Damages Flashcards
Payzu v Saunders [1919] Facts
• P agreed to buy some goods from D for 9 months
• Payment to be made within 1 months of every delivery
• First delivery payment was late
• D refused to carry on
• This was a breach
• D said will continue if pays cash
• P refused this, claimed for damages
• Held:
• D did breach
• But P had ability to mitigate the loss
o Could have paid in cash
• Because he didn’t do that, not entitled for damages of breach
• Have obligation to mitigate losses
Payzu v Saunders [1919] Principle
Mitigation
C must take all reasonable steps to minimize his loss (but no more than reasonable steps)
Have obligation to mitigate losses
Because he didn’t do that, not entitled for damages of breach
(Czarnikow Ltd v Koufos) The Heron II [1969] Facts
- sale of sugar
- ship was 9 days late
- ship made deviation from routes
- deviations were breaches of contract
- during delay, market price of sugar fell
- K tried to get damages for the price of sugar would have been
- Were loss of profits damages?
- Held:
- Yes
- It was foreseeable that the price of sugar was fluctuate
- Must have been aware of the possibility
- Does not need to be likely, simply reasonably foreseeable
(Czarnikow Ltd v Koufos) The Heron II [1969] Principle
Remoteness
- Must have been aware of the possibility
- Does not need to be likely, simply reasonably foreseeable
Hadley v Baxendale Test
First limb:
D liable for losses which arise “naturally, according to the usual course of things, from the breach of contract”
Anglia TV v Reed [1972] Facts
• A incurred expectation in preparing for filing a play
• Expenses incurring before and after entering contract with R
• R dropped out and they could not get a replacement
• A sued for expenses of production £2700
• Held:
o They could recover all of that
o Even costs incurred before R signed the contract
o R should have known that they would spend money of the production
Anglia TV v Reed [1972] Principle
Recovery of pre‐contract spending
reliance loss
Even costs incurred before R signed the contract
o R should have known that they would spend money of the production
Parsons v Uttley Ingham [1978] Facts
• U allowed pig food to get moldy because of bad ventilation
• Pigs died
• P argued they are liable for loss of pigs
• Held:
• Not too remote
• Naturally occurring result
• Lord Denning
o If loss ought to have been contemplated, not too remote
o Was foreseeable that if food went bad, they would die
• If loss itself is foreseeable, it is allowed o Death of the pigs was a natural result of feeding them mouldy food, under Hadley v Baxendale.
Parsons v Uttley Ingham [1978] Principle
• Remoteness- Application
Hadley v. Baxendale Test
Ruxley Electronics and Construction Ltd v Forsyth [1995] Facts
- F built a swimming pool for R
- Was not deep enough
- Still safe
- To rebuild would of cost lots of money
- How much damages should be payable?
- Full amount of taking out swimming pool and replacing it?
- No
- Held:
- Damages for loss of amenity
- Looked at the economic reality of the situation
Ruxley Electronics and Construction Ltd v Forsyth [1995] Principle
• Expectation Damages
Looked at the economic reality of the situation
Hadley v Baxendale 2 Limb Test?
Remoteness
2 Limb Test:
First limb:
D liable for losses which arise “naturally, according to the usual course of things, from the breach of contract” (i.e. there must have been a serious possibility that the loss would occur if D breached the contract (The Heron II))
Second limb:
D also liable for losses “that may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it” (liability for these very dependent on how much each party knows about the other’s reasons for entering into the contract, the background, how each wants to use what the other provides, how it fits into the other’s larger plans, etc.)
- Must meet 1 of the 2
- Must be first thing to look at when considering damages
- Even before looking at expectation or reliance interest
Jackson v Horizon Holidays [1975] Facts
• J went on holid ay to Sri Lanka • Paid £1200 • When they got there, it was bad • Held: o Denning • Lots of disappointing things about it • Ex: mold, etc.. o J was able to recover for the distress and disappointment for the whole family
Jackson v Horizon Holidays [1975] Principle
Holiday Claims
Exception that you can recover damages for disappointment and discomfort
o Denning
• Lots of disappointing things about it
• Ex: mold, etc..
