Damages

Question 1

What are Damages?

Answer 1

A common remedy for a breach of contract - a sum of money compensation aiming to put the injured party in the position they would have been if the contract had be properly performed.

Question 2

Types of Losses?

Answer 2

Reliance loss

Expectation loss

Question 4

What are the four main types of common law remedies?

Answer 4

Unliquidated Damages - these are assessed by the court according to the breach itself and the losses arising from it

Liquidated Damages - these are set sums identified by the parties prior to the formation of the contract

Restitution of payments made in advance of a contract - recovery is possible where there is a complete failure of consideration or where there is a mistake of law

Quantum Meruit- recovery for an amount of work already done(again, this area is considered in Chapter 17)

Question 5

What are the four main equitable remedies?

Answer 5

Specific performance - where in certain circumstances the terms of the contract are enforced

Injunctions - where in certain circumstances parties are prevented from enforcing the contract

Rescission- where parties are allowed, if it is possible in the circumstances, to return to their pre-contractual position

Rectification - where a written contract is altered on order of the court in order to reflect the actual agreement accurately

Question 7

What is expectation interest?

Answer 7

This is equal to the net value of what the innocent party would have received if the contract has been performed .

(Protects the interest in performance)

Robinson v Hartman (1848)

Question 9

What is reliance interest?

Answer 9

The extent to which the innocent party is worse off as a result of relying on the contract.

(Robinson v Harman)

Question 10

What breaches gives one the right to damages?

Answer 10

Warranty and Condition

They both give the right to claim damages if breached

Question 12

Case for Expectation loss :Ruxley Electronics and Construction Ltd v Forsyth 1995

Answer 12

• contract to build a swimming pool with a diving area of 7ft6 but it was built at 6ft
  Claim rejected by reject who awarded £2,500 loss of amenity

Rebuilding the entire pool would cost £21, 560
Which was unreasonable

Question 13

Remoteness of Damages

Answer 13

The principle is that damages will never be awarded for a loss that is too remote a consequence of the breach.

Question 14

What is the two part test for remoteness of damage? (Hadley v Baxendale [1854]

Answer 14

1) Damages must “arise naturally” from the breach (what loss is a natural consequence of breach)
2) Both parties must have been aware that the losses could have happened if the contract was breached at the time the contract was formed

Question 15

Hadley v Baxendale 1854

Answer 15

Owner of flour mill suffered a broken mill shaft and the carrier delay the replacement by serval days during the time the mill was unable to grind corn. Owner tired to claim for profit loss of 5 days.

Held: unsuccessful because the carrier was unaware of the importance of the prompt delivery

(I need it delivered on time because it’s for my business and i will suffer loss)

Question 16

Other types of losses?

Answer 16

Loss of profit - a claimant may recover for the profit on contracts that he would have been able to complete but for the breach. This will only happen where the loss is not too remote.

Loss of a chance - in a rare circumstance the courts have allowed a claimant to recover a loss that is entirely speculative in the circumstance,although generally in contract this is not recoverable.

Question 17

Cases for loss of chance

Answer 17

Chaplin v Hicks (1911)

Actress had a contractual right to attention audition and she is wrongly prevented from attending. Court awarded her £100 in compensation even though she only had a 50:12 chance of going work from the audition

Question 18

Victoria Laundry v Newman [1949]

Answer 18

Launders and Dryer - purchase a new boiler on the 5th of June 1946 due to negligence it was delivered 5months after contracted date.

They were succesful I’m suing for loss profits of £16 a week from date of breach

They failed suing for £262 a week for government contract it couldn’t fulfil because of negligence because this contract was unknown to the defendants

(I need this boiler by this date because I have a contract/job I can’t do without it) then liability comes

Question 19

Parsons v Uttley Ingham [1978]

Answer 19

Pig farmer order a feeder hooper with a ventilated cover. This was defective causing the food to go mouldy and causing 254 pigs to die. Lost profit of 20k
Held: liable for pigs death

Principle: the type or kind of damage was foreseeable even though the extent of it was not

Question 20

What type of liability is involved in damages?

Answer 20

Strict liability so if you fail to carry out your obligations you are in breach and liable for damages.

Question 22

Reliance Loss: Angelia Television Ltd. V Reed 1971

Answer 22

• Anglia paid out large sums of money preparing for to make a film. The actor (Reed) backed out in breach of contract and the company abandon the production. It sued for loss profit

Lord denning “He must have contemplated… that if he broke his contract, all that expenditure would be wasted whether t was incurred before or after the contract” he mayst pay for all the expenditure so wasted and thrown away.