contract law- damages

Question 1

what are legal remedies

Answer 1

• damages or rights concerning the goods
• goods can be rejected, contract repudiated and so on
• common law. breaches can result in ending a contract where:

1. breach of condition or innominate term judged to be a condition
2. one party refuses to perform their obligations or a substantial part- anticipatory breach
3. one party makes it impossible to perform the contract

Question 1

lien

Answer 1

• the right to retain possession of the goods of the debtor until paid

Question 2

nominal damages

Answer 2

• a very small amount that can be awarded if no loss has been suffered, but there has still been a breach.

Staniforth v Lyall (1830)
- there was a breach but the claimant had since hired the boat in question to somebody else for a higher profit, so hadn’t lost out. he still received a smaller, nominal sum as damages

Question 3

speculative damages

Answer 3

• courts are reluctant to award these, however if the claimant can prove that the speculative damages are reasonably likely to occur
• he can recover the damages up to the amount that is reasonably likely to occur- Ruxley Electronics and Construction Ltd v Forsyth
• damages do not have to be proven with absolute certainty, only reasonable certainty.

Question 4

causation and remoteness of damage- Hadley v Baxendale (1854)

Answer 4

• test established: Hadley v Baxendale (1854):

1. was the loss that occurred a natural consequence of the breach? (objective test)
2. was the defendant aware of the potential losses as a result of the breach? (subjective test)

Question 5

modified remoteness of damage

Answer 5

• test modified in Victoria Laundry Ltd v Newman Industries Ltd (1949)

1. recoverable loss should be measured against a test of reasonable foreseeability
2. this foreseeability should be dependant on knowledge at the time the contract was made
3. the knowledge should be both common knowledge and the actual knowledge of the defendant

Question 6

assessment of damages

Answer 6

1. loss of a bargain
2. reliance loss

Question 7

loss of a bargain

Answer 7

• putting the claimant in the same financial position if the contract had been performed correctly:

1. difference in value between the goods required and those actually provided
2. difference between the price on the contract and the price in the market
3. loss of profit not just for goods but also in other contracts that may not have been able to have been fulfilled
4. loss of chance- speculative losses are not usually recoverable, but there have been exceptions (Chaplin v hicks, where an actress had a contractual right to attend an audition, but was wrongly prevented from doing so

Question 8

reliance loss

Answer 8

• relates to the expense incurred by a claimant who relied on a contract being performed.
• expenses can also be recovered for money that had been spent in advance of a contract being breached or for a loss of amenity

Question 9

duty to mitigate the loss

Answer 9

• it’s up to the injured party to take reasonable steps to minimise the effects of the breach
• base it on the true worth of the defective goods- British Westinghouse Electric v Underground Electric Railways (1912)

Question 10

liquidated losses

Answer 10

• sometimes the amount of damages is a fixed term in the contract. this will only be enforceable if the sum identified is an accurate and proper assessment of loss; otherwise, it is a penalty and will be enforceable.

Question 11

quantum meruit

Answer 11

• awards for services already rendered. in Upton Rural District Council v Powell (1942), a fireman was awarded a reasonable amount for having worked under a contract with no fixed agreement on wages

Question 12

steven v bromley (1919)

Answer 12

• when a fresh agreement can be implied in place of an original one, quantum meruit applies. steven was contracted to carry steel at a specified rate. when the steel was delivered, it contained other cargo. steven was able to claim the additional items.

Question 13

De Barnady v Harding (1853)

Answer 13

• when a party considers a contract discharged after the others breach, or been prevented from performing, quantum meruit applies

Question 14

equitable remedies

Answer 14

• these are awarded when damages are not considered enough.
• awarded at the court’s discretion
• prohibitory injunction- when the court instructs somebody not to do something. if breached, then this can become a more serious matter.
• can be permanent or temporary, which is called an interim injunction