o J was able to recover for the distress and disappointment for the whole family
Jarvis v Swan Tours [1973] Facts
• J was a solicitor
• Went to holiday in Switzerland
• Got a brochure from S, which made wonderful claims
• House parties, attractions, scenery, etc…
• J booked 15 days
• Found that the house party was not a house party (only 13 people)
• He was all alone
• The skies were only mini skies
• J sued for breach of contract
• Held:
o Lord Denning
• Felt sorry for J
• J can recover difference in value and distress (disappointment)
o J should get more than the difference
o Davies LJ
• Gave a good example
• Ex: gets ticket for show
• Spent money on dinner jackets + everything else involved in the night
Jarvis v Swan Tours [1973] Principle
Holiday Claims
Exception that you can recover damages for disappointment and discomfort
- J can recover difference in value and distress (disappointment)
- Spent money on dinner jackets + everything else involved in the night
Milner v Carnival plc [2010] Facts
• C was trading as kunard (cruise ship)
• M booked a voyage
• Suppose to be 106 days
• Price was supposed to be £59,000
• Brochure said ‘experience of a lifetime’
• Expect high quality product
• They did not get one
• Got off at Hawaii and would go no further
• Held:
o How do we figure out the damages?
o No obvious losses (other than wifes dresses)
o Damages for distress and disappointment were both under £5,000
o Cannot measure distress according to the cost of the holiday
o They are exclusive
Milner v Carnival plc [2010] Principle
Holiday Claims
Exception that you can recover damages for disappointment and discomfort
o Cannot measure distress according to the cost of the holiday
o They are exclusive
Malik v BCCI [1997] Facts
• M was terminated on the ground of dishonesty
• He was only linked to a business that had a reputation of dishonesty
• Their reputation was destroyed because of the termination
• Tried to get damages for damage to reputation
• Held:
o Employer has a duty to maintain trust and confidence
o If violates this, could recover damages
o Bank said that they didn’t know the business was corrupt
• Argument Failed
o This provides an exception
• Must be similar to this
• Employers duty to act in this way
• Violation of trust and confidence allows damages
Malik v BCCI [1997] Principle
Injured Feelings
Injury to reputation
Exception
• Violation of trust and confidence allows damages
Johnson v Unisys [2001] Principle
• Can recover for contractual losses unless there is a violation of procedure
Eastwood v Magnox Electric Plc and McCabe v Cornwall CC [2004] Principle
Injured Feelings
Unfair Dismissal
- Looked at how much compensation is payable for unfair dismissal
- Could you get damages at common law for damage to feelings
Dunnachie v Kingston upon Hull City Council [2004] Principle
Injured Feelings
Unfair Dismissal
• You cannot recover for damage for injured feeling (psychiatric)
3 types of damage interests?
1) Expectation Interest
2) Reliance Interest
3) Restitution Interest
1) Expectation Interest
o expectation (that defendant (D) would perform his promise) not fulfilled ‐> damages should put innocent party in as good a position as he would have had if D had performed his promise
• Expectation that D would perform his promise
• Puts injured party in situation where D had performed his promise
2) Reliance Interest
o innocent party has relied to his detriment on D’s promise (entered into contract, incurred expense, etc.) ‐> damages should compensate to extent C has relied to his detriment on D’s promise, i.e. put him in as good a position as he was in before D made his promise
• If relied on promise by breaching promise
• You are put back before you entered into the reliance
3) Restitution Interest
o innocent party wants to deprive D of a gain D made at his expense
• Gains made at the expense of the innocent party
• Ex: royalties
Ruxley Electronics and Construction Ltd v Forsyth [1995] Facts
- F built a swimming pool for R
- Was not deep enough
- Still safe
- To rebuild would of cost lots of money
- How much damages should be payable?
- Full amount of taking out swimming pool and replacing it?
