Damages Flashcards
Robinson v Harman (1848)
expectation measure
FACTS: H wrote to R offering him a 21-year lease of a dwelling house in Croydon. He subsequently changed his mind and refused to complete the lease when he discovered the property was worth more than the agreed price. The property was actually vested in trustees and H was only entitled to a portion of the property. R brought an action for damages.
JUDGEMENT: R successfully recovered damages for his expenses and for the loss of the bargain.
PRINCIPLE: “Where a party sustains loss by reason of a breach of contract, he is, so far as money can do it to be placed in the same situation, with respect to damages, as if the contract had been performed.”
Ruxley Electronics and Construction Ltd v Forsyth [1996]
FACTS: R agreed to build a swimming pool at F’s home. The contract specified the depth of the pool was to be seven feet and six inches. R completed the pool to a depth of six feet and nine inches. F brought an action for breach of contract, claiming the cost of rebuilding the pool to the specified depth.
JUDGEMENT/PRINCIPLE: F 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.
CCC Films v Impact [1985]
Reliance measure
FACTS: D gave C licence to exploit, distribute and exhibit 3 films in some countries, for $12,000. D promised to insure tapes and post by recorded delivery. D sent tapes uninsured and by ordinary post; tapes never arrived. C claimed $12,000 wasted expenditure, but could not prove it would have been recouped
JUDGEMENT:
(1) C has an “unfettered choice” between expectation and reliance measure.
(2) A claim for wasted expenditure does not require C to show that C suffered no or little loss or is unable to prove loss.
(3) However, wasted expenses can only be claimed insofar as they would have been recouped without breach. C generally bears the onus of proof.
(4) Where D’s breach prevented C from exploiting the contract’s subject matter, D must prove that C’s expenses would not have been recouped.
Anglia Television Ltd v Reed [1972]
FACTS: R had agreed to play the major role in a TV series which was going to filmed by A. However, before taking part, he abandoned the television series and decided not to take part. He therefore terminated the contract and A sued him for breach of contract and reliance loss because in preparation for filming they had incurred a certain amount of expenses amounting to £2750
JUDGEMENT: A won the case
PRINCIPLE: C may even claim wasted expenditure incurred before the contract was made
C and P Haulage v Middleton [1983]
FACTS: M had a licence to occupy C&P’s premises for 6 months, provided that at the end of the 6 months, any improvements added to the building were not removed. After being evicted 10 weeks prior to the end of the 6 months, could Middleton claim damages for the improvements made to the building?
JUDGEMENT: Held that M could not claim. After the breach, M moved back to his house and worked rent free, therefore he would be unjustly enriched if damages were awarded; at the end of the 6 months, he would have had to leave the ‘improvements’ anyway.
PRINCIPLE: The reliance measure cannot be used to escape from a bad bargain
Attorney General v Blake [2001]
FACTS: A double agent, traitor and criminal residing in the Ukraine published a book of his memoirs contrary to the Official Secrets Act
JUDGEMENT: Even though the primary aim is to award damages as compensation, it may be possible for the government to claim as damages a portion of the profit that the contract breaker makes.
PRINCIPLE: Exceptional circumstances allow deviation from the usual compensatory principle to account for profits. Next best alternative to an impossible criminal conviction where a matter of national security was concerned.
AB Corp v. CD Co (The “Sine Nomine”) [2002]
JUDGEMENT: No restitution for breach of charter party, as profit maximising legitimate
“It is by no means uncommon for commercial contracts to be broken deliberately because a more profitable opportunity has arisen. International commerce on a large
scale is red in tooth and claw. Our solution to the present problem is that there should not be an award of wrongful profits where both parties are dealing with a marketable commodity—the services of a ship in this case—for which a substitute can be found in the market place. In the ordinary way the damages which the claimant suffers by having to buy in at the market price will be equal to the profit which the wrongdoer makes by having his goods or his ships’ services to sell at a higher price. It is in the
nature of things unlikely that the wrongdoer will make a greater profit than that. And if he does, it is an adventitious benefit which he can keep. The commercial law of this
country should not make moral judgments, or seek to punish contract-breakers; we do not, for example, award triple damages, as in the USA.”
