Damages Flashcards
What can be enforced by the other party in the event of a breach?
Damages, specific performance or return of money paid/service rendered may be possible to be enforced by the innocent party.
Damages
Damages are not punitive (Addis v Gramophone [1909] and for lost chance are calculated on the number and type of contingencies upon which it depends (MoD v Wheeler [1998]). The date for assessment is the date of the breach of contract (Dodd Properties v Canterbury CC [1980]).
Physical/psychological inconvenience
Physical inconvenience is recoverable (Hobbs v L&SW Ry (1875)). Distress is not recoverable (Watts v Morrow [1991]) unless they are a direct result of the physical inconvenience of the breach (Perry v Sidney Phillips [1982]) or if the contract was specifically for enjoyment or peace of mind (Jarvis v Swan Tours [1973]). Similarly if peace of mind is ‘an important object’ of the contract it will be recoverable (Farley v Skinner [2001]).
Loss of reputation
Claims for a loss of reputation are not actionable per se (Addis v Gramophone [1909]). There must be real damage.
What measure are damages given in?
Damages are measured either on the performance or reliance measure. The courts are moving towards a performance interest measure for recovery of damage (Ruxley Construction v Forsyth [1996]), where what is expected from the contract is recoverable in breach. The courts thus recognise things of value to the individual, like lost amenity, though not necessarily valuable (Farley v Skinner [2001]).
Reliance measure
The reliance measure is a calculation of damages based on expenses incurred by preparing a contract which has been made futile by breach (Anglia TV v Reed [1972]).
Causation in contract
There must be but for causation and the breach being the effective cause of the loss (Galoo v Murray [1994]). If another event occurs that creates more loss, if the event was likely then it will not break the chain of causation (Monarch Steamship v Karlshamms Oljefabriker [1949]). Where the second event is unlikely, the chain of causation will be broken (Young v Purdy [1997]).
Remoteness in contract
It was established in Hadley v Baxendale (1854) that two types of damages are recoverable: where they are arising naturally in the course of things (imputed knowledge) and where they would be in contemplation of the parties in the event of a breach (actual knowledge).
Special, unforeseeable results of a breach
Special, unforeseeable results of a breach are not recoverable (Victoria Laundry [1949]) but ordinary losses such as lost profits for late delivery of a mechanism which is known to be necessary for the functioning of a firm are recoverable. Changes in market prices resulting in losses due to late deliveries are considered to be in the course of things and known to all parties (The Heron II [1969]). Contractual remoteness looks at D’s knowledge at the date of making the contract and not the date of breach (Jackson v RBS [2005]).
Effect of The Achilleas
The Achilleas [2008] confused the law somewhat and now the rule in Hadley v Baxendale can be displaced, but Supershield v Siemens Building Tech [2010] does not say how. In The Achilleas the majority held that damages are normally calculated on what is known to the party at the time of contract (i.e. the first rule in Hadley) but in this case the amount of damage need not be foreseen.
Contract and tort remoteness?
In Parsons (Livestock) v Uttley Ingham [1978] it was held that contract and tort remoteness should develop concurrently.
Damages for economic loss
Damages in contract for economic loss are on the basis of the knowledge which the parties are presumed to possess. For business people the ordinary course of business falls under this knowledge (Monarch Steamship v Karlshamms Oljefabriker [1949]). Therefore a deliverer who does not know the value of the things being delivered will not be liable for losses arises due to late delivery (British Colombia v Nettleship (1868)). Despite this ‘bare knowledge’ is sufficient to make the contract breaker liable (Patrick v Russo British Grain Export [1972]).
Mitigation
A party who has suffered from a breach of contract is under a duty to mitigate losses and they cannot be compensated for losses suffered as a result of their own imcompetence to mitigate (British Westinghouse v Underground Electric [1912]).
Examples of mitigation
Dismissed employees must make reasonable efforts to obtain new work or else nominal damages will be awarded (Beckham v Drake (1848)). They do not have to accept lower status (Yetton v Eastwoods Froy [1967]). If mitigation results in a financial gain, this is subtracted from the compensation awarded British Westinghouse v Underground Electric Ry of London [1912]). It must be shown to have a real pecuniary benefit (The Baltic Surveyor [2002]).