- No
- Held:
- Damages for loss of amenity
- Looked at the economic reality of the situation
Ruxley Electronics and Construction Ltd v Forsyth [1995] Principle
Expectation Interest
• Looked at the economic reality of the situation
Tito v Waddell (No 2) [1977] Facts
- British gov’t granted mining lisince to mine fosfates on ocean island (settlement)
- Management was put in the hand of a trust
- Instruction was tat profits were to be put on trust for previous land owners
- Issues about the meaning of a trust (not important here)
- Right to recover additional royalties (important)
- Whether there was an Obligation on the trust to replant the island after the mining has taken place
- Held:
- It would be uneconomic to replant the island because no one lived there
- Looked at the cost of cure and economic benefits
- No evidence that there was an intention to replant the island
- Paid for actual damage suffered by the mine
- In theory, island would have been planted, in reality it made no sense because no one had the intention to move back
- When assessing damages, must look at actual expectation of the parties, not theoretical
Tito v Waddell (No 2) [1977] Principle
Expectation Interest
- Looked at the cost of cure and economic benefits
- When assessing damages, must look at actual expectation of the parties, not theoretical
Panatown Ltd v Alfred McAlpine Construction Ltd [2000] Facts
- Important for damages
- Looking at exception of the general rule to privity
- Exception that said when goods travelled by sea, the consigner could recover damages from the carrier even if the contract was between the consigner of goods and the carrier
- The consignee did not have a contract with the carrier
- Issue that 3rd party could no recover damages even if he is not part of the contract
- When 3 parties, and contract is between A and B but it was C who suffered the loss, C can recover damages when there was expectation that C would recover the goods once the goods were loaded on the ship
Panatown Ltd v Alfred McAlpine Construction Ltd [2000] Principle
Expectation Interest
• When 3 parties, and contract is between A and B but it was C who suffered the loss, C can recover damages when there was expectation that C would recover the goods once the goods were loaded on the ship
Birse Construction Ltd v Eastern Telegraph Co Ltd [2004] Facts
- residential training college built with defects
- C never actually intended to repair the defects
- Held:
- Cannot recover for damages for losses that you never intended to fix before they were sold
- Expectation damages cannot be recovered
Birse Construction Ltd v Eastern Telegraph Co Ltd [2004] Principle
Expectation Interest
- Cannot recover for damages for losses that you never intended to fix before they were sold
- Expectation damages cannot be recovered
Golden Strait Corporation v Nippon Yusen Kubishika Kaisha [2007] Facts
- Expectation damages
- Issue of future evetns
- G was a ship owner
- Initial decision that G was not entitled to damages in regards to a ship chartered to N
- N was allowed to cancel the charter because of the war in Iraq
- When party repudiates a contract, can the party rely on outside events that would of rendered the contract worthless?
- In this case, there was a provision that allowed the contract to be cancelled in these kinds of situations
- They foresaw this
- Held:
- They were allowed to rely on the outbreak of war in Iraq
- Look at the time of a breach
- Time of assessment can be flexible
Golden Strait Corporation v Nippon Yusen Kubishika Kaisha [2007] Principle
Expectation Interest
• Time of assessment can be flexible
Aerospace Publishing v Thames Water Utilities Ltd [2007] EWCA Facts
• A suffered losses when a water pipe bursts and flooded
• T was at fault
• Issue was the quantum of damages
• A argued that if flooded did not happen, employees would not have been diverted
• A should be entitled for value of activities that employees would have done
• Held:
• 3 point test (below as well)
o 1) Must show all reasonable evidence to show that the staff was diverted from their normal duties
o 2) Must establish that the diversion of staff caused interruption in the business
o 3) If can establish both, courts will allow damages
Aerospace Publishing v Thames Water Utilities Ltd [2007] EWCA Principle
Expectation Interest
3 point test (below as well)
Aerospace Publishing v Thames Water Utilities Ltd [2007] 3 point test?