Wrotham Park Estate Co v Parkside Homes Ltd [1974]
(The court talked about possibility of claiming the profit of the contract breaker on the basis of the hypothetical release of the contract)
FACTS: The owners of an estate sold part of their estate to a developer. They put a restriction in the contract (i.e. a covenant) which restricted the right to develop a portion of the estate and they had to obtain the permission of the estate manager first if they wanted to develop. The estate owner died and everything passed on. The area was eventually sold to a local authority which obtained planning permission – this was eventually sold to the defendant. The heir to the estate reminded the defendant that there was still an existing covenant. The defendant breached the covenant and built houses and therefore the plaintiff (i.e. claimant) sued asking for the demolition of the houses and, if this was not possible, for a portion of the profit
JUDGEMENT: The court allowed the plaintiff to claim a portion of the profit on the basis that they could have, if they had wanted, tried to obtain a release from the covenant by negotiating a change in the price. The court held that 5% in this hypothetical release was roughly the right amount and therefore the hypothetical release (the 5% which the defendant could have negotiated to circumvent the covenant) was the loss that the plaintiff had suffered
Weld-Blundell v Stephens [1920]
Causation
FACTS: The defendant had negligently leaked some documents to a third party, which contained libellous statements written by the claimant about the third party.
The third party sued in libel and won. Could the claimants recover from the defendants for their negligence?
JUDGEMENT: Held that they could not. The libellous statements were intentional and had broken the chain of causation.
PRINCIPLE: If the “but for” test is satisfied, the defendant may still escape liability on the ground that an unforeseeable act of a third party broke the chain of causation.
Hadley v Baxendale (1854)
Remoteness
FACTS: C owned a flour mill. C and D contracted for the purchase of another crankshaft, so the machine for the mill would work. The crankshaft was not delivered in a reasonable time which breached the contract. C sought money for loss of profit by suing D as his flour mill did not work without the crankshaft.
JUDGEMENT: The court did not award the entirety of the damages that they were claiming because it was held the loss that they had suffered was too remote. C had not told D that they wanted him to make a replacement crankshaft quickly. Thus, D could not be liable for the C’s losses because, in effect, D could not contemplate the C’s loss.
PRINCIPLE: Damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally
Hadley v Baxendale test for remoteness
Claims for damages can only be made where damages:
(a) Arise naturally from the breach, so will be compensated AND
(b) The losses that may fairly and reasonably be supposed to have been within the reasonable contemplation of the parties will be rewarded
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949]
FACTS: C had a laundry business and wanted to expand their laundry business as there was a shortage of laundry services after the war. To do this they contracted with D to buy a boiler. It was agreed the boiler would be delivered on 5 June. The boiler was not delivered until November, which led to Victoria Laundry suing D for damages. They asked for the loss of business they would have had had they received the boiler on time and also claimed that had they had the boiler they would have been able to win a lucrative government contract so sued for this too
JUDGEMENT: Applying Hadley v Baxendale, the court only allowed the recovery of the losses of the business but they did not allow the loss of the lucrative contract from the government (even though they would have got it) as it was seen to be too remote. Even though Neman had specific technical knowledge (they knew that the boiler was going to be used for a very specific purpose) it was still not within the contemplation of the parties that the plaintiff would then bid for the government contract
PRINCIPLE: This case reformulated the Hadley case in terms of foreseeability, therefore applying similar standards to tort – but this was criticised in The Heron II case
Koufos v C Czarnikow Ltd, The Heron II [1969]
FACTS: A vessel was chartered to take a cargo of sugar to Basra where there was a sugar market. The charterers intended to sell the sugar immediately upon arrival in Basra. However, the vessel was delayed by 9 days by which time the price of sugar had dropped. The charterer therefore sued for the losses they have incurred and for the difference they would have been entitled to get upon arrival and what they got 9 days later which was considerably less. Question = was it foreseeable the plaintiff wanted to sell immediately and if the price of sugar dropped a loss would be suffered by the plaintiff?
JUDGEMENT: The charterer was entitled to recover the difference they would have been entitled to get upon arrival and what they got 9 days later. The reasoning of this was that even though the owner of the ship did not know that the charterer intended to sell the sugar straight away upon arrival, he knew the charterer was in the sugar business and knew the price of sugar varies so it was not unlikely that if there was a delay and the price of sugar dropped they could foresee their breach would cause the plaintiff a loss
PRINCIPLE: The court here (criticising the approach of the CA in Victoria Laundry v Newman Industries) said it is not possible in contract to have the same foreseeability test as in tort. So, in this case the House of Lords held that the defendant is only liable for those losses which he foresaw or could have foreseen at the time the contract was being made as not unlikely to result from the breach of contract – this approach is stricter than tort.
The Achilleas [2009]
Remoteness reformulated/rationalised for exceptional cases
3 different rationales suggested – assumption of responsibility, foreseeability of loss, justice
Addis v Gramophone Co Ltd [1909]
Non-pecuniary loss
FACTS: C was employed by D. D breached his own contract by replacing C. C wanted damages for the defendant ruining his reputation and ability to find another job.
JUDGEMENT: No right to exemplary damages as that is only available in tort. Furthermore, it was impossible for the claimant to get damages for any emotional distress he suffered.
PRINCIPLE: Non-pecuniary loss is not generally recoverable in an action for breach of contract
