Contract Remedies

Question 1

What are the 3 main types of remedy in contract law?

Answer 1

-Legal remedies (repudiation and damages)
-Equitable remedies (injunctions and specific performance)
-Specific remedies (under the CRA 2015 and Law Reform (Frustrated Contracts) Act 1943)

Question 2

What is meant by repudiation?

Answer 2

Ending a contract/ setting it aside - may result in lawful refusal of future performance, rejecting any goods and a refund of money paid. Actual or anticipatory breach of conditions leads to repudiation, and serious (actual or anticipatory) breaches of innominate terms could lead to repudiation too.

Question 3

What are the 2 types of damages?

Answer 3

-Nominal damages
-Compensatory damages

Question 4

What are nominal damages?

Answer 4

Nominal damages occur when nothing has been lost as a result of the breach, so the damages are simply there to recognise that there was in fact a breach. Due to there being no loss, these damages are usually a very small amount.

Question 5

What is the purpose of compensatory damages?

Answer 5

Robinson v Harman- to put the claimant in the same financial position they would have been had the contract been properly performed.

Question 6

What losses can be compensated?

Answer 6

To get compensatory damages for loss, the loss must not be too remote from the breach.

Question 7

What are the 2 types of losses?

Answer 7

-Normal losses that come naturally from the breach
-Special losses caused by/based on particular circumstances

Question 8

What is the remoteness test for each type of loss?

Answer 8

Hadley v Baxendale
-Normal losses are not too remote if they are reasonably foreseeable

-Special losses are not too remote if the defendant knew of the particular circumstances and the loss they could cause

Question 9

What is quantum of damages?

Answer 9

Calculating the amount of compensatory damages owed. There are 2 methods to do this:
-Expectation loss
-Reliance loss

Question 10

What is expectation loss?

Answer 10

This calculates the amount/value expected to be gained if the contract was performed properly. There are 2 main ways this can be measured. Either one party hasn’t performed at all so the expectation loss will be the cost of obtaining the good or service that should have been supplied and possibly any profit expected. Or one party performs the contract but does so defectively. The expectation loss here is either the cost of restoring the goods to the expected quality or the gap in price between the goods contracted for and those actually received.

Question 11

What is the case where C could claim compensatory damages for expectation loss?

Answer 11

Thompson v Robinson- C could sue for the loss of profit they would have made on the car as he has expected to make that profit but had now lost that profit. (The car was not high in demand).

Question 12

What is the case where C could only claim nominal damages?

Answer 12

Charter v Sullivan- C could not recover lost profit on the car here because it would have been easy to get the same profit from someone else (due to the car being in high demand). Therefore he would not actually lose profit as a result of this breach, so did not need to recover this.

Question 13

What is reliance loss?

Answer 13

Reliance loss is used when it is very hard to figure out what value could be expected if the contract was complete. Instead, reliance loss looks at what value has been lost as a result of starting the contract (because they relied on the contract continuing).

Question 14

Which case is an example of reliance loss?

Answer 14

Anglia TV v Reed- it would be hard to tell how much profit the film would make before it was finished – it could have been very successful or not very successful. Instead, A got damages based on the amount they had already spent on the film before the contract ended.

Question 15

What else might reliance loss be used for?

Answer 15

Loss of valuable amenity/ pleasure like in Farley v Skinner, where some damages could be awarded for losing some enjoyment of the land.

Question 16

What does duty to mitigate the loss mean?

Answer 16

C must take reasonable steps to minimise their loss. If C loses more profit because they fail to take reasonable steps, the damages will not cover the extra loss.

Question 17

What case is an example of duty to mitigate the loss?

Answer 17

Thai Airways v KI Holdings- C would have lost more profit if they used the same kind of planes as usual, but lost less by using fuel efficient planes. The court awarded less damages as less profit was lost. Importantly, if C had used the same kind of planes as usual, the court probably still would have awarded the same amount of damages because C could have used more efficient planes.

Question 18

What doesn’t duty to mitigate the loss require C to do?

Answer 18

White and Carter v McGregor- mitigation of loss doesn’t require C to sue for anticipatory rather than actual breach, even if this seems unreasonable (ie greatly increases costs).

Question 19

What are equitable remedies?

Answer 19

These are used rarely in contract law to provide a fair remedy if damages would not do so. The 2 types are injunctions and specific performance.

Question 20

What is a prohibitory injunction?

Answer 20

Stops someone from doing something.

Question 21

What is a mandatory injunction?

Answer 21

Orders someone to do something- usually this is to undo something caused by the breach.

Question 22

In which case was an injunction not granted?

Answer 22

Page One Records v Britton- injunctions cannot be used to enforce personal services, as the court cannot supervise these kind of orders.

Question 23

What is specific performance?

Answer 23

A court order requiring a party to specifically carry out their obligations as agreed (rare). For this to be ordered, damages must be an inadequate remedy, the order must not cause undue hardship to the defendant and such an order cannot be used where the contract involves personal services.

Question 24

Which case is an example of specific performance being ordered?

Answer 24

Beswick v Beswick- the nephew was given an order of specific performance so he had to continue paying the wife as the contract specified. This was easier than calculating damages, as the nephew was meant to pay Mrs. Beswick until she died – so there was no way to know how much this would be until she did actually die.

Question 25

What statutory remedies are covered under the Consumer Rights Act 2015?

Answer 25

-S20 – Right to reject (refund within 30 days)
-S23 – Right to repair/replacement
-S24 – If the goods cannot be fixed/replaced, a reduction in price or refund may be available (guaranteed for first 6 months)

Question 26

What statutory remedies are covered under the Law Reform (Frustrated Contracts) Act 1943?

Answer 26

-S1(2) – Anything paid before frustration can be recovered (minus ‘just expenses); anything yet to be paid stops being payable.

-S1(3) – Where no pre-payment is made before frustration but performance has started, money may be sought for that part performance.