o 1) Must show all reasonable evidence to show that the staff was diverted from their normal duties
o 2) Must establish that the diversion of staff caused interruption in the business
o 3) If can establish both, courts will allow damages
C&P Haulage Ltd. v. Middleton (CA 1983) Principle
Reliance Interest
- Court cannot claim reliance measure of damages just to get out of a bad deal
- He would of suffered losses anyway because of a bad deal
- Forced ot use expectation measure of damages
Anglia Television v. Reed (CA 1972) Facts
• A incurred expectation in preparing for filing a play
• Expenses incurring before and after entering contract with R
• R dropped out and they could not get a replacement
• A sued for expenses of production £2700
• Held:
o They could recover all of that
o Even costs incurred before R signed the contract
o R should have known that they would spend money of the production
Anglia Television v. Reed (CA 1972) Principle
Reliance interest
o They could recover all of that
o Even costs incurred before R signed the contract
o R should have known that they would spend money of the production
McRae v. Commonwealth Disposals Commission Facts
- Mistake case as well
- Case involves the tanker,
- Salvage ship went out, but tanker never existed
- Impossible to tell what they would have expected to recover
- All they could claim was the money they spent in reliance of the contract
McRae v. Commonwealth Disposals Commission Principle
Reliance Interest
• Impossible to tell what they would have expected to recover
Whincup v. Hughes (1871) Facts
o Son was apprentice to watch maker for 6 years
o Watchmaker died after 1 year
o Not allowed because son received some benefit (1 year) under the contract
o Only claim restitution if there is TOTAL failure of consideration
Whincup v. Hughes (1871) Principle
Restitution Interest
o Only claim restitution if there is TOTAL failure of consideration
AG v. Blake Facts
o Person wrote a book and violated terms of the Official Secrets Act
o Wrongdoing was so significant that restitution was appropriate
o All of the profits had to be returned to AG
AG v. Blake Principle
Restitution Interest
D enriched himself by serious wrongdoing (very unusual)
Can use Restitution Interest remedy only when? (3)
o 1) D was enriched
o 2) D was enriched at C’s expense
o 3) Unjust for D to retain the benefit without compensating C
Planche v Colburn Facts
• P was supposed to write a book • Did all the research to prepare • Publisher cancelled it • Held: o Awarded money to P because he had done some work o Recover on a quantum meruit basis
Planche v Colburn Principle
Quantum Meruit
o A claim on a quantum meruit (what the job is worth)does not usually arise if there is an existing contract between the parties to pay an agreed sum
May be a quantum meruit claim where there is? (4)
- 1) • An express agreement to pay a reasonable sum
- 2) • No price fixed by the contract
- 3) • A quasi‐contract
- 4) • Work outside a contract
Attorney General v Blake [2000] Facts
- in addition in violating duties, he also made profits from the book
- B had to return the profits to the AG
- AG never expected to make profits of the book
- Because it was from violation, AG could claim the profits
Attorney General v Blake [2000] Principle
Account for profits
Defendant ought not to gain an advantage for free, and should make some reasonable recompense for breaching his contract
Because it was from violation, AG could claim the profits
Experience Hendrix LLC v PPX Enterprises Inc [2003] Facts
- D had licensed recordings
- Did not have authority from E, a beneficiary
- P had benefitted from recordings
- Profits by rights should go to E
- E could recover
Experience Hendrix LLC v PPX Enterprises Inc [2003] Principle
Account for profits
Defendant ought not to gain an advantage for free, and should make some reasonable recompense for breaching his contract
- P had benefitted from recordings
- Profits by rights should go to E
- E could recover
WWF World Wide Fund for Nature (formerly World Wildlife Fund) v World Wrestling [2007] Facts
- Agreed that wrestling would become WWE, no longer WWF
- Agreement made restriction on wrestling’s ability to use WWF
- Wildlife made claims that wrestling violated the agreement
- Issue: what damages should they be entitled to?
- They are not competitors
- Held:
- They are not in the business of compensating charities for violations of this kind
- Conduct of D was not relevant
- Amount of damages should be limited to what can actually be proven
- Ended up being little to no damages at all
WWF World Wide Fund for Nature (formerly World Wildlife Fund) v World Wrestling [2007] Principle
Account for profits
Defendant ought not to gain an advantage for free, and should make some reasonable recompense for breaching his contract
- Conduct of D was not relevant
- Amount of damages should be limited to what can actually be proven
- Ended up being little to no damages at all
Account for Profits, Hierarchy of Damages? (4)
1) – Compensatory damages
• compensating someone for a loss
2) – User damages
• Assessed with respect to what has been taken from C
3) – Exemplary damages
• Designed to punish and deter
• Do not have this in contract
4) – Restitutionary award
• Damages in respect to the gain fo the wrongdoer rather than loss of innocent party
• Ex; intellectual property use by another
Qualification to damages? (4)
1) • Notional “obligation” on claimant to mitigate his losses
• cannot allow it to continue if C can fix it
2) • Losses not recoverable if “too remote” from the breach (≡ unforeseeable)
• If not natural from the breach
3) • Causation requirements
• loss must be caused by the breach
4) • Position with non‐financial losses: damages for pain and suffering, etc.
Limting factors to receiving damages? (3)
o 1) Causation
o 2) Remoteness
o 3) Mitigation
Galoo Ltd v Bright Grahame Murray [1994] Facts
• involve accountancy firm
• company was client of the firm
• firm made a number of errors
• company relied on the firms work, suffered significant trading losses
• if firm did job correctly, would have stopped trading sooner
• was this a casual affect to the trading losses
• held:
o not sufficient causation to establish the firm as liable for the losses
o breach had to be affective/dominant cause of the loss
o cannot be simply contributive
Galoo Ltd v Bright Grahame Murray [1994] Principle
C cannot get damages for the loss he has suffered if he cannot show that it was D’s breach of contract which caused his loss
breach had to be affective/dominant cause of the loss
o cannot be simply contributive
Victoria Laundry (Windsor) v Newman Industries [1949] Principle
Hadley v. Baxendale Test
Remoteness
- The extra gov’t contract in not something to expect
- Cannot recover
Victoria Laundry (Windsor) v Newman Industries [1949] Facts
- D was 20 weeks late to delivering a boiler
- Delay made L lose a lot fo business
- Also loss opportunity to take advantage of gov’t contractive
- Would have brought in over £200 a week
- Should of expected the ordinary business of the laundry
- The extra gov’t contract in not something to expect
- Cannot recover
Koufos v C. Czarnikow Ltd, The Heron II [1969] Facts
- sale of sugar
- ship was 9 days late
- ship made deviation from routes
- deviations were breaches of contract
- during delay, market price of sugar fell
- K tried to get damages for the price of sugar would have been
- Were loss of profits damages?
- Held:
- Yes
- It was foreseeable that the price of sugar was fluctuate
- Must have been aware of the possibility
- Does not need to be likely, simply reasonably foreseeable
Koufos v C. Czarnikow Ltd, The Heron II [1969] Principle
Hadley v. Baxendale Test
Remoteness
- Must have been aware of the possibility
- Does not need to be likely, simply reasonably foreseeable
Jackson v Royal Bank of Scotland [2005] Facts
- J was trading under the name of Samson (S)
- Contracted to sell dog chews to another company , E
- Chews were imported from Thailand
- Payment was to be made by a letter of credit
- Letter was opened at R
- S was named as the beneficiary on the letter
- Price was on packing list, included the mark up
- E did not know how much S was making on the markup
- This continued for a number of years
- Different mark up on every transaction
- 3 years in, R sent invoice directly to E instead of S
- E saw the mark up was 19%, withdrew its business from S
- S sued R
- They breached their duty of trust and confidence
- Held:
- Could recover for the lost profits
- Wrong to limit liability to 1 year
- 4 years of profits was more appropriate
- implied term of confidentiality by both parties
Jackson v Royal Bank of Scotland [2005] Principle
Hadley v. Baxendale Test
Remoteness
- Could recover for the lost profits
- Wrong to limit liability to 1 year
- 4 years of profits was more appropriate
- implied term of confidentiality by both parties
(The Achilleas) [2008] Facts
• hire of a ship
• clear that the ship was going to be returned late
• owner had another booking for it
• forced to renegotiate the price
• owners tried to get losses back
• argued that they should get damages for the whole length for original contract
• Held:
• Only recovery would be for the amount of time that was overlapped
• Controversial
• Lord Hoffman
o Implied new standard
o Had you assumed responsibility for loss in contract, new standard of breach
o Must make provision in contract to claim loss for damages
(The Achilleas) [2008] Principle
Remoteness
o Implied new standard
o Had you assumed responsibility for loss in contract, new standard of breach
o Must make provision in contract to claim loss for damages
Supershield Ltd v Siemens Building Technology FE Ltd [2010] Facts
• lawsuit about a leak
• defective installation of a valve
• sprinkler tank that filled perpetually
• overflow drains were blocked, flooding
• were the losses too remote?
