DAMAGES Flashcards
1
Q
How do the court measure damages in contractual claims?
A
- they try to put the claimant in the positon they would have been in had the contract been performed properly
- C will be able to recover loss of the benefit which C would’ve obtained
- not meant to punish D, only compensate C
- they are worked out on a expectation loss basis
2
Q
Ruxley Electronics and Construction Ltd v Forsyth
A
- usually if goods are defective, the rule is that the amount of damages awarded will be the difference in value between the actual value of the goods and the value the goods would have had if they had not been defective.
- with contracts for services, the rule is that the amount of damages awarded will be the cost of putting the work right, ie cost of cure.
- however, the court would award the cost of cure for defective goods and the difference in value for defective services if reasonable to do so.
- Ruxley agreed to build a swimming pool at Forsyth’s home. The contract specified the depth of the pool was to be seven feet and six inches. Ruxley completed the pool to a depth of six feet and nine inches. Forsyth brought an action for breach of contract, claiming the cost of rebuilding the pool to the specified depth.
- Ruxley argued the pool was still safe for diving despite the breach and Forsyth had not, therefore, suffered any damage in terms of a loss to the value of his home.
- Given the cost of re-building the pool was £21,560, it would be wholly unreasonable and disproportionate to the loss Forsyth had suffered in not having the pool at his desired depth. He further contended that Forsyth had no actual intention of having the re-building work conducted and, therefore, he had not suffered any loss.
- Forsyth argued that Ruxley had failed to perform his specific obligations under the contract and he should, therefore, be entitled to damages which would place him in the position he would have been in had the obligations been appropriately performed. He asserted it was irrelevant whether he chose to use the damages for the re-building work.
- Forsyth could not recover the cost of re-building because this would be totally out of proportion to the loss he had suffered.
- He could recover £2,500 for loss of amenity but the law must cater for cases where full performance of the promise would vastly exceed the loss which had truly been suffered. The pool was, in fact, worth no less because of the breach but to award nothing would render the contractual promise illusory, and so a nominal award was appropriate.
3
Q
Anglia Television v Reed
A
- Anglia engaged the defendant, an actor, to play the leading role in the production of a play for television. The defendant later refused to carry on with the contract and Anglia was forced to abandon the production as it could not get a substitute.
- Anglia claimed as damages all of the expenditure which they had wasted on the production, which included such things as director’s fees, designer’s fees and stage manager’s fees. The Court of Appeal awarded the wasted expenditure which included expenditure which Anglia had incurred before entering into the contract with the defendant.
- she was able to claim for the expenditure because it would’ve been in the defendant’s contemplation
- this is reliance loss damages
- expectation loss damages cant be calculated because they didn’t know what the expected profit was
4
Q
Omak Maritime Ltd v Mamola Challenger Shipping Co
A
- damages for reliance loss can only be claimed if gross profits from the contract would have equalled expenditure or exceeded it
5
Q
Can a court award damages for a lost opportunity?
A
- Blackpool and Flyde Aero Club v Blackpool Borough Council
- can be awarded damages for this
- tenders weren’t all looked at
6
Q
Does the court award damages for mental distress and disappointment?
A
- the general rule is that not usually.
- unless the purpose of the service is to provide entertainment and enjoyment under Jarvis v Swans Tours
7
Q
Jarvis v Swans Tours
A
8
Q
What does Hadley v Baxendale say about the remoteness rule?
A
- damages suffered by C must be fairly and reasonably considered from the breach OR was it reasonably supposed to have been in contemplation of both parties of the time they made the contract (were special or lucrative contracts known to the contractor)
- it is said that there are two limbs to remoteness rule in Hadley
- 1 is that loss which arises naturally from the breach will normally be within the parties’ reasonable contemplation (Limb 1).
- 2 is that unusual loss will be within the parties’ reasonable contemplation only if the special circumstances which give rise to the loss are known to both parties at the time the contract is made (Limb 2).
9
Q
Balfour Beatty Construction
A
When deciding whether loss is too remote there is no general rule that contracting parties are presumed to have knowledge of all techniques in each other’s business practices. However, the simpler the activity, the easier it will be to imply knowledge.
10
Q
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd
A
- D was liable for loss of ordianry business proft
- D was not liable for the loss of profit on the highly lucrative contract as it went beyond ordinary profit and D had no knowledge of these special circumstances - loss was too remote
11
Q
Koufos v C Czarnikow ltd, The Heron
A
12
Q
Parsons Ltd v Uttley Ingham Ltd
A
- there was no need to separate the law in terms of whether the damages was physical damage or loss of profits (death of pigs was physical damage)
- D was liable for the death of a large no of C’s pigs
- since some harm to pigs could be contemplated, it did not matter that the death of so many pigs was not in contemplation
- court said that, if a particular type of loss is within the parties’ contemplation as a serious possibility, then all loss of that type is recoverable even if more serious than could be contemplated.
13
Q
Brown v KMR Services Ltd
A
- similarly to parsons, extent to loss didn’t matter as long as some harm was foreseeable and in contemplation of parties
- however, obiter from Stuart Smith LJ says that although in practice it may be difficult to categorise loss into types or kinds, especially where financial loss is involved, he did not see any difficulty in holding that loss of ordinary business profits is different in kind from that flowing from a particular contract which gives rise to very high profits.
- Victoria Laundry might well be decided in the same way if the facts were to occur today.
14
Q
Transfield Shipping Inc v Mercator Shipping Inc 2008
A
15
Q
Would the innocent party and party in breach want to claim the clause is a penalty or a specified damages clause?
A
- innocent party would want it to be a penalty and not binding if actual loss is greater than the amount stated in clause
- the party in breach would want to argue its a penalty if the clause is greater than the actual loss so they pay less damages
