharge but creditor can’t claim interest/damages
How can a contract be discharged by agreement?
- By a subsequent binding contract between the parties: requires a) agreement obligation is released (accord); b) consideration for promise to release (satisfaction)
- By operation of an original contract term: condition precedent or subsequent
Where one party has completed its obligations but other hasn’t, what can be done for discharge by agreement by subsequent binding contract?
Completed party can release other’s obligations under deed OR accept something else in place of former obligation
What is the meaning of a condition precedent?
Condition which must be satisfied before any rights come into existence - contract suspended until condition satisfied
What is the meaning of a condition subsequent?
Term providing for the termination of a contract in event of specified occurrence
What remedies are there for breach of contract?
Compensatory damages
Specific Performance
Injunction
What are the 2 types of breach?
- Repudiatory Breach: breach of condition (or innominate treated as such) entitling other to treat contract as terminated - party can either affirm & claim damages, or terminate & claim damages
- Anticipatory Breach: party indicates they won’t perform obligations in advance - innocent party has automatic right to ‘accept’ the renunciation and treat contract as terminated
What must be shown to treat contract as terminated for an anticipatory breach?
That if breach occurred at time performance was due, it would have been repudiatory
What are the risks of wrongful termination?
Court could later find term was a warranty/treated as one which means they would’ve had no right to terminate = wrongful termination
Wrongful notice seen as serious breach
Risk particularly high for terms not defined as conditions and depending on test
What are benefits of affirming a contract?
Contract survives & rights of innocent party preserved
Commercial reasons
Innocent party doesn’t sacrifice opportunity to claim for damages
How can one affirm?
Must be evidence of a very clear and unequivocal commitment to continuing the contract
What limitations are there for the right to affirm?
- Cooperation of breaching party required for continued performance
- Innocent party must have a legitimate interest, financial or otherwise, in affirming and continuing
What is frustration and what’s its effect?
Events that are beyond control of either party, that occur after formation of the contract, and render performance radically different
Effect: relieves a party from further obligations under the contract - contract ends automatically
How may performance be rendered radically different?
Performance is impossible, illegal, or common purpose is frustrated i.e. can’t be carried out
What is a frustrating event not?
Merely an increase in expense/onerousness
Caused by party’s default
One which parties could’ve reasonably foreseen
Provided for in the contract i.e. force majeure clause
What happens to obligations arising to frustrating event?
Money paid before can be recovered & money that should’ve been paid no longer need to be
Expenses of payee can be recovered at discretion of the court
Where benefit was non-monetary, a party who received it may be required to pay a just sum for it
What is restitution interest and the requirements for it?
Represent’s C’s interest they have in restoration of benefits which defaulting party has acquired at its expense - i.e. account for profits
1. Inadequacy of other remedies
2. C has legitimate interest in depriving D of their profit
What is the default approach to damages and 2 ways of calculating it?
Put innocent party in position they would’ve been in had the contract been performed
1. Expectation Interest
2. Reliance Interest
What are the different ways of calculating expectation interest?
- Cost of Cure: cost of substitute/remedial work required - C must act reasonably
- Diminuition in value: difference in value between performance received & performance promised
- Loss of Amenity: where loss is not in economic value, but still has value to them
What is reliance interest and how is it calculated?
Putting C in position they would’ve been in had contract never been entered into
Reliance Measure: C can recover expenses they incurred in preparing for or in part performance of the contract - only for wasted expenditure prior to breach
Most likely to be used where expectation damages are highly speculative
What are the requirements for reliance interest?
C would’ve recouped those expenses had contract been properly performed - D must prove this wouldn’t be the case
What losses have special rules and exceptions?
- Mental Distress: damages not awarded unless for where a major object of contract was to provide pleasure, relaxation & peace of mind
- Loss of Reputation: damages not awarded unless an employment contract contains implied term of trust and confidence such that employer must carry out work in honest way
- Loss of Chance: recoverable in damages if lost chance is quantifiable in monetary terms & there was a real chance opportunity may have come to fruition
Can damages be recovered on behalf of another?
No
What is a liquidated damages clause?
Stipulates a certain sum payable on particular breach
How are liquidated damages clauses interpreted?
Starting point = upheld
Courts intervene will strike it out where it’s a penalty clause, & C will be entitled to unliquidated damages
What is the test for determining whether a liquidated damages clause is a penalty clause?
- Clause a Primary or Secondary Obligation? Primary = party of primary obligations of contract; Secondary - obligation triggered by breach to compensate
- If secondary, clause penalty if it imposes a detriment out of all proportion to any legitimate interest
What is specific performance and when is it awarded?
Requires D to carry out its obligations under a positive term of the contract
Only in exceptional cases, where damages are not an appropriate/adequate remedy
Equitable principles apply
What is an advantage of specific performance?
Breach of SP has more severe consequences than breach of contract
What principles are there for specific performance?
Not awarded where it would cause undue hardship
Promise given for no consideration is not specifically enforceable
Not awarded for breach of employment contracts, breach of a contract not binding on both parties or for breach of an obligations to perform acts which would need constant court supervision
What is a prohibitory and interim prohibitory injunction?
Prohibitory Injunction: court order restraining a party from breaching a negative term
Interim: temporary order to protect a party until a matter reaches rial
Equitable principles apply, only granted where Just and convenient, and damages not appropriate
What is the effect of not complying with an injunction?
Be in contempt of court
What limiting factors are there on damages?
- Causation: factual (dominant cause) and legal (no NAIs that break chain)
- Remoteness: loss of a type ordinarily and naturally arising from breach; and if losses are too unusual, D must have had sufficient actual knowledge to be aware of risks of these losses
- Mitigation: injured party should take reasonable steps to minimise effect of breach - no obligation to but losses attributable to failure to do so aren’t recoverable