• Held:
o No
o Referred to Achilleas case
o A case: provision must be made in order to claim losses in the contract
• Said standard rule was still Hedley v Baxendale case
• 2 prong test
o A case happens in small minority of cases
• Not the general rule
• Circumstances still unsure
Supershield Ltd v Siemens Building Technology FE Ltd [2010] Principle
Hadley v. Baxendale Test
Achilleas Test
Remoteness
o Referred to Achilleas case
o A case: provision must be made in order to claim losses in the contract
• Said standard rule was still Hedley v Baxendale case
• 2 prong test
Sylvia Shipping Co Ltd v Progress Bulk Carriers Ltd [2010] Facts
• Helps understand case
• Charteres lost a sub charter because owners were negligent in maintaining holes in the ship
• Tried to sublet to other person
• Claim that they should be able to claim losses from sublet
• Held:
o Can claim damages
o Not too remote
o Achilleus case only applied in unusual cases
• Complex cases
Sylvia Shipping Co Ltd v Progress Bulk Carriers Ltd [2010] Principle
Remoteness
o Can claim damages
o Not too remote
o Achilleus case only applied in unusual cases
• Complex cases
Surrey CC v Bredero Homes [1993] Facts
- S sold surplus land to developer
- Obtained covenant that it would be developed according to current plans
- Developer had to apply for relaxation oft the covenant if wanted more houses
- Developer finished the houses and built more without authority
- S tried to sue for damages
- Held:
- S did not suffer financial damages
- No problem with damages
- No damages under expectation
- Too remote
Surrey CC v Bredero Homes [1993] Principle
- S did not suffer financial damages
- No problem with damages
- No damages under expectation
- Too remote
Mitigation
To the extent C does not follow these principles, he will be unable to recover
(3 Rules)
• 1) P cannot recover any losses if he could avoid by taking reasonable steps
• 2) P cant recover for any losses actually avoided, even if took more steps than necessary
• 3) P can recover for losses incurred in attempting to mitigate
o for trying to mitigate
o Even if don’t succeed
British Westinghouse Co. v. Underground Electric Railway HL1912) Facts
- D agreed to supply P with electricity turbines
- Actually installed some that were less efficient than the expected ones
- D accepted them and used them for a number of years
- Replaced them with ones that are more efficient than those that were originally supposed to be installed
- After replacement, P realized and claimed damages
- P was under not duty to mitigate
- Since he did, Court could take into account the advantages from new turbines
- Held:
- Saving from new ones were greater than costs of old ones, he could not recover
British Westinghouse Co. v. Underground Electric Railway HL1912) Principle
Mitigation
C must take all reasonable steps to minimize his loss (but no more than reasonable steps)
- P was under not duty to mitigate
- Since he did, Court could take into account the advantages from new turbines
The Mihalis Angelos [1971] Facts
• shipping case
• owners of ship let it to charterers
• undertook that ship would be ready at July 1st
• charterers had option to cancel the ship if was not ready by 20th
• Charterer could not get ship by 17th, cancelled the contract
• Ship was not ready until 23rd
• Argument that ship was not ready on the first, charter should be able to avoid contract
• Held:
•
• 3 issues
o Issue 1: expected readiness of the ship
• Condition or warranty?
• Is so, can terminate
• Held:
• Condition
• Charterers could terminate
o Issue 2: if charterers repudiated the contracted by cancelling on the 17th, before the 20th
• Held:
• No
o Issue 3: damage suffered by owners
• Did not really suffer damages
• Is obligation to mitigate
• More lenient to innocent party
The Mihalis Angelos [1971] Principle
Mitigation
Lord Denning: shipowners suffered no loss and should be entitled to no more than nominal damages
Structure for Damages?
1) Breach
o Date of breach?
o Type?
- Allows termination?
- Allows damages?
• Must establish different losses
3 points for each
1) Causation and whether it was too remote?
• Hedley v Baxendale test
• Achilleus case?
2) Type of interest that can be claimed?
• A) Expectation
• B) Reliance
• C) Restitution
3) Mitigation?
• What can we do to mitigate
• What should be done
• Which is the best method to pursue?
•Allows equitable remedies?
