Contract 3 - Causation, Remoteness, Mitigation Flashcards
What must the injured party establish to claim damages?
A connection between the breach of contract and its loss
This involves assessing both factual and legal causation.
What is factual causation?
Whether the breach by the defendant has, as a matter of fact, caused the loss suffered by the claimant.
What is legal causation?
Whether as a matter of law the defendant should be held responsible for the loss.
How do courts assess factual causation?
By considering if the breach was a ‘dominant’ or ‘effective’ cause of the loss.
What is a novus actus interveniens?
An intervening event that breaks the chain of causation.
What case illustrated that a customer’s actions can break the chain of causation?
Lambert v Lewis.
What are the two parts of the test established in Hadley v Baxendale for recoverable damages?
- Arises Naturally
- Was Within Both Parties’ Contemplation
What does ‘arises naturally’ mean in the context of damages?
Losses that are the usual and expected result of the breach.
In the case of Hadley v Baxendale, why were the losses not recoverable?
The carrier was not aware that the mill’s operations depended solely on the specific shaft.
What did the case Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) establish?
Parties should only be liable for losses they ‘objectively’ accepted responsibility for when entering the contract.
What did Jackson v Royal Bank of Scotland (2005) confirm regarding contemplation?
What is in both parties’ ‘contemplation’ should be assessed at the time of contracting.
What was the outcome of Victoria Laundry (Windsor) Ltd v Newman Industries Ltd regarding ordinary business profits?
Ordinary business profits were recoverable under the first limb of the Hadley v Baxendale test.
What was the outcome regarding the loss of lucrative dyeing contracts in Victoria Laundry v Newman Industries?
The loss was irrecoverable because it was not reasonably foreseeable.
What is the duty of the injured party regarding mitigation of losses?
To take reasonable steps to minimise its losses.
What happens if the injured party fails to mitigate losses?
They cannot claim for losses that could have been avoided by reasonable actions.
What was the significance of the case Payzu v Saunders regarding mitigation?
The claimant was expected to accept the defendant’s new offer to avoid further loss.
Are there strict requirements for mitigation actions?
No, actions to mitigate aren’t measured too strictly.
Fill in the blank: Damages cannot be recovered if they are too _______ from the breach.